Future of Work: 5 Ways the Gig Economy Can Boost Business Performance

Natasha Serafimovska

Career Coach, Professional Resume Writer, Freelance Writer

After a year of financial and economic uncertainty, OECD estimates that many of the G20 and advanced economies are expected to reach their pre-pandemic levels of economic activity by Q2 2022. Job vacancies are also on the rise with the rollout of vaccination programs, even for more vulnerable sectors such as tourism and retail.

Yet, despite the massive growth in job vacancies, many employers are struggling to fill them. Covid-19 has upturned all aspects of life, including how people feel and think about work. Companies House in the UK has revealed that 2020/2021 saw 21.8% increase in company incorporations, the highest increase on record. Likewise, projections show that the gig economy in the U.S. is on the rise with freelancers expected to make half the workforce in the U.S. by 2028.

This has posed a series of new challenges for employers who have to re-think how they hire and retain talent. Businesses have already acknowledged the benefits of using freelancers with 90% of companies believing that a blend of freelance and full-time employees would give them a competitive advantage in the long run. 

Yet, despite the growing number of businesses outsourcing their work, freelancers still sit at the fringes of business activity. Many are being used as an additional resource rather than as a key talent that can challenge old processes and introduce new ideas. 

5 Key Benefits of Embracing the Gig Economy

5 Benefits of the Gig economy

Here we look at the five key benefits businesses can expect from embracing the gig economy and truly transforming their business in the post-Covid era.

Hire Highly-Skilled Talent for a Fraction of the Cost

Covid has left many businesses cost-conscious. Yet, hiring a full-time employee comes with a half a dozen hidden costs that go beyond the employee salary. Things like tax and pension contributions as well as expenses incurred during the recruitment process can easily double the cost of having a full-time employee on the team. 

In turn, freelancers are self-employed people who operate either as sole traders or registered businesses and they take on the responsibility to cover all of their additional expenses. This gives businesses the flexibility to hire highly-skilled talent without the pressure of making a significant financial commitment. 

This is even more important in cases where the relationships might not work out. While replacing an employee means going through the full cycle of recruitment yet again, businesses can easily hire several contractors at once and stick with the one that fits their needs the best. 

Bring Fresh Perspective to Existing Business Problems

While hiring a full-time employee can take some time from interviewing all the way through to onboarding, hiring a contractor is more immediate and the onboarding is far quicker.

This means that working with contractors makes your business more agile and better positioned to respond to unexpected market shifts. Instead of waiting for months to hire an employee, you can find a contractor within a week and have them working on the project in a matter of days. 

Other than their accessibility, contractors work with dozens, if not hundreds, of businesses every single week. The range and diversity of their experience is something you might not be able to find within your full-time workforce and something that can give you the edge when addressing specific business challenges.

Not to mention that contractors are business owners themselves, so you’re likely to get a very different perspective on your business problems than what a full-time employee would provide. You can capitalize on this expertise to not only implement existing projects, but also to develop new ideas and approaches that can drive your business forward. 

Improve Your Hiring Success Rate

In the U.S., the median employee tenure (i.e. how long an employee stays with their employer) is around four years. This number drops significantly the younger the employee is with 25-34 years old having a tenure of 2.8 years and 16-19 years old having a tenure of only 12 months. 

This can have serious repercussions on business performance and profitability as businesses still have to invest significant amounts in recruitment expenses regardless of how long an employee stays with them. Not to mention the loss of know-how which happens every time an employee leaves the company. 

Contractors can alleviate many of these issues. Not only hiring a contractor is less expensive, but working with one can serve almost as a trial period of whether that person would be a good fit for your business or not. You can assess their work ethic and if they’d fit well within the corporate culture in real-life scenarios, which can’t be replicated during the interviewing process.

Once you find a freelancer who’s already proven to be a great professional to work with, you can offer them a full-time position with the confidence that you’re hiring quality talent. The contractor would also know what they’re getting themselves into, significantly reducing the chance of churn. They may decline the offer, but there’s always a chance they’d say yes.

Reduce Your Operational Overhead

Managing a large workforce can easily snowball into a mammoth of a task that consumes a big portion of your time and resources. From managing salaries, tax and pension contributions, to leave and health insurance, employees come with a great administrative baggage. 

A big workforce also implies a bigger corporate structure with many layers of managers and supervisors which can slow down business operations. A survey by Harvard Business Review has found that two thirds of businesses find their organizations have become more bureaucratic in recent years. In contrast, productivity has ground to a halt with an annual increase of 1.1% since 2004. 

In a fiercely competitive market, this lack of innovation and agility can make or break a business. Companies who embrace the freelance workforce as more than just an additional support can reduce a lot of the bureaucratic burden that comes with business growth. 

While contractors might require some minimal level of management, it would be far less demanding than managing a full-time employee. Since you’d have a B2B relationship, contractors are bound to be more self-sufficient and service-oriented, making them a great resource for any business who wants to lighten their administrative overhead.

Improve Operational Efficiency 

Even before the pandemic, many employees and managers felt like they were spending far too much time in meetings and that far too many of those were inefficient. This number has only grown during the pandemic as millions of people transitioned to remote work. 

Yet, the gig economy can change all of that. Since contractors usually charge per project or by the hour, they usually spend far less time in meetings and are more efficient with their own time. If they’re already experienced, there would also be less need for hand-holding and support throughout the process. And because they’re paid by the hour instead of a pre-agreed full-time salary, businesses themselves would be forced to be more efficient and productive with the time they have at their disposal.

It’s indisputable that the pandemic has transformed the world of work both for workers and businesses alike. While more people seek fulfilment and purpose from their jobs, businesses are also more cost-sensitive and are looking for ways to become leaner and more innovative. Having a full-time workforce has its own merits for building a strong company culture and long-lasting legacy, but the gig economy can provide businesses the agility, expertise and the breath of fresh air they need to overcome current challenges and thrive in the post-pandemic world.

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