In India an ‘Uberisation’ of the workforce is happening at rapid pace, with more and more people opting out of the daily grind and choosing to be ‘fluid’.
According to the India Skills report from HR solutions company People Strong, “the number of workers hired as freelancers or contract workers has risen from 20 per cent to 25 per cent in the contingent workforce in the past two years.” The report points to the rise of the Gig Economy or Flex Economy. More are opting for a flexible style of work, one that lets them remain in control of their time and allows them to work when and how they want.
Uberisation, which was first popularised by cab-aggregator Uber, is now a workplace revolution. Companies such as Spotify, Amazon, Netflix and Airbnb are all leveraging uberisation. According to various estimates, in the US alone, 60 million of the workforce will function on a freelance basis in the next four years.
Till 2015, this figure was 15 million or 29 per cent of the entire work-force. Gone are the days tie-wearing candidates were sought by tech companies. Today, many IT companies are breaking away from traditional practices and there is room for several freelancers and consultants to work as a team. This trend, called ‘uberisation of workforce’, or the ‘gig economy’, where talent works on a demand-supply model is catching on like wildfire in the global tech world.
Uberisation of the workforce has become a new ‘business strategy’ in the hands of organisations to fight with competitive pressures. It helps in cost-cutting, hiring talent for a specific time period and successful accomplishment of projects with less cost. On the other side, employees who are hired on contract enjoy autonomy and flexibility.
The nature of arrangement depends upon the strategy of the company and the kind of work required. Employers need to think beyond full-time employees and tap into the Open Talent Economy. In modern business, the art and science of management should not be about overseeing an ever-shrinking base of internal resources. Instead, it is about curating capability or contributions across a network of sources.
Some really smart people who can create immense value for companies are sitting outside the four walls of their offices today. Accenture believes a liquid workforce strategy can become a competitive advantage for companies. Within 10 years, we will see a new Global 2000 company with no full-time employees outside of the C-suite, noted Accenture Technology Vision 2016. A host of online freelancer marketplaces have come up, connecting independent professionals with companies.
On freelancer.com, 20 million users log in every day. Up work (formerly Elance-odesk), another digital labour marketplace has a long list of freelancers available to work for companies at short notice. Even LinkedIn is in on the act, with Pro Finder, a tool for freelancers, which is being used by more than 50,000 LinkedIn-approved freelancers under 140 service categories.
Finding talent is only one part of it. HR will need to let go of bureaucratic procedures. “Employers need to be ready… to provide… flexibility to their workforce,” notes the India Skill report. With digitisation making inroads in every sector, and millennials demanding work-life balance like never before, companies are increasingly embracing the concept of gig economy, where skill is hired purely on the basis of demand.
Change is the only constant in the workforce. Sometimes situations can be positive or negative but we need to keep moving ahead embracing changes suitable for our progressive growth. Digitisation of companies across all sectors is the biggest change happening nowadays and another change which organisations are facing is the changing mindsets of employees.
Uberisation makes it possible for companies to cut costs, hire talent on demand, customise the workforce according to projects and build a highly motivated team. On the other hand, the employees, who are basically contractual, consultants and freelancers, get to select projects they want to work on and on the terms they desire.
Companies have accepted this change very positively. This concept helps in creating a win-win situation. Most IT companies do not hire full-time employees for completing their projects but hire talent on demand for a specific time period. As a result, temporary workers are in demand. Labour flexibility attracts temporary workers for working on a project for a specific duration. Temporary workers work on contract for a fixed term and are paid for the work they perform.
In Europe, there are different categories of temporary workers like seasonal, temporary, freelancers, fixed term employees, outsourced employees etc. With digitisation happening across sectors, the way companies traditionally function is fast changing. The work environment as we have seen is evolving at a fast pace to keep up with changing times and mindsets. The digital presence has accelerated flexible, project-based employment.
Project-driven work can be successfully achieved if both permanent and temporary employees work together as a team. When an employee works in a team, he becomes more productive then when he works alone. Teams can be effective if there is cohesiveness and mutual understanding between the permanent and temporary employees. There are certain challenges which hinder the effectiveness of teams. These challenges are from the side of temporary workers who sometimes face psychological distress.
One half of the Google workforce in the US comprises TVC (temporary/vendor/contract)employees, and they carry different coloured badges to work. In India, however, while it is time to adopt the same, TVC work is something of a stigma. In addition, the legal and statutory framework in India does not support TVC beyond a point. TVCs would largely be missing statutory benefits of PF, ESI, and so on, or protection under the Shops and Establishments Act, Factories Act, Payment of Wages Act, and so on.
Due to uberisation, the workforce would also lose out on employer-paid health and life insurance cover. This ‘talent-on-demand’ trend will pose newer challenges for HR processes. Unlike permanent employees who are more connected with the ethos and goals of the company, HR will now have to deal with a set of employees who are not emotionally attached to the company, but are seeking newer and greener pastures.
Full time employees and part time employees work under one roof but both of them have different needs and expectations. There are challenges in motivating and engaging them for better performance and good result. Training constitutes an important part of the organisation in order to polish skills of employees and equip them to handle new technology.
But this costs money so organisations train some of the employees while filling other vacancies with skilled people on contract. But when those on contract develop aspirations of being trained by the company and do not receive it, they develop frustration and psychological distress. This poses a challenge for the organization.
Thus, despite getting freedom and flexibility in their working life, temporary workers could end up unhappy. Thus, a critical challenge for an organisation is to create harmony between permanent and contractual employees. Any company eager to leverage the benefits of uberisation will have to ensure an inclusive culture because even though the hiring patterns for employees will differ, they will be working towards the common goals of the company.
(The writer is with Eastern Institute for Integrated Learning in management (EIILM), Kolkata)