There is a lot of talk about the benefits of the gig economy which is based on hiring more freelancers and contract employees. The gig economy is the new normal in business circles, and for good reason. Businesses are saving money, increasing efficiency and attracting a more diverse and talented workforce to address fluctuating labor needs. While full-time employees are still on the job, they are losing ground as the favored type of individual contributor based on a changing corporate landscape.
1. Using contract workers saves money
While some companies have been slow to fully embrace all the benefits of the gig economy, the number of owners and managers getting on board with using freelancers has grown significantly in recent years. Forbes reports that 57 percent of businesses are currently using freelancers to save money with 43 percent of those businesses saving 20 percent or more on labor costs.
One of the main savings that businesses benefit from by hiring a freelancer or contract employee is in benefit costs. Forbes claims that benefits total approximately 31 percent of an employee’s average earnings’ and benefits’ package. For this reason, it is no surprise that companies would rather save money by hiring a freelance employee when possible.
2. Embracing the gig economy and being open to hiring freelancers is an attractive recruiting tool
It is no secret that millennial’s and the younger Gen Z generation prioritize work-life balance when considering career options. Based on this reality, companies that offer new staff members the ability to work remotely as a freelancer will attract more recruits. Business.com reports that 51 percent of this group thinks that remote work actually improves their performance.
This conscious shift to flexible working conditions is notable and fuels much of the gig economy’s robust growth. At the end of the day, a company’s ability to compete is dependent on attracting top talent who increasingly value more freedom and flexibility.
3. The gig economy promotes corporate flexibility that solves seasonal hiring surge challenges
Most businesses cope with seasonal fluctuations. Forbes reports that 42 percent of companies use temporary or freelance workers during busy times to meet seasonal surges that demand extra help. By having access to a workforce that can be hired in days instead of months, a business can maximize profits during peak periods.
To provide some perspective, Forbes claims that Amazon hired an additional 120,000 or more workers to help cover the 2017 Christmas season. While most companies are smaller than Amazon and hire fewer employees to work during peak periods, business leaders can now accept large projects throughout the year because of the large workforce that is available to work at a moment’s notice.
4. Companies can spend more to provide a superior customer experience
Delivering a superior customer experience is much easier when a company is operating with a large, well-trained “on call” workforce. The gig economy has created this reality with many highly-qualified workers looking for short-term work at any point in time. Inc. reports that companies save a significant amount of money through reduced recruiting, hiring and on-boarding expenses. Bringing a freelancer on-board is much cheaper and faster than going through the hiring process to bring a permanent employee on-board.
5. The gig economy promotes diversity hiring practices
A more diverse workforce is highly desirable in today’s marketplace. With so many workers available for short-term projects, it is much easier for a business to pick and choose. The perfect employee with the best skills is often representative of a more diverse group of workers than any HR department is likely to select via a long on-boarding process that often caters more to pedigree than hard skills.
The business workplace is always responding to societal expectations and new technology. Technological innovations over the past couple of decades make working from home or anywhere else a viable option. Considering a company’s ongoing need to cut costs and increase quarterly Profit and Loss statements, it is no surprise that the gig economy has taken center stage as a way to meet business goals and satisfy the workforce’s evolving expectations for more work flexibility.