What We Know After 10+ Years of the ‘Gig Economy’

January 22, 2019

By Christa Fletcher(opens in new tab), contributor for Underground Group

In short:

  • Gig workers are a perfect fit for some companies, but they’re not so perfect for others.

  • When deciding whether to onboard gig workers, consider items like security, the volume of flexible projects you have on your plate, and your ability to pay gig workers aptly and efficiently.

  • If you choose to hire gig workers, prepare all corners of your business for their arrival, and work to make them feel like a part of company culture when they arrive.

Ever since companies like Lyft(opens in new tab), Airbnb and Postmates emerged, the gig economy (opens in new tab)has grown to become a core component of the labor market, causing companies to review their definitions of what it means to be an employee and consider the benefits of hiring independent workers. 

This gig economy is powered by freelancers and contractors who are not employed full-time by any one company. Roughly 57 million Americans(opens in new tab) are gig workers, according to Forbes. Nearly one in four Americans earn money from the digital “platform economy,”(opens in new tab) according to the Pew Research Center. An estimated 40% of the population will be gig workers by 2020(opens in new tab), per Intuit. 

The gig worker model is beneficial for some companies and spells trouble for others. When weighing the choice between traditional, full-time employees and short-term independent contractors for your business, first consider how your company will be impacted. Then, if you decide to hire gig workers, consider how you’ll find the right ones, make them feel at home, and allow them to do their best work while growing your company.

The potential benefits of gig workers

1. More flexibility

Gig work is often project- or task-based. Temporary workers can be a great solution if your company needs more support but can’t afford to hire additional full-time employees. 

“Freelancers give companies flexibility, including the ability to scale their workforce to meet demands and deadlines, while protecting full-time workers from cutbacks or layoffs during leaner times,” Mike Boro wrote in Quartz(opens in new tab)

For the past two years, Breena Fain has worked as a contractor for software-as-a-service (SaaS) startups. She’s currently an expat marketing contractor based in Mexico City, and previously, she was a marketing director for a SaaS startup in San Francisco. 

“Gig workers are perfect for a quick turnaround project that you do not have the capacity to do with your team,” said Fain. “If you have a full-time staff, they’re focused on strategy and other plans, so you can use gig workers to handle projects that need to be done quickly.”

A study by the Harvard Business Review(opens in new tab) also noted that gig workers “feel ownership over what they produce and over their entire professional lives,” making them assets to companies in need of skills that can translate to multiple assignments. (For example, a freelance accountant can help with a company’s taxes, but then later help manage the company’s tax-based podcast.)

2. Lower costs

Gig workers also tend to cost less to the company because they do not receive an annual salary or perks like health benefits, vacation days and retirement plans. Instead, they usually earn an hourly wage or project fee. Approximately 43% of companies who use gig workers are saving 20% or more on labor costs, according to Forbes(opens in new tab).

From a gig worker’s perspective, Fain said she didn’t mind this model because it allowed her to charge more for short-term projects.

“[Gig workers] don’t mind having a project dumped on them. They’ve already committed to a life in flux,” she said. Accordingly, “gig workers can adjust their costs and potentially make more money for quick deadlines.”

3. Clearer ROI

“There’s a clear ROI budget for the gig worker,” Fain said. “You have a very flat, specific amount for projects, so you see the value of your work (or hire) as a gig worker.

“When you hire a contractor to write an ebook, for example, it could cost $2,500, but you know that’s the exact amount of money you have to make from [the book]. With large marketing teams, it’s harder to break down what it will cost to acquire a customer from the work you’re doing. With so many benefits and salaries, it’s hard to evaluate the cost-benefit of a full-time employee.”

The potential cons of gig workers

1. High turnover 

By definition, gig workers aren’t bound to your company by incentives like retirement or 401(k) plans, salaries, and benefits. They often have short contracts and an array of other clients to choose from at any given time.

Payment seems to tie in big-time here: According to a report(opens in new tab) by Forbes, 73% of gig workers will leave a job if they’re not satisfied with how they’re getting paid or how companies communicate about payments.

You can proactively avoid these negative sentiments by setting up protocols for paying gig workers with varying needs before hiring them. If not, you’re better off keeping a roster of full-time employees.

2. Compromised security

Other more practical management concerns may keep you from hiring gig workers; security, knowledge base issues and confidentiality are some real concerns for larger companies or those that deal with private information. The nature of your company’s work will help determine these practical concerns.

Maintaining security can be tough if you have a revolving door of contractors. Onboarding and providing clearances take time and resources from your IT and HR staff, which may not be worth the return.

How to find and hire a gig worker 


1. Pinpoint your specific talent needs.
Before you tap into the wide pool of freelancers, understand which skill sets your company currently has, which skills you will need in the future, and how a gig workforce can help fill the gap.

For example, say you’ve decided to build an app for your brand, and you need a level of expertise your current software engineering department doesn’t have. Or maybe you need to staff up during your busy season (such as in retail during the holidays or at tax preparation firms that see a business increase in the first 3-4 months of the year). You need core talent and strategy in-house, and you need gig workers to support them. 

2. Recruit for your specific needs.

For businesses seeking skills like engineering, writing, graphic design, and other creative and production skills, the world is their oyster. You can post an ad on one of many gig recruitment websites tailored to niche industries(opens in new tab), like Behance.net(opens in new tab) for creative work or Toptal(opens in new tab) for IT.

A note about location

When hiring a gig workforce, you’re not necessarily limited by location. Digitized companies often hire gig workers across the globe. Qualified workers have their own computers and coworking spaces, so they have what they need to get the job done.

However, many employers want their employees (both full-time and independent) to work in the office. Eighty percent of the workforce says they would like to work remotely at least part-time, yet only 7 percent of employers make flexible work available to most employees, per Global Workplace Analytics(opens in new tab).

3. Prepare for the hire.

Managing a hybrid of full-time employees and freelance workers means first understanding implications for all areas of your business. 

You’ll need to collaborate with IT to set up an infrastructure that can manage a blended workforce: Will you provide gig workers with equipment? Will they have access to your office? How much access to you give them to your proprietary data

From a security standpoint, companies should also be careful about how much data is shared with contract workers versus full-time employees.

Additionally, you will need to work with your finance and legal teams to ensure you comply with regulations around hiring and paying contract employees and the types of services they can perform. These laws vary by state: For example, California recently adopted a new legal classification test(opens in new tab) to determine whether an individual can be deemed an employee or a contractor. Legal counsel can help you determine whether the individual you want to hire as a contractor actually qualifies as one or if you’re required to provide them with standard employment benefits.

4. Build camaraderie.

It’s important that gig workers feel like a part of your company’s culture, both for overall morale and to keep them engaged with your company for future projects.

Finding a balance between camaraderie and boundaries is the hardest part of both being a gig worker and working with one, said Fain. 

“I have a client I’ve worked with for two years, and I’ve gotten close to them as teammates, but you have to set boundaries because you’re not being paid the same and you do not have the same equity in the company,” she said. 

Wise managers schedule regular catch-up conversations with gig workers(opens in new tab), just as they do with full-time employees. You might also include temporary workers(opens in new tab) on certain non-sensitive company emails and in company-wide social events. Provide ways for gig workers to “move up the ladder”(opens in new tab) at your company and take on increasingly greater responsibility or tougher projects.

Because when you get down to it, we’re all just looking to grow.

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