By Ayush Dev Pant

The Gig Economy is infiltrating the global market, and it has caused Human Resource Management to be the most trending topic in the current business scenario. Since the Industrial Revolution, business owners have had the power and authority to hire their employees. The Millennials and the members of Generation Z seem to be the catalysts to change the long followed human resource culture.

Industrial welfare was the first form of human resource management. In the late 1800’s, 60-hour/week legislation was passed for children and woman. Since then, wages have been set by companies, and employees have been complying with it. This trend is going to be around for a while, but its paradigm is transmuting with time.

So, what is causing the shift in this paradigm?

Freelancing. According to the freelancing report, in 2016, an estimated 57.3 million Americans were freelancing, putting a staggering $1.4 trillion into the US economy. There are multiple factors influencing the change in the pattern of pursuing a certain career or job. Freelancing is a flexible and multi-income model of self-employment. Working as a freelancer gives one the leverage to set their own service value and select clients according to their convenience. Most of the freelancers are by choice rather than necessity. The traditional environment offers inflexible ambit which curbs the professional growth of the employees, and this is seen as one of the most influential determinants that leads to freelancing.

The event which fueled the ascending rate of freelancing was the 2008 recession. Full time jobs were impenetrable and self-employment was pertinent. Freelancing gained a new pace and people started realizing the dynamism which non-traditional employment offered. The recovering economy did not tempt the freelancers to go back to a traditional working environment. Freelancing is also discerned as a more financially secure means of employment as it is not limited to one or two revenue sources. Internet and the technology has a major share in enhancing the financial side of this model. The availability of diverse sets of tools and platforms enables a person to connect to people and companies all over the globe. According to a freelancing survey by Forbes, the percentage of freelancers making $75,000 to $99,999 per year hit 19% this year, up from 9% in 2014 while freelancers earning $100,000 to $149,000 increased from 5% to 12% in that same period. Those earning $150,000 or more, grew to 5%, up from 3% in 2014.

Is the corporate world ready for a U.S workforce that is 50% freelancing?

If freelancing continues to grow at its current rate, the majority of U.S. workers will be freelancing by 2027, according to projections in the Freelancing in America Survey. The traditional working environment is gradually moving towards the decline phase of its life cycle. This trend is bringing crucial challenges for business owners. One of the most pivotal issue for the current managers is creating a prominent working environment for the flexible personnel. The Gig Economy follows short-term, self-employed contracts, and this limits the authority and influence of the managers over the freelancers as they are their own boss. The freelancing model will also wane the accuracy of long-term financial projections as the price for their services is not set by the company. Finding the right freelancer with the right expertise at the right place will be a crucial challenge for human resource managers.

Freelancing is upscaling its influence in the market, but they don’t perfectly align with the companies as most of their model follows a traditional employment pattern of recruitment and layoffs. Fifty-four percent of people working in the Gig Economy say it takes too long to get paid. The payment mechanism and platforms tend to create major delays while the late payment decisions of companies come second. Working with clients all over the world also incurs extra transaction fees, and it is an area of concern for the self-employed. Freelancing also dispossesses employees with benefits which a traditional enrollment offers leading to further costs. The deeper integration of digital payment systems and the dynamic technological environment will solve most of the issues freelancers are facing today.

The future is freelance. Companies are finding ways to integrate freelancers with their plans and vision. Both parties are looking to align with each other in the most suitable way possible. The flexible workers today have enhanced decision making power while it is still up to companies to make the hiring decision. Now, it’s time for the parties to view each other as partners and build a strategic relationship. The future is said to be the era of Supply Chain Management, and it should not just be limited to materials. It’s time for companies to manage the supply of freelancers.