Gig Manufacturing: Building for the Shared Economy

In an unprecedented catastrophic situation amid ongoing pandemic, Indian economy is struggling. As a result of disruption triggered by supply shocks, corporations across the country are faltering when it comes to the retention of workforce. Over the past few weeks, India has seen job losses and layoffs across the sectors, especially for the blue collar workers. With the extension in lockdown measures, Micro, Small and Medium enterprises (MSME’s) are struggling to support their workers, and we are observing mass layoffs across sectors. And the worst hit are the ones in the manufacturing sector.  

In an attempt to regain the momentum, cash strapped India Inc. needs to rework on business models to gain balance between traditional employment and on demand (gig economy) employees.

Understanding Gig Employment

Gig employment, an outlook completely different from the traditional work engagements is where a gig worker (flexible worker) can perform a specific task, requested by the service seeker (enterprises) on demand basis (by the hour). Gig workers include self-employed, freelancers, independent contributors and part-time workers, working for project based income rather than fixed salary. On-demand project based hiring keeps the operational cost down when compared to traditional setup with not too much burden on the employer and a help in the time of need for the worker.

…the Gig Economy of India is definitely marching towards becoming a strong component of India Inc’s strategy, as the sheer size of the gig economy is projected to grow at a CAGR of 17%, whereas it is likely to hit a gross volume of $455 billion by 2023.

ASSOCHAM quoted recently

Thus, a shift from a full time 9-to-5 job to an on-demand, freelance and task-based work engagements becomes ever more apparent.

State of ‘Manufacturing Gig Workers’

During lockdown period, manufacturing sectors were facing a lot of challenges, whether it be from the supply chain jitters, the lack of demand or letting the human capital drain out.

More than 100 million blue collar workers, accounting for 70% – 80% of Industry,  have gone without income in the past month as  reported by Economics Times.

Blue collar jobs refer to the duties which require physical abilities to perform their duties, most often in a non- office setting like construction site, production units, driving, asset delivery etc. Varying as per the situation they can be skilled or unskilled, waged or salaried.

Because of prolonged lockdown measures, majority of blue collar workers migrated to their native places. Forlorn manufacturing units are stranded with the dilemma even with the eased lockdown, how the system will cope with the momentum without the required human capital to operate.

Reverse migration, units severely hit by low human capital

As per the reports released by World Bank,

“The lockdown in India has impacted the livelihoods of a large proportion of the country’s nearly 40 million internal migrants. Around 50,000–60,000 moved from urban centers to rural areas of origin in the span of a few days.” Experts from the domain believe manpower creation will be the herculean task immediately after lifting of lockdown.

Industry representative from sectors (construction sites, manufacturing units like automobiles, Mobile phones, Food processing units, Small and medium enterprises) majorly affected by migration argue that raw materials and supply chain will be normalized in few weeks but the gap in human capital will prevail. Such shortage will affect the logistics and distribution channels as well, increasing the overall cost in medium term.

Mukesh Mohan Gupta, president of the Chamber of Indian MSMEs, said small businesses were still facing issues pertaining to social distancing, sanitization and difficulty in finding labor.

“For the labor still present in the cities, lack of public transport is a deterrent for movement to factories. Many businesses are reluctant to start because of fear of inspection by district authorities and subsequent sealing of facilities if things are not found in order,” as reported by The Economic Times.

Symbiotic Relationship: Gig economy and Production units

With technology penetration, gig economy can help a company in cutting costs and getting skilled workforce. Corporations find it cheaper to employ freelancers to perform specific tasks by avoiding the traditional administrative and compliance costs associated with regular employees.

Entrepreneurial journey is all about exploring new ways to create demand. In a situation of lockdown followed by pseudo lockdown of operations (due to unavailability of workers) business houses should consider restructuring the model. And the best way forward could be sharing and gamifying resource hiring by the hour.

Enabling ‘Gig Manufacturing’ model for Blue Collar Workers

The future of Indian enterprises and its gig economy lies in digital innovations and a shift to on-demand production. Think about a scenario: You have an apparel manufacturing unit, post-lockdown, started to produce PPE kits as an alternative to previous production line which was crippled due to low demand. However, you need to build up an optimum mix of workers skilled in making kits. Unfortunately, you realize it’s challenging to hire as there is major shortage of skilled workers in your area and the also funds are in short supply as well. What will be the most important need in this time? To hire by the hour, the limited workforce available. The available workforce would genuinely appreciate if it is continuously gainfully employed.

As per the survey by Gartner

‘63% of 137 senior executives find talent shortage to be a key concern for their organization.’

Gartner

Exceptional employees are waiting to be found.

While connecting the dots and interviewing the Industry leaders, a robust model to deal with crisis situation is structured.

