Advantages of the Gig Economy for Businesses

Top 5 Advantages of Gig Economy for Businesses

Dane Panes | October 29, 2021

Contents

    Key Takeaways

    • Gig workers are a big part of the American economy. Many are entering the gig economy to take advantage of flexibility and independence that come with it.
    • The benefits of the gig economy for businesses include reduced costs, access to a large pool of workers, finding seasonal employees quicker, better outputs, and improved company productivity.
    • Companies also face several challenges when hiring gig workers. This includes maintaining and instilling company culture to the talents, ensuring that managers and supervisors establish clear distinction of the talents’ roles and responsibilities as gig workers in the company, dealing with a high turnover rate, and maintaining collaboration between gig workers and on-site employees.

    Gig workers now comprise a significant portion of the American workforce. Many corporate workers are making it out in the world by working as independent contractors or freelancers. They love the idea of being in the gig economy simply because it lets them take advantage of flexibility and independence. Working in the gig economy lets them take control of their time, and basically be their own boss.

    But what about the perspective of corporations and other businesses? While this may seem like bad news, businesses – regardless of their size – actually has a lot to gain from the gig economy.

    So, what are the advantages of the gig economy for businesses? We’ve gone ahead and narrowed it down to these five items for you:

    Significant savings for companies

    According to the U.S. Bureau of Labor Statistics (BLS) in their study entitled “Employer Costs for Employee Compensation”, employee benefits take up more than 30% of the employee’s compensation. On top of that, the company would have to pay for onboarding and training for on-site employees.

    On the other hand, by hiring gig workers, organizations can avoid these costs, and you’ll be doing your business a favor. They won’t have to pay for a traditional employees’ benefits which usually covers health insurance, paid leaves, retirement plans, and others. The gig workers shoulder these costs themselves.

    Furthermore, businesses won’t have to spend a lot on onboarding and training as most gig workers already have a background and are trained to do the job. That said, businesses can save a significant percentage of their profits and reinvest it back into their business.

    Hiring gig workers also let you save on office space. Depending on their lifestyle, most gig workers work from home or in coffee shops, so companies won’t need to set up another workspace in the office or buy office supplies for them.

    In a way, hiring gig workers offers a win-win solution for companies. It lets them contact talents or individual contractors they need for short-term projects without going through the trouble of arranging and paying for employee benefits and other overhead costs (i.e., office space, training, onboarding, etc.).

    A larger pool of workers

    Gig workers aren’t confined in the United States. You can find millions of them all over the world. For businesses, this translates to a larger pool of candidates from across the globe – with some already vetted and screened so they’ll be able to start as soon as they’re hired. Plus, many of them may charge cheaper rates, which means bigger savings for your company.

    The gig economy also offers workers with varying backgrounds, experience, ages, and expertise. With that, companies can utilize a diverse set of talents for different projects. The diversity in the background that the gig economy offers also helps bring creativity and fresh ideas to the table, which can be extremely helpful as the company scales.

    Find Seasonal Employees Quicker

    The gig economy is especially beneficial for seasonal companies. While others may stick to the traditional way – wherein they use an agency to hire temporary workers – today, they can take advantage of gig workers and hire talents for a specific period. This way, you won’t have to pay the staffing agency for their services charges (which can be expensive).

    Once the busy season is over, so will the contract be between you and the independent contractor. If you need their assistance again in the next busy season, you can rehire them for the same job.

    Better Outputs

    As mentioned, most gig talents join the gig economy because they can take advantage of flexibility and independence. They can choose when and where they will work. People usually choose the time and place where they’re most productive. As a result, you can expect to receive better outputs by tapping into the pool of talents in the gig economy.

    Many freelancers and gig workers also prioritize staying up to date with their industry’s current trends and practices. That said, companies are assured that they’re hiring equipped and knowledgeable individuals that will help their company scale.

    Not only does this assure businesses that they will remain competitive, but it also benefits freelancers because the better job they do, the more customers they’ll gain. That said, their services will become more in demand, which essentially translates to higher income.

    Improved company productivity

    Assigning work outside an employee’s scope can be detrimental not only for the employees themselves but also for the company as a whole. It can lower employee morale, which ultimately affects efficiency and employee productivity.

    On the other hand, tapping into the gig economy allows you to outsource administrative and secretarial tasks. This could include responsibilities like sending and replying to emails, scheduling meetings, and more. With these tasks handled by an outside person, business owners, managers, and your on-site staff can focus on their respective responsibilities and do more.

    The more your company accomplishes on any given day, the more likely it is for your business to scale faster.

    Challenges of Hiring Gig Workers

    Despite the significant benefits that companies get out of the gig economy, companies planning to integrate gig talent into their overall company strategy also have to figure out how they can overcome the challenges that come with it.

    The challenges of hiring gig workers include:

    • Instilling and maintaining the company’s culture on talents or finding a freelancer that fits or can adapt to the company’s established culture.
    • Ensuring that managers establish clear boundaries for gig workers and provide clarity as to the talents’ scope, roles, and responsibilities.
    • Dealing with high employee turnover
    • Maintaining collaboration despite the differences in roles, work setup, and time zones.

    It is vital that business owners and managers are aware of these challenges early on. That way, they can take steps towards creating solutions and prevent issues from arising in the future.

    The Bottom Line

    While we may have no way of telling what the business landscape will look like in the future, changes in the structure, framework, and trends will surely increase the demand for agile workers. Corporations, therefore, have to prepare themselves as these changes happen. By tapping into the gig economy, they can access a deep pool of talents that will help them maintain their competitive advantage and build a successful organization.

    About the Author

    Dane Panes started freelance writing in 2017. Since then, she has written about a lot of topics for different businesses. She started writing for SMB Compass in March 2020 and has been a full-time content writer ever since. Now, she focuses mostly on topics related to entrepreneurship and business financing.