Talent on demand: is HR ready for the gig economy?

08 July 2016

Author: Marianne Calnan


Talent on demand: is HR ready for the gig economy?

Organisations are already using ‘talent platforms’ to pay workers by the job. But we’ve not even begun to consider the ethical and legal questions it raises

If we judge art based on the number of people who enjoy and interact with it, Tangguh Karya may be one of the most influential artists in the world. Yet few outside his home city of Yogyakarta on the Indonesian island of Java have the slightest idea who he is.
 
A largely self-taught designer of T-shirts – as well as posters and graphic arts – Karya’s work has been worn by millions of people across the globe, but he has never been on the books of any household name fashion label. Instead, he works almost exclusively on a website called 99designs, where he submits his ideas in ‘contests’ organised by clients including multinational retailers and fashion buyers. When he ‘wins’, as he invariably does, he signs over the rights to his creations and receives a generous payment in return.
 
In the past, the chances of a talented, unconnected Indonesian designer getting rich off his work would have been remote. Until, that is, the gig economy came along – and it’s not just the Tangguh Karyas of this world who stand to benefit.
 
The exact definition of the term ‘gig economy’ is suitably fluid, given the fact that it has no governance or central structures. It refers primarily to the principle of people taking on small pieces of irregular work rather than a single full-time job: the self-employed accountant who runs the numbers for businesses too small to afford a more formal arrangement, or the translator who takes on ad-hoc work turned around in a matter of hours.
 
The archetype of the gig economy is Uber, the disruptive taxi app that is estimated to have approaching one million drivers globally on its roster and has impressive penetration in Asian cities such as Singapore. Uber has bypassed the traditional employment relationship by tapping into a flexible pool of self-employed labour that it connects directly with consumers via technology.
 
But the gig economy isn’t just about individuals. Businesses such as Johnson & Johnson, Danone, Lego, Ford and Lenovo are known to use technology platforms to staff their projects. In March, PwC launched a global ‘marketplace’ for freelance talent that would allow its offices to bid for the services of registered suppliers. More than one million designers are registered on 99designs, 20 per cent of them in Indonesia alone.
 
Alex Swarbrick, regional director of Asia-Pacific at the Roffey Park Management Institute, says the trend is clear: “Some put the figure [for those working as freelancers of some description] at 6 per cent, others place it as high as 12 per cent, depending on whether all freelance work counts. It’s still early days, but the evidence suggests it is likely to grow.”
 
In the US, 53 million people worked on a freelance basis at some point in 2014, equating to 34 per cent of the total labour market. In the UK, official figures suggest 450,000 individuals who have full-time roles also take on second jobs, most of them via online talent platforms. Many more, both younger people who prefer flexibility and older people pushed out of the labour market, are building careers of ‘gigs’.
 
What links them all is that technology – principally platforms such as inploi, Elance, TaskRabbit and Tongal – directs people with skills to those who need them, and deals with the transaction itself too. Kevin Mulcahy, partner at Future Workplace and co-author of The Future Workplace Experience, says the efficiency of such channels is growing all the time. “Many platforms are improving their capabilities to allow contractors and employers to more efficiently screen for a better match of skills to assignments. And many have also evolved to automatically screen and recommend qualified workers for assignments,” he says.
 
Our translator can post their services on TaskRabbit, stating an hourly rate, and sit back and wait for potential employers to contact them to ‘bid’ on work. Or they can put themselves forward for jobs posted on the platform, which handles the payment and paperwork and takes a percentage of each transaction.
 
It sounds like a future-proof employment model, ideally designed for a global economy where work can originate and be fulfilled anywhere and no longer respects the nine-to-five, office-bound models of the past. But not everyone believes the gig economy is an untrammelled good.
 
For starters, while an IT contractor or coder being paying handsomely for their in-demand skills is in control of their destiny, others are at the mercy of the technology. As Chris Rowley, professor of human resource management at City University’s Cass Business School, asks: “Do workers stuck with non-standard work prize the flexibility and freedom? Or are they marooned in jobs they desperately want to leave?”
 
Like many critics, he points out that gig economy workers have effectively ‘traded off’ traditional employment agreements including “stability of pay, hours, benefits, holiday and pensions” in favour of their freedoms. This is financially beneficial for businesses, which can reduce full-time headcount while still tapping into talent, but it leaves individuals in a potentially precarious position. And it could put the onus for their welfare back on to the state, which will receive less in tax revenue as self-employment increases.
 
