Thursday, November 10, 2016
There’s been a lot of talk about the so-called ‘gig economy’ of late; so what exactly is it?
The gig economy is the idea that you can make a living through a series of part-time or project-based jobs – like designing a small-business website or writing code for a large corporate project.
The IT gig economy is huge and its development has been extremely rapid in just the past few years. In 2015 the share of the workforce engaged in ‘alternative employment arrangements’ had grown to 15.8 percent, a jump of 9.4 million employees since 2005. By comparison, the U.S. economy gained just 9.1 million new jobs over the same time frame.
The tech sector is particularly suitable for gig economy work. For instance, the software development process has become well-structured and compartmentalized, making it simpler to parse out through contract work.
Some online-based services, like Uber, are linked with the gig economy, but make up just 0.5 percent of overall employment, the smallest section of this type of employment. Standard contingent work and contract employment still make up the biggest parts of the gig economy.
The workforce’s growing interest in flexible hours and various technological developments have been major drivers of the gig economy, but perhaps the Great Recession may have been the biggest driver of all. Job losses caused by the economic downturn had many effects, including forcing people to find new ways of making ends meet and a long extension of unemployment benefits that allowed many people to dip their toes in gig economy waters.
Some freelancers such as .NET Developers or Project Managers say they see themselves doing it for the foreseeable future. Others have said freelance work is a stepping stone to a more satisfactory job, and many of them say these are committed to contract work for their entire careers.
Even though freelancing has it downsides, like the constant search for well-paying work and the absence of benefits like company-subsidized healthcare, many say their experience as contract employees offers many perks and they have found resources to help them find good placements.
What the gig economy means for companies
The biggest public debate regarding the gig economy is over contract employees versus full-time workers. There are a number of repercussions tangled up within this distinction: Businesses have all manner of regulatory, legal and tax obligations for full-time workers that they don’t have with contractors.
Companies may be lured to use independent contractors as a low-cost workaround, particularly considering the Affordable Care Act’s mandate that companies with a minimum of 50 full-time workers must provide health insurance. However, the consequences for classifying employees incorrectly could be massive, with legal and financial penalties based on the size of the entire company payroll.
Running a company by the book doesn’t just keep the IRS at bay, there’s also the chance it will strengthen your connections with those who work for you. Establish a reputation as a company that treats their workers and contractors well, and you’ll bring benefits in recruitment and employee retention.
The IT community is a tightly knit and highly competitive space. Top companies are looking for strategic partners to help them find, manage, and keep top talent.
At Software Management Consultants, we regularly help companies leverage the gig economy to their financial benefit. If you are currently looking for a custom talent acquisition solution, please contact us through our website.