Gig Workers Reshaping Job Market: A Rising Trend Among Startups

In the rapidly changing landscape of the Indian job market, the gig economy is gaining traction, reshaping traditional job roles and organizational structures. A recent survey conducted by IT industry body Nasscom and job portal Indeed reveals that 84 per cent of organizations in India are either exploring or open to adopting gig models for hiring. Notably, startups and the Business Process Management (BPM) sector lead the way in incorporating gig workers.

According to the survey, 96 per cent of startups have delved into the gig economy to tap into freelance opportunities and access specialized talent for specific project requirements. Following closely are BPM organizations at 75 per cent, and IT services and product organizations at over 60 per cent. The primary motivation for Gen Z and millennials to opt for gig roles lies in the flexibility of job locations and the emphasis on specialized skills.

The survey highlights that organizations are leveraging gig workers primarily in areas such as software development, data annotation, and business analytics. This approach allows companies to benefit from on-demand talent and specialized expertise. However, it is observed that more than one-third of large organizations remain resistant to the gig model, citing concerns related to data security and client preferences.

What Is The Gig Economy?

The Gig Economy, characterized by a market system where short-term positions are prevalent, and organizations engage independent workers for temporary projects, is gaining traction in the current workforce environment. This model offers flexibility for both workers and employers as individuals take on assignments on a project-by-project basis.

A report titled 'India’s Booming Gig and Platform Economy' by Niti Aayog anticipates a significant surge in the Indian gig workforce, projecting an expansion to 23.5 million workers by the fiscal year 2029-30. This projection represents a substantial increase of almost 200 per cent from the current workforce of 7.7 million.

Gig Workers: A New Talent Market

Sangeeta Gupta, Senior Vice President and Chief Strategy Officer, Nasscom, said, “The tech industry in India is experiencing a significant transformation, reflecting the evolving dynamics of the contemporary workspace. Over the past five years, there has been a noticeable shift from traditional office settings to an exploration of remote work, followed by a recent trend of returning to office spaces. The future of work will be defined by the dynamic balance between efficiency improvements from automation and the expansive potential of creativity unleashed by continuous innovation.”

In addition to embracing gig models, organizations are focusing on geographical expansion to tap into new talent markets. The survey points out that strategic partnerships are also being pursued to gain a competitive edge and access new markets. The push for new market access is driven by the imperative for diversification and the desire to tap into untapped consumer bases.

The survey underscores the growing significance of Tier II/III cities in India as hubs for untapped innovation potential. Service-based organizations and global capability centers (GCCs) are increasingly looking to these emerging technology hubs to harness diverse talent pools. While talent availability and cost savings remain primary drivers for smaller organizations with revenues below INR 25 crore, larger tech firms with revenues exceeding INR 250 crore are motivated by the availability of diverse skill sets and untapped talent in these technology hubs.

States Ensuring Social Security For Gig Workers

Rajasthan was the first state to enact legislation ensuring social security for gig workers operating on digital platforms. The recently passed Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act, 2023, addresses both aggregators, which are digital intermediaries connecting buyers and sellers, and primary employers who directly engage gig workers for specific tasks.

A key feature of this legislation is the introduction of the Platform Based Gig Workers Welfare Cess. This monthly contribution, ranging from 1 per cent to 2 per cent of the transaction value, is mandated from both aggregators and primary employers. The collected funds, combined with worker contributions, government grants, and donations, will be consolidated under the Rajasthan Platform Based Gig Workers Social Security and Welfare Fund.

The Karnataka government has also announced an initiative for gig workers in the state. All gig workers in Karnataka will now receive life insurance and accident insurance coverage of INR 2 lakh each. Bengaluru alone has over 2 lakh gig workers registered with app-based platforms. In line with Rajasthan, the state is gearing up to present a gig workers’ welfare Bill in the upcoming Assembly session, aiming to create a fund that ensures social security and protection for gig workers.