In an ideal world, growth is smooth and predictable, allowing businesses to hire and train the workers they need when they need them. This isn’t how things typically work out, though. Often, businesses will rush to grow their team to accommodate fast-growing demand, only to find themselves overstaffed a few months later. Alternatively, they’ll be forced into a round of layoffs after a bad quarter, only to find that they lack the talent they need to recover.
This issue is only exacerbated by Australia’s skills shortage. Hiring new talent often isn’t feasible on short notice. Instead, businesses need more temporary labour resources, who can help them to adapt their productive capacities in the short term. Some, such as retail businesses who might need seasonal support, can deal with this by bringing on traditional casual workers. This doesn’t work in high-skill industries however, where rank-and-file workers require high levels of education and experience to be effective. The answer for many businesses has been to leverage technology to access underutilised talent—in the “gig economy”.
Understanding the changing labour market
The term “gig economy” has become a polarising and occasionally dirty word over the past several years. In the popular imagination, it either represents a romantic ideal of professionals realising their creative passions without corporate constraints, or impoverished semi-employed college graduates scratching out a living in a world where regular employment is becoming increasingly irregular. Both of these views provide an inaccurate and damaging picture of the real gig economy, which has been diversifying and growing rapidly into an extremely valuable tool for businesses over the past decade.
The gig economy has grown and diversified
Over 4.1 million Aussies work as freelancers today, and nearly a million more take on freelance contracts in addition to their regular jobs. Of these, approximately half earn more than they did in their previous positions. This is possible because, while some might opt for freelance work in absence of other options, many talented, experienced professionals do so for personal reasons, or to pursue a more individual type of business success.
Besides the more traditional freelance professions, such as journalism or programming, the modern gig economy provides a breathtaking breadth of talent. It includes HR managers, salespeople, service personnel, project managers, marketers, administrators, logistics professionals, and niche specialists to accommodate the needs of businesses in diverse industries.
Freelancers make businesses more competitive
Dealing with a seasonal spike in demand, or attempting to implement a growth plan often requires additional labour resources. If that growth doesn’t turn out to be permanent, though, those workers might become a liability. Failing to pursue a growth opportunity, on the other hand, is self-defeating. By strategically expanding operations on a temporary basis, businesses can take advantage of more limited opportunities, and more easily reverse course if needed.
Unlike regular employees, freelancers are inherently limited in capacity and temporary—they last only as long as their contract, and the volume of work always remains proportional to costs. Because they come in a much broader variety of skills and experience than casual workers, they can also be used to fill any imaginable role in a far wider range of industries. Best of all, the same individuals can be contracted repeatedly, gaining important insider knowledge and experience with every new project.
This gives businesses important options that wouldn’t otherwise be available to them. Besides allowing businesses to attempt higher-risk growth strategies, it also helps them to take advantage of temporary opportunities. A cadre of familiar freelancers allows businesses to take on clients without long-term contracts, or to increase production to prepare for a seasonal spike in volume.
The gig economy keeps costs predictable
One of the biggest issues with hiring new staff is the need to be able to pay to initially hire and train them, and then to pay them in the long term. This isn’t an issue when making use of the gig economy. The total cost associated with hiring a contractor for a specific project can be set in stone from the beginning. When the project ends, the business and the contractor collect their respective profits and go on their way.
Financing flexible workers
Many businesses, particularly those who are already funding a primary growth strategy, don’t have spare working capital on hand to bring on workers—freelance or otherwise—to tackle a growth opportunity on short notice. Fortunately, Fifo Capital’s supply chain finance facility is perfectly designed to deal with this.
Supply chain finance allows businesses to ensure that their suppliers, in this case contractors, are paid on time (or early) by having their financier extend payment on their behalf. The business’ payments to the financier, on the other hand, can be deferred up to 90 days. As a result, businesses can hire the labour resources they need to do a particular project, and collect the revenues it generated before actually issuing any payment. The contractors, for their part, are paid on time as usual.
The flexible talent available via the gig economy, complemented by the financial options presented by alternative finance, offers businesses important opportunities and options. By understanding these, and learning to leverage them to control costs and boost growth, businesses can become more competitive and more resilient.