The on-demand economy is on the move. With companies like Uber and TaskRabbit growing in popularity, more and more people are looking into how this type of work can benefit them.
Despite the many benefits of the on-demand economy (more on this below), there are still many questions that need answered. This holds true both for companies hiring on-demand workers, as well as those who want to work in this capacity.
Business Insider defines the on-demand economy as follows:
“The On-Demand Economy is defined as the economic activity created by technology companies that fulfill consumer demand via the immediate provisioning of goods and services.”
Go back in time a few years and there were serious questions about the on-demand economy, including whether or not it could last. It was a common belief among many that this was nothing more than a fad.
Fast-forward to 2016 and this is no longer the way most people think. Instead, it has become clear that the on-demand economy is revolutionizing the way people work. Furthermore, and just as important, it is changing the way companies hire and start-ups are developed.
In other words, this is no longer a small trend with big potential. It is here to stay, with out of this world growth prospects. Does your HR department need free online recruiting software? Recruiteze is the solution you’re looking for. Click here to use it without any obligation.
The On-Demand Economy
For a better idea of just how big the on-demand economy has become, let’s take a look at one of the major players in this space: the ridesharing service Uber.
Earlier this year, Forbes examined Uber’s fast growth. Here is something to chew on:
“The documents show that Uber had gross bookings (total fares charged to app customers, before the drivers get their cut) of $3.63 billion in the first half of 2015. That’s up from just $2.93 billion in all of the prior year. So Uber’s overall ride-hailing business is strong: unless these figures fell off in the second half of 2015, it likely more than doubled its bookings year over year.”
In terms of growth, this is astronomical. This is the type of growth that Uber was hoping for on day one.
But despite the fact that the on-demand economy is popping and companies like Uber are growing at an ultra fast rate, there is something else to remember: big time growth does not always equate to profit.
This is the part of the on-demand economy that continues to