The year 2020 shaped up as a pivotal year in many ways. On the one hand, it disrupted people’s lives, health and the way they used to interact in a pre-Covid-19 world; on the other, it impacted the livelihoods of millions as businesses and individuals struggled to evolve and survive the pandemic. High-growth sectors like tourism and hospitality came to a grinding halt overnight; traditional jobs disappeared and consumers clamoured for all things digital that ensured speed and safety. New forms of work, driven by new technologies, are emerging fast, and the existing workforce must adapt and contribute in sync with the new normal.
However, job transformations mostly happened in sectors already disrupted by new-age tech companies, especially the startups, which have been a mainstay in the Indian economy for some time now. Incidentally, ridesharing app Uber and foodtech giant Zomato were the first to opt for a flexible workforce comprising freelancers and contract workers, bringing the companies several benefits in terms of productivity, cost control and profit margins. This breakaway from a team of permanent employees to short-term and expertise-driven contract work is popularly known as the gig economy. On-demand service companies may have adopted it first, but traditional corporate houses are also looking for this new breed of workers in the pandemic-induced remote work regime.
India’s gig economy has been growing steadily in the past couple of years. It is expected to see a massive jump in the post-Covid-19 era, given the current need for business agility and the young demographic’s focus on strategic roles, meaningful work and the freedom to pursue their passion without being shackled to a 9-to-5 job. Gig work allows people to choose their working hours, the projects they like and a pay-per-job model that enables them to work with companies that offer higher-than-average payment. As for businesses, the gig economy costs less and allows them to tap into a diverse pool of workers. The combination of saving resources and acquiring more experienced workers enable companies to scale faster as well.
According to Boston Consulting Group, a management consulting firm, India is home to 8 Mn non-farm gig jobs and it is likely to grow to 24 Mn in the next three-four years. India’s gig sector is expected to grow to $455 Bn by 2024 at a CAGR of 17% according to the Associated Chambers of Commerce of India (ASSOCHAM).
But this is one side of the story as the gig economy faces various challenges. For one, as most gig workers fall under the low-income category, they end up working extra hours to make ends meet. Further, pay-per-job often results in irregular incomes. Finally, as the workforce is not part of the permanent employee base, they miss out on all benefits and perks. Clearly, the role of businesses employing gig workers becomes more crucial as the regulatory infrastructure of the nation does not protect this particular market.
In essence, a balance must be struck here and followed meticulously so that the sector may evolve into a talent-first, goal-driven and less-hierarchical work structure instead of adhering to its much-maligned short-term, low-pay, zero-benefits model.
Keeping in mind the multiple benefits associated with gig work, players such as Bengaluru-based hyperlocal delivery startup Dunzo, Delhi-NCR-based home services marketplace Urban Company and Bengaluru-based doorstep two-wheelers repair startup Hoopy are tapping into this rising workforce. But the likes of Hoopy are well aware of the dark side of this ‘human marketplace model’ as discussed above.
“Using Gig economy successfully is a little tricky, especially where the gig workers are the front face of the company. The onus is on the companies to formulate policies , pay structure and benefits plans in a way that motivates the gig workers to abide by the set SOPs,” says Shashank Dubey, cofounder and COO, Hoopy.
The Balancing Act Of The Gig Economy
In December 2020, Bangalore-based Fairwork India, an organisation that researches workplace fairness, came out with the second edition of fair working conditions rankings by digital platforms. Among the bottom, three were Swiggy, Uber and Zomato — three companies leveraging the gig economy in a big way. In brief, the challenges of the gig sector have surfaced across workplaces and gig workers are bearing the brunt.
But things are even more complicated than they appear. The biggest business advantage of the gig economy is its agility. In simple terms, companies need not bear extra costs for acquisition and retention. As these businesses run on a tight budget and primarily focus their resources on core operations to scale and grow, offering full-fledged employee benefits to gig workers is not easy. On the other hand, many businesses have failed to ascertain minimum standards for their workers as they tend to have stringent measures in place.
The outcome does not augur well for businesses, though. According to a study by Oxford University’s Saïd Business School, workers are up to 13% more productive when they are happy with their work conditions. Moreover, absenteeism and lack of efforts by gig workers directly impact the brand image of a business.
Understandably, some businesses are taking steps in the right direction to bring about some much-needed change. For instance, in the same ranking by Fairwork India, Urban Company topped the list even though its business model is based on the gig economy. Other players who are innovating in the gig economy space include Hoopy and Flipkart’s logistics and supply chain division Ekart.
Hoopy, a two-wheeler repair and servicing startup set up in 2016, works with more than 200 mechanic partners and has come out with ingenious solutions to help its gig workers. Recently, the company has announced a Covid-19 vaccination drive for all its mechanic partners and their families and extended the offer to former workers who are no longer associated with the startup. Cofounder and COO Shashank Dubey has told Inc42 that its workers are getting vaccinated at the Narayana Institute of Cardiac Sciences in Bengaluru, and the initiative has been facilitated by the company’s angel investor Kumar Gaurav, VP, Kotak Securities.
Hoopy’s Take On The Gig Economy
Hoopy mainly works with independent mechanics from the unorganised sector and brings them under its brand as gig workers. The people hired by the startup are split into three groups based on their experience and skills. These include minor mechanics, general service mechanics and major work mechanics, and they are paid accordingly. The workers, designated as mechanic partners by the startup, also have scope for career growth as the auto repair company allows them to move up to a higher category when they have enough skills and experience. Senior mechanics are also entitled to profiles like quality-in-charge, service manager and trainers.
Hoopy’s mechanic partners initially undergo a seven-day training, followed by a period of mentoring by senior coworkers. In addition, the company has in place various soft-skill development initiatives to ascertain that its workers are able to provide a good customer experience every time. All mechanic partners get certificates for all training programmes they have undergone that help develop their portfolios.
Besides training and career development, Hoopy has developed a pay structure that ensures that the person earns a minimum amount every day. The startup also provides medical insurance and extra incentives for adhering to the standard operating protocols regarding the quality of repair and servicing. Dubey tells Inc42 that about 10% of all mechanics frequently cross the INR 30K mark per month, and the majority makes up to INR 20K. In the unorganised market, the national average pay for auto mechanics is INR 11-12K a month.
Hoopy had to shut shop temporarily during the nationwide lockdowns in 2020. But it tied up with Freshworld (doorstep fruits and vegetable delivery startup) to turn its mechanic partners into delivery executives so that they could keep earning. It also started a donation drive to raise money for its workers.
Hoopy describes its gig economy as respectful work culture. The startup regularly organises high tea events where all its people, right from the senior leadership to full-time employees to mechanic partners, gather and share their experiences.
The startup’s retention data reflects these efforts. A LinkedIn survey suggests that, on average, the retention rate of gig workers in an organisation is around 62%. But Hoopy boasts 90% retention of its mechanic partners.
“Traditionally, mechanics in India do not get their due respect as they are part of a highly unorganised industry. So, we try to build a work environment where their needs are taken care of. Perks like loans, insurance and intangibles like respect and pride go a long way,” says Shrivastava.
In spite of the pandemic-induced lockdowns and a significant investment in its gig partners since its inception, Hoopy managed to cross an annual recurring revenue of $1 Mn in March 2021 and aims to cross revenue run rate of $3.5 Mn by March 2022. But this revenue data does not merely underline the company’s financial health. It also proves beyond any doubt that striking a balance between business growth and good working conditions for the gig workers is possible. And it speaks well of the company culture without which no business can thrive.