The future of gig economy amid rising layoffs

The Indian startup ecosystem has seen an unparalleled surge in investments over the last few years. Macroeconomic uncertainties due to global inflation, supply chain bottlenecks, and the Russia-Ukraine war have led to widespread recession fears, and investors have turned more cautious about spending, leading to a funding crunch. Startup CEOs announcing layoffs and blaming turbulence in the market have added to the feeling of helplessness among the youth.

According to Crunchbase, layoffs across Indian startups have already crossed the 12,000-mark this year as companies find newer ways to reduce cash burns and survive the funding winter. The edtech sector has been the most impacted as companies including Eruditus, Lido Learning, Unacademy, and BYJU'S resorted to layoffs to optimise their costs. The sector has seen sporadic growth in the last two years, with most companies growing in an unplanned way, pivoting and re-pivoting their business model.

With most education institutions reopening and offline teaching resuming again, many edtech startups are feeling more volatile and uncertain. While the education industry was the strongest beneficiaries during the pandemic, the threat of growth stalemate has forced many to hold back on hiring. 

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One’s loss, another’s gain

As per reports from talent consulting companies, around half of laid-off employees are subsequently hired by IT companies, product-consulting firms, and global captive centres (GCCs). While growth in startups has always been predicted to be a little dicey, techies tend to fall for the hefty pay cheques offered by most startups. However, the layoff trend just made many employees move towards a more secure and stable corporate work environment. Even when there is serious attrition in the IT sector, more often than not, companies try to maintain stability with better hikes and compensations, refined hiring, and improved work-life balance.

Meanwhile, another section of laid-off employees chose to try their luck in yet another emerging employment trend—the gig economy. There are around 15 million gig workers in India and the sector is rapidly adjusting to the most preferred working styles of millennials and Gen Z.

As India moves toward becoming a $5 trillion economy by 2025, the gig economy serves as a building block that helps the economy achieve the final goal of eradicating the gap between unemployment and income. Freelancers, cleaners, delivery executives, bloggers, consultants, etc are a part of the gig economy. In recent times, most gig jobs are platform-enabled, which also gives gig workers the flexibility to work for more than one contractor.    

Gig economy boom

Government think-tank NITI Aayog’s recent report on ‘India’s booming gig and platform economy’ estimated that India’s gig economy will grow rapidly. The report also gave recommendations on how the sector can improve and how the financial inclusion of gig workers is of utmost importance.

As per another report by gig tech platform Taskmo (FeedMyPockets), there has been approximately 17 percent month-on-month growth in people joining the gig workforce. The general population recognises 'gig workers' as low-skilled or medium-skilled workers such as cab drivers, delivery executives, and services providers like electricians, plumbers, carpenters, beauticians, etc. However, with the popularity of several gig job discovery platforms and the pandemic-led tech-driven hybrid work model, the demand for high-skilled gig employees such as independent consultants, administrative assistants, graphic designers, substitute instructors, tutors, content writers, and engineers etc has risen dramatically.

Why gig model is popular

Unicorns like BYJU'S, Unacademy, Flipkart, and Swiggy were the pioneers that drove the gig economy in India. To save on overhead costs, these companies hire gig workers for both skilled and unskilled jobs. The gig economy creates a mutually beneficial system for both employers and employees. Companies choose to hire gig workers on contract, and once the task at hand is complete, brands do not have to retain them. Gig jobs provide great flexibility in terms of hours invested, location preference, and the work at hand.   

A further detailed report on the layoffs has shown that most employees who lost their jobs used to work for sales and marketing roles, which is directly proportional to the spike in demand for field sales executives, business development executives, brand promoters, micro-influencers, and digital promoters in the gig segment. The booming gig segment has come a long way and brought economic benefits of productivity and employment to the Indian economy. Amid worries over startup layoffs, funding crunch, and shutdowns, most gig tech platforms have witnessed a surge in demand for gig workers across quick commerce, healthtech, fintech, and ecommerce sectors.