The Rise of the Gig Economy: What Is It and Why Should I Care?

Everywhere you turn, you hear the phrase “gig economy”—especially of late. There’s even a conference dedicated to this segment of the workforce that focuses on the intricacies that come with this type of shift-based employment. While we’ve heard the phrase repeatedly, not everyone understands what the gig economy is and why it’s so important.

In this three-part blog series, we hope to shed some light on exactly what the gig economy is and why it’s growing in popularity. We’ll address how to manage and source this type of labor through technology. We’ll also look at what type of program management strategies need to be adopted to work with the gig economy.

You might also like: ‘Temp vs SOW: Why Contingent Workforce Classifications are Essential

What Is the Gig Economy?

So what is the gig economy?

While it may sound like a new trendy rock band, the gig economy is actually a part of the workforce that operates in fixed-term contracts, rather than in open-ended work arrangements. This may sound similar to staff augmentation. However, more often than not, gig workers are independent contractors rather than workers that are brought on through an employer of record—also known as a staffing supplier.

Another difference between the gig economy and other types of short-term employment is that the nature of the work is shift- or project-based. While the shifts and projects may be recurring for the same organization, they’re often short in nature. This type of work can either be an added source of revenue for a full-time employee or, if the worker can pick up enough “gigs”, a full-blown revenue stream.

Related reading: ‘How COVID-19 Is Changing the Rules for the Gig Economy

Why Is the Gig Economy Growing?

The gig economy has many benefits—for both employers and workers. We’ve probably all had a project or two that we needed completed but didn’t have the expertise or bandwidth to complete ourselves. The gig economy has flourished over the last several years creating a network of freelance talent that can provide targeted work for a set period of time, or for a specific project.

In addition to the specific expertise that’s brought through the gig economy, there’s also a level of flexibility that comes from freelance work. Not only can the employer bring in talent ad-hoc, there’s added flexibility for the worker as well. A survey of Millennials by USA Today found that 40% plan to leave their full-time job in the next five years to freelance. This is a common trend in younger generations who desire more flexibility in their working lives.

Flexibility isn’t the only thing that employers enjoy about the gig economy—the cost savings are also a definite perk. With most of the workers being independent contractors, there isn’t the same level of mark-up that comes with working through vendors. And there definitely isn’t the same level of cost and commitment of a full-time employee.

Also read: ‘What’s Next for Contractors? Helpful Resources for Contingent Workers Impacted by COVID-19

Why Is the Gig Economy Important?

Competition for highly skilled labor will always be a challenge, especially for niche positions. As we’ve seen through the recent COVID-19 pandemic, the world can change in an instant. Having a workforce that can change to match the economy is very important.

As we saw with the boom that arose after The Great Recession, being able to rebuild your workforce through non-employee labor is key. The gig economy is a great place to go for any type of shift-based or project work your company needs done—without the commitment of a full-time hire.

As the gig economy grows in popularity, so has the talent that has saturated this segment of the workforce, making it a great place to draw on for new workers. In our next blog in the series, we’ll shed light on how to manage and source talent from the gig economy to help your organization source the talent it needs to be successful. Until then, we hope this blog helps to better define what the gig economy is and why it should be on your radar when thinking about your contingent workforce growth strategy.

For more on this subject, check out our white paper ‘Contingent Workforce Management: Critical for Total Talent Success’. Download your copy today.

Meet the Expert
Taylor Ramchandani – VP of Strategy

Taylor Ramchandani is responsible for the management and strategic planning of the VectorVMS vendor management system. Taylor is committed to client satisfaction and to ensuring VectorVMS technology meets the current and future needs of clients and managed service providers (MSPs). She uses market research and in-depth industry experience to create products and services that make extended workforce management efficient and intuitive. Taylor oversees product development, marketing, and business partnerships for VectorVMS and is responsible for driving innovation for contingent workforce management. Connect with her on LinkedIn.