According to a Master card report, gig economy transactions are projected to grow at an annual rate of 17% to hit the $455 billion mark by 2023. The rise of the gig economy fuelled by multiple factors like globalization, digitalization, and especially the 2020 pandemic, transformed the dynamic of tech hiring. 

Expansive use of the internet, embracing digital transactions, and quick adaptation of remote work culture provided a huge impetus to the gig economy. Freelancers, especially, were quick enough to grab the lucrative opportunities in the market to dominate the conventional workforce landscape. 

Questions like “Can the gig economy replace the traditional in-office workforce?” “Will the gig economy end the traditional tech hiring scenario?” are the most haunting ones. Let’s delve deeper into the issue to understand the realm of the gig economy better and find out its impact on the tech hiring landscape. 

What Is the Gig Economy?

The gig economy is a free employee market system where gig workers like freelancers, part-timers, and contractors fill up or occupy vacant positions instead of full-time or permanent employees. Employers hire gig workers to put their headcount spend on the check. 

‘Gig’ is a part-time or temporary opportunity where the employer and the contractor sign an agreement to work for a specified period of time. The pay range, duration of employment, scope of work and everything differs based on the terms of the agreement. Every approach has advantages and disadvantages. However, compared to traditional employees, gig workers enjoy a little more flexibility, higher pay, independence, and many more such perks. But they lack proper job security. Although some companies do offer social security benefits to gig workers too, it is not mandatory in many countries. 

The Rise of the Gig Economy

You must have heard or been hearing about the gig economy ever since the pandemic hit. But, the gig economy, otherwise referred to as the ‘sharing economy,’ or ‘crowdsourcing’ finds its roots back in the 1990s time period. It has seen unprecedented growth during the pandemic and business leaders have been thoroughly taking note of it. 

For example, in Mercer 2022’s Global Talent Trends report, 6 out of 10 executives voted in favor of the gig working model over the traditional employee model. The increase in this trend has particularly ballooned during the pandemic. Studies indicate that the gig economy will surpass the traditional workforce by 2027 at this pace. 

Here are some shocking statistics to provide a deep insight into the state of the gig economy: 

• According to an Upwork report, over 59 million of the American population freelance, constituting 36% of the American workforce. 
• An ADP research report reveals that 1 in every 4 employees in 40% of global organizations is a gig worker.
• The global gig economy is projected to grow at a CAGR (Compound Annual Growth Rate) of 15% till 2026. 
• Software & IT alone constitute 50% of the global gig workforce. 
• Only 33% of gig workers are concerned about job security. 
• 36% of freelancers pursue it as a full-time opportunity. 
• An average gig worker earns $5,120 per month whereas an IT employee earns around $6,000 a month. 
• 63% of gig workers mention flexibility as the biggest benefit of freelancing. 
• An average gig worker earns $69,000 per year compared to an average US household income of $59,000. 
• 59% of freelancers mention that they make more in freelancing than in traditional roles. 

Pros & Cons of Outsourcing or Contracting Your Tech Needs

Pros

• Cost Cutting

Hiring full-time developers are expensive. National social security policies mandate organizations to provide adequate social security net for their employees. In addition to wages, companies have to pay for over-the-top expenses like health insurance, paid vacations, training costs, allowances, and payroll taxes. 

Very few countries have social security and minimum wage policies set up for gig workers. Hence, hiring freelancers or gig workers seems like a quick cost-saving measure for many organizations. 

• Wider Access to the Talent Pool

The common misconception that hiring full-time employees means limiting the scope of sourcing a wider talent pool has triggered the behavioral change. Hiring gig workers or remote contractors usually means wider reach and better scope. In this method, companies have access to a larger talent pool of individuals with better skills. Plus, with booming freelance marketplaces like Freelancer.com, etc, it has become a lot easier to hire freelancers than ever before. 

• Long-term Commitment

Full-time employees are entitled to health insurance, family coverage, and a lot of other similar social security coverages. Full-time employees’ pay remains the same throughout their association with the company. However, especially in software & IT companies, the volume of workload differs based on incoming projects. For this reason, executive leadership prefers to hire short-term, part-time employees for a shorter time period based on the project load. This can help them both achieve their goals, meet their targets, and save a ton of money on the company’s headcount, once the project is finished.  

Cons

• Control

Freelancers usually charge on an hourly basis or project-wise basis. However, their role within the project & organization as a whole is highly limited. Employers can exercise complete control over full-time employees whereas the same is not the case with freelancers or contractors. 

With multiple freelancers located in different locations, ensuring team alignment and streamlining the project lifecycle is a true challenge for managers and executives. There should always be someone micro-managing freelancers, tracking their activities, outcomes, and invoice. This entire process wastes a lot of productive time of other employees resulting in revenue leakage. 

• Confidentiality

Freelancers are not committed to a single company like full-time employees. They work on a project-to-project basis and collaborate with multiple companies at the same time. Although some companies do sign NDA (Non-disclosure agreements), the trust and loyalty issue always keeps surfacing when you hire a freelancer. 

• Flexibility 

Freelancers work at their flexible times. As they juggle multiple projects at multiple companies, it is highly challenging to align their timelines with your in-house teams and project timelines. 

Impact of Gig Economy on Tech Hiring

The tech industry is projected to become a hotbed for growing jobs, occupying a major proportion of the job market compared to all the other industries. The shift in hiring gig workers instead of developers or full-time employees is already apparent. 

In addition, the number of people working in the gig industry has been consistently increasing. As the demand for tech skills like product development, coding, and product design increases, you can see an upward trend in HR leaders preferring freelancers over the traditional workforce. 

Also, companies looking at hiring in general – are no longer obliged to hire a full-time employee from their surrounding market. But, instead, access to wider market space enabled everyone to constantly look for better options. It means companies now have more flexibility and control over how and when they fill vacant positions. In addition, the rising number of skilled gig workers is also acting as a catalyst for this trend of hiring gig workers over regular employees. 

Hiring freelancers, indeed, offers flexibility and helps you save a good amount. Ever wondered about the cost of this approach in the longer term? Uncertain commitments, ill efforts, ineffective project management, growing unproductivity, and delayed development cycles – are just a few downsides to the process. 

How Would You Like the Best of Both Worlds?

Remote developer hiring models like Workfall allow you to do exactly that. 

Remote developers are a great way to find the best fit for your company within your payroll range. They are relatively more cost-effective and easier to scale with your growing business needs. 

With Workfall, you can hire world-class pre-vetted developers within a matter of two weeks. Like to explore more? 

Conclusion

The gig economy is growing and it’s changing the way we think about tech hiring. It is, currently, the huge force in tech hiring – not just making it easier to hire people but hiring people with experience, expertise, and the right set of exceptional skills. The result is that companies are finding hiring gig workers or freelancers more lucrative than recruiting full-time employees. 

Regardless of the trend, hiring remote developers is a great way to go forward. Parallel to the gig economy, you can also see the market for remote developers in a full-time capacity is increasing exponentially because of the benefits associated. They can work from anywhere, you have wider access to the talent market, and both you and them can choose your own work shifts. This gives both employees and employers enough flexibility over their processes. 

But it is not just about flexibility – also, innovation. Companies that rely on remote developers tend to be more innovative because they don’t have to worry about in-office dynamics or other kinds of similar distractions that slow down processes & innovation. With remote culture, employees can solely focus on their work and nothing else, which means they can come up with more and more ideas each day. In addition, companies that hire remote talent are more likely to attract better talent because of wider market reach.