Thanks to the growing gig economy, the number of independent, self-employed workers is on the rise. In the gig economy, businesses hire contractors instead of full-time employees to complete short-term engagements or assignments. According to Gallup, “about 36% of U.S. workers participate in the gig economy through either their primary or secondary job.” What is the gig economy and what makes it a popular option for both businesses and workers? Find out how the gig economy works, its benefits and drawbacks, and four best practices for success.

What is the gig economy

To define gig economy, it’s important to understand that contract workers are treated differently than traditional employees. An independent worker is hired to do a specific task or job on a temporary basis and is paid accordingly. There are a number of websites that connect businesses with gig workers performing a variety of services from language translation and transcription to data entry and creative tasks. Other names for the gig economy include the freelancer economy, agile workforce, and independent workforce.The gig economy has actually been around for years in the form of temp agencies and freelancers like photographers and writers, for example. Its popularity grew with the Internet and the ability to connect and share skill sets with a wider audience. Today the gig economy includes a diverse labor pool from younger workers seeking experience or extra income from “side hustles” to experienced retirees wanting to keep up skills and supplement income.

Benefits of the gig economy

Workers who participate in the gig economy often cite flexibility as one of its biggest appeals. These workers have the ability to choose the assignments they want and that suit their schedule. Many successful businesses are also enjoying the benefits of the gig economy by keeping administrative and staffing costs low. With the ability to hire on demand to fulfill immediate needs, companies don’t have to pay for insurance, 401k contributions, or extra real estate costs as with full-time employees.Businesses also benefit from the ability to hire the best-fit, best-qualified contractors regardless of location. These workers usually already have the training and skills needed to get the job done. Additionally, half of freelancers update their skills every year compared to only one-third of traditional employees.

Challenges of the gig economy

While the gig economy presents a number of exciting opportunities for both workers and businesses, unique challenges lay ahead. Gallup suggests that employers need to “redesign traditional jobs to include many of the benefits of independent gig work.” Job seekers want what makes gig work rewarding: flexibility, autonomy, respect, and creative opportunity. Gallup also recommends that businesses train managers to better relate to the needs of the agile workforce.

Four ways to find success in the gig economy

Here are four practical ways businesses can leverage the gig economy to meet their needs:1. Utilize technology platforms and websites to find and vet the talent you need. Many of the online gig and freelancing sites quickly match your needs to potential best-fit candidates. You can also examine skill sets, read candidate reviews, and check their track record of successful project delivery. Many websites also offer the ability to work on a trial basis or test a candidate before a contract is signed.2. Scale your workforce according to market demand.Rather than hiring full-time workers to meet increasing need, many businesses scale the size of their workforce using freelancers or temporary workers. If business slows down, those workers can be “released” back into the gig economy and your company isn’t stuck with additional overhead.3. Hire workers and stay within your budget.Some businesses are willing to take a chance on a new worker for a temporary assignment, especially if the costs are low. Depending on your budget, your business can hire entry-level workers or highly skilled workers at a fraction of the cost of a full-time employee.4. Pick up gigs for your own business.As a small business, sometimes your services work slows down. Your business can add to its cash flow by offering services in the gig economy and potentially meet a new client that provides ongoing work.

Flexibility reigns in the gig economy

The gig economy provides businesses and freelancers with more flexibility and control. Learn more about the gig economy and the effects of workplace automation on future job security. Plus find out how Asure Software’s Talent Management solutions help you match business needs with the right talent.