Breaking Down India’s Gig Economy: Insights into the Role of Startups and Its Impact on Workers

Insights-into-the-Role-of-Startups-and-Its-Impact-on-Workers

India has a burgeoning gig economy, with startups leading the charge in transforming how work gets done. 

As the world continues to evolve, so does the nature of work. The traditional nine-to-five job is no longer the only option available, and more and more people are choosing to freelance or work in the gig economy. This shift has had a significant impact on many industries, and startups are no exception. A recent report from The National Association of Software and Service Companies revealed that 65% of Indian businesses use gig workers, a rise from 57% in 2020. 

Some of the most innovative and successful startups in India, such as Swiggy, Ola, Zomato Urban Company, BigBasket and other quick-commerce businesses, which employ over half a billion workers, have pioneered this innovative facet of structured employment. In this article, we will explore the role of startups in India’s gig economy and what a robust gig market means for workers.

An overview of the gig economy in India

The gig economy refers to the hiring of temporary or part-time workers, usually through an online platform in project-based, hourly or part-time roles. According to Indeed, this workforce will grow to 9-11 million people by 2025. This growth is being fueled by a number of factors, including the increasing penetration of the internet and mobile phones, rising disposable incomes and the growth of online platforms that connect businesses with freelancers. Presently, the most common jobs in the gig workforce are door delivery (22% for food and 26% for other services), household/vehicle repair (16%), cleaning (10%) and personal care (7%). 

According to Sashi Kumar, Head of Sales at Truly India, the rise of services such as delivery and home services has led to a certain amount of formalization in the gig economy, with the exponential growth expected in the future years.

Indian startups’ role in the gig economy landscape

According to a forecast by The Associated Chambers of Commerce and Industry of India, India’s gig economy would expand at a 17% CAGR by 2024 and may expand 2X its pre-pandemic predictions, reaching a whopping US$455 billion. Dr. C. N. Ashwath Narayan, Minister of information technology (IT) for the Karnataka Government, believes that startups will continue to thrive in the country, along with the booming gig market, despite some periods of retrenchment. This new model of work is becoming increasingly appealing to startups, and they are capitalizing on its benefits.

Firstly, startups are often more agile and flexible than traditional businesses, enabling them to quickly adapt to changing market conditions and customer needs. This level of flexibility is particularly valuable in a dynamic economy like India’s, where the marking conditions are constantly evolving. Startups can scale up or down as needed without incurring the cost and hassle of hiring and firing full-time employees.

Another reason startups are drawn to the gig economy is that it provides access to a wider pool of talent. They can connect with freelancers and contract workers from all over India and even globally, thereby gaining access to a diverse range of skills and experience that may not be available locally.

Finally, the gig workforce is simply more cost-effective for startups. They don’t have to pay for employee benefits or overhead costs like office space, which can save them a significant amount of money in the long run.

One of the most notable examples of startups benefiting from the gig economy is Swiggy, an online food ordering and delivery startup. The company has used the gig economy to build a network of delivery partners who are able to make quick and efficient deliveries. This has helped Swiggy ‌expand its operations rapidly while also keeping costs down.

Another example is Ola, an Indian ride-hailing service startup. Thanks to the large supply of flexible workers with the rise of the gig economy, Ola has established a large network of on-demand drivers to provide customers with rides. This has made Ola one of the fastest-growing startups in India, and it is now expanding its operations into other countries as well.

Along with these two startups, many other Indian companies are making a mark in the gig economy landscape. These include Housejoy (an on-demand home services platform) Broomes (a platform to hire house help in India) and Urban Company (a home services platform that connects customers with service providers such as plumbers, electricians and cleaners). 

As more and more startups choose to adopt the gig route, it is likely to trigger a shift in India’s labor landscape. The trend is expected to have a ripple effect across other sectors of the economy as well, as traditional businesses also start to adopt these new ways of working.

Benefits and challenges for gig workers

Without a doubt, the burgeoning gig economy has several benefits for workers. The work schedule, for example, is highly flexible. You can choose to take a gig that offers higher pay rates or pick up other projects between jobs. Moreover, it provides an opportunity to diversify your skill set by experimenting with different roles. It can also act as a safety net for workers during economic downturns like COVID-19, as they can easily take on extra jobs to supplement their income when needed.

However, this type of work is often marked by income instability, with workers experiencing an abundance of jobs one week and then very few or none the next, leading to irregular incomes. Furthermore, gig workers are frequently exploited by their employers, as revealed by a report by Fairwork India that Ola, Uber, Dunzo, PharmEasy and Amazon Flex had deprived their workers of fair wages and conditions. They may be paid less than minimum wage, expected to work long hours without overtime pay or subjected to unhealthy and hazardous working conditions.

In addition, they may also not be entitled to any employee benefits, such as sick pay, paid leave, health insurance and retirement savings plans. This can make it difficult for contractual freelancers to make ends meet, especially when they are unable to work due to illness or injury. 

For instance, in May 2021, Kesavan, a delivery boy employed by City Link Portal Private Limited in Bengaluru suffered a fatal accident when returning from work. While his family is demanding indemnification for his death, the nature of Kesavan’s contract with City Link remains in the dark, as it was an arrangement from a third-party vendor. In a separate incident in June 2022, an online grocery delivery platform called Dunzo threatened to ban its delivery partners, who were mainly gig workers, if they took part in strikes calling for better pay and working conditions. 

In conclusion, it is expected that India’s gig economy will continue to expand, with startups playing a significant role in driving such growth. The project-based employment mode offers workers flexibility, diverse opportunities and a chance to earn a living on their own terms. However, it is also clear that gig workers face significant challenges such as income instability and exploitation, which need to be addressed by policymakers. To unlock the full potential of the gig economy in India, it is crucial to establish a regulatory framework that protects the rights and interests of gig workers while enabling businesses to operate efficiently. With the right policies and support, India can foster a sustainable and inclusive gig economy that contributes to overall economic growth and development.

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