Uber has been at the sharp end of protests around the world, not just because of concerns about safety and the effects of its rise on the traditional taxi market, but also because many of its drivers feel they should be classed as employees and enjoy legal protections. Some have suggested a new class of worker will need to be created to recognise those who exist between employment and genuine self-employment.
 
Peter Outridge, managing director of the Asia-Pacific HR centre of excellence at KPMG, says younger workers are most likely to be drawn to the freedom that comes with working for yourself, and organisations and governments will need to respond: “The newest graduates want mobility and flexibility on their own terms. I’m not sure that governments are fully equipped to deal with it – you see governments in Asia, with Uber, trying to control something they don’t fully understand. There will be a lot of transformation in the next few years – for example, consortiums of people working collaboratively – and both organisations and governments have to think that through.”
 
Rowley says the gig economy will change the ‘psychological contract’ between employers and employees, and could encourage organisations to invest less in training and developing individuals if they believe they can buy solutions off the shelf.
 
These are profound questions that will need to be answered, and it’s only early-adopter organisations that are beginning to answer them. For most, the gig economy remains an abstract concept. But that will change, says Swarbrick: “HR has historically been risk-averse – it’s been about control and predictability. The gig economy requires something completely new; different ways of engaging with a workforce in a multiplicity of relationships beyond formal employment.”
 
The sharing economy in action
 
Grab
An app that connects consumers with taxis, cars, motorbikes, carpooling and delivery services, Grab began life in Malaysia in 2012, when Anthony Tan and Tan Hooi Ling decided to take on Uber before it achieved critical mass in southeast Asia. The strategy appears to have paid off: the business now claims to have more than 200,000 drivers operating in 30 cities across six countries including Singapore and Thailand, while three million people use its services each month.
 
Truelancer
India is fast emerging as a hotbed of freelance professionals, and Truelancer – founded in 2015 by Dipesh Garg and Rajshekhar Rajaharia – already boasts more than 250,000 registered users. Graphic design and multimedia, finance and social media are the most in-demand skills, but there is also a huge range of managerial candidates looking for interim or remote roles. Garg says freelancing comes naturally to India, which has long thrived on an informal economy: the site believes its freelance market could be worth $1bn annually.
 
90 Seconds
Producing corporate videos can be an onerous business: 90 Seconds claims to harness both the cloud and the crowd to dramatically simplify it. Launched in New Zealand in 2010, it has connected 10,000 brands including Visa and Sony with a database of more than 5,000 creative professionals who offer a “real time workflow”. Revenue tripled during 2015, and the service sees Asia as its key market for expansion: it has a presence in Singapore, Tokyo and Manila, and plans to enter Hong Kong this year.
 
Hao Chushi
Apps that take chefs into diners’ homes have been launched amid great fanfare and promptly sunk in the US. But hopes are high for China’s Hao Chushi (‘good cook’), which is using seed funding estimated at up to $8 million to push beyond its major city bases. Choose your cuisine and one of four pricing tiers – from romantic meal for two to banquet for up to 10 – and a chef will appear at your door to do the rest (though you still have to provide ingredients and utensils). Uber-style feedback mechanisms ensure quality.
 
Parking Duck
There are seven million drivers in Bangkok. But when it comes to finding a parking space, it often feels like the whole city is ahead of you in the queue. Enter Parking Duck, which co-founder and CEO Paruey Anadirekkul says is trying to solve “Asia’s biggest problem”. Hailed as an ‘Airbnb for parking’, it connects owners of spaces with commuters, enabling them to hire out parking slots. Numbers aren’t available to quantify its popularity yet, but the site has ambitious aims to expand beyond Thailand into other bustling cities including Singapore.
 
Etsy
A hugely popular online service that combines the ethos of part-work sites with the technology of marketplaces such as eBay, Etsy connects those who make, sell and buy unique goods. It currently has 1.6 million active sellers globally, hosting more than 35 million items for sale. And Asia has emerged as a key marketplace: the business is expanding rapidly into Japan and Hong Kong, though it faces competition from local players including Taiwan’s Pinkoi, which allows artists to open their own virtual storefronts.