The much vaunted “Gig Economy” is far more than the on-demand platform jobs most commonly associated with this term. In fact, the Gig Economy today is comprised of an array of independent worker classes and engagement processes that deliver unique benefits to workers and hiring organizations alike. If you’re still among those who associate the Gig Economy with Uber and similar on-demand services, read on to learn how robust and diversified the Gig Economy has grown and how it will continue to increase its impact on how modern workforce management is conducted.
According to a Deloitte article on 2019 Global Human Capital Trends, the world is experiencing accelerated growth in the number of people working under some form of alternative workforce arrangement. They project that by 2020 the number of self-employed workers in the US is set to triple to 42 million people. Freelancers are the fastest growing labor group in the EU with numbers having doubled between 2000 and 2014; outpacing overall employment growth in UK, France and the Netherlands.
Here’s a briefing on the more commonly encountered Gig Economy worker types and how they’re best engaged in practical applications.
The Independent Contractor (IC): Perhaps the most well-known type of worker class outside of the temp/staff supplementation, the IC is defined by Investopedia as “a person or entity contracted to perform work for—or provide services to—another entity as a nonemployee.” This is your typical “freelancer” and according to IRS regulations must be fully autonomous. While professionals who perform individual tasks for different clients—like doctors, lawyers, architects—are ICs, as part of a contingent workforce, ICs are often engaged to perform jobs like writing, software coding and other tasks that they can perform outside of the supervision and management of the hiring organization. The IC must pay his/her own tax and benefits instead of the hiring organization.
Employer of Record (EOR): The EOR is a service that acts as an employer, onboarding and administering payroll and benefits as well as withholding/reporting tax to workers. These workers are direct employees of the EOR service but the EOR “leases” the workers to organizations seeking on-demand labor without the tax and compliance burden typically associated with hiring.
Statement of Work (SOW): A statement of work is a formal document that provides direction and parameters to a vendor or contractor about how a project should be administered and executed. When an organization has a significant, specialized but finite project to address, it is preferable to utilize non-employee resources to execute the project as opposed to engaging full time workers and the administrative costs that involves. Instead, the organization can engage a SOW solution provider to not only scope the project and build a detailed project plan, but also to bring the necessary team/talent to the project and execute from start to finish.
Staffing Solutions: The staffing supplier is the most well-known slice of the Gig Economy. In existence since before the internet revolution, staffing suppliers are providers of temporary workers in most job roles and capacities. These providers source and vet talent and provide qualified candidates to hiring organization on a temporary basis—from short term to longer term engagements.
Human Cloud: The SIA defines the human cloud as being comprised of three emerging talent acquisition channels: CrowdSourcing sites like Gigwalk, Onespace and Applause, Online Work Services like Uber, Lyft and Handy, and Online Staffing Platforms like Upwork, Talmix and Toptal. These online channels represent an ecosystem of contingent talent sourced and managed entirely online.
As becomes evident, the Gig Economy has grown more diverse and multifaceted and should not be discounted or de-emphasized when developing a contingent workforce management strategy. Those organizations delaying their engagement of Gig Economy channels do so at their own peril from both a cost and competitive standpoint.
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