Key Premises to Design for the Gig Manufacturing

1. Model is incorporated keeping three stakeholders in mind:
   1. The Employee (Gig worker)
   2. Business Units (creating demand for the workers),
   3. Technology Enabled Platform (medium to connect the dots).

2. Blue collar jobs are not dependent on deep rooted knowledge or skills, therefore workers at fresher’s level share equal rating and can be placed. Gradually with more and more work projects skill set will develop, that will result in higher rankings.
3. Production lines are on on-demand basis (hourly basis)
4. Workers are allowed to list their hourly rates or can be pre-determined by the platform. (negotiations is allowed).
5. Platform charges its commission from the employers and gig workers as a fixed percentage of wages or salary given.

Getting into the nuts and bolts of the model

• On-boarding of workers is the key challenge.

Thinking of one such way for on-boarding can begin from the laid off employees, reaching out to the companies that have recently drained their human resources. Database for ready-to-work verified employees will be created, with basic verification already completed by the companies for you. Such initiatives can be aligned with the promotional boards to expand the horizon and more workers can be listed, solving both unemployment and labor crunches at the same time. Rewards or tactics, vis-à-vis gaming logics, to entice or instilling the fear of missing out can motivate workers to have a higher return.

• After on-boarding, measuring the efficiency of workers is the next big step

A robust review mechanism is needed to create the worth of the platform and incentivize the workers to upskill for better hourly wages. Key to set up robust review system, transparency, credibility and authenticity. After the completion of the project, worker needs to document the completion which should be validated by the project manager. Also, review of the work performed in both qualitative (attitude of worker, efficiency, team spirit, etc) and quantitative (sharing the attendance sheet, completion of orders, working hours) terms.

• Remuneration of workers

Gig workers can list the hourly rates depending upon the experience, which need to be validated through the reviews. Like the freelancing platforms manufacturing units will list project budget and price points and can use reviews as filters, blue collar workers have the right to choose for whom to work. The remuneration is calculated from attendance logs of the manufacturing unit.

• Profile building process

In order to bring standardization, aim should be to create a universal profile of the Gig worker with universally accepted attributes about him or her. Components to add in profile:

1. Basic information (Name, Address, ID proof like Aadhar card, Pan card or any Government issued ID)
2. Contact information (Mobile numbers, Email ids)
3. Management review and ratings
4. Industry/ Sectors tags (previously worked in and interested to work for)
5. Current location
6. Verification

Some of the top Indian Startups bringing much needed spotlight onto the gig economy, are nowhere near creating a platform for Industrial Hiring. Though all these are about hourly hiring and billing for household chores.

1. Urban Company

Established in 2014, by founder Raghav Chandra, Varun Khaitan, and Abhiraj Bhal now has with a fleet of over 25,000 gig workers, has established its operations in 18 cities in India and also in International markets (Abu Dhabi, Dubai, Singapore, Sydney). Gurugram based company, founded in 2014, and disrupted the market by creating a platform to connect the service provider and consumer.

2. HouseJoy

Founded in 2014 by Kumar and Goel, HouseJoy is one-stop solution to sort all your home needs ranging from construction to maintenance, quickly, professionally and conveniently. Established in 13 cities, delivering variety of home services by verified & qualified professionals only.

3. Jimmber

Another Indian Startup where you can hire blue collar workers as a helping hand for your home.  Founded in 2014, Mumbai based startup was acquired by Quikr for $10 million in 2017. They provide additional training and counseling for bridging any gap that exists in their service.

The gig economy has a disruptive model to connect Service Givers and Industries for almost all kinds of skills and services. Gig economy has enormous potential, specially driven by the workers seeking flexible work schedules and power to choose the project which they want to work for. And manufacturers that want to hire on-demand workers in the effort to reduce wastage especially when the economy is in a downturn.

Although gig economy is marginal when compared to traditional engagement but gradually it’s getting momentum with the rise in the on-demand services. In India, almost 70% of corporations have already used gig workers for at least one task in 2018. Because of lack of stability in this ecosystem, workers continuously need to update their skill set and knowledge.  With the developments in technology and the emergence of artificial intelligence in work environments, the gig work models will continue to adapt, innovate and expand beyond asset sharing, service sharing, digital listing, and managed marketplaces and will become a significant component of the #futureofwork.

Source:

1. Economic times article: Covid-19 impact: After being locked down, companies now set to suffer labour pain. https://economictimes.indiatimes.com/news/company/corporate-trends/after-being-locked-down-cos-now-set-to-suffer-labour-pain/articleshow/75542263.cms?from=mdr

2. BCG report: Learning from the recession, the Japanese way https://www.bain.com/insights/learning-from-the-recession-the-japanese-way/

3. InvestIndia : Gig Economy – Shaping the Future of Work https://www.investindia.gov.in/team-india-blogs/gig-economy-shaping-future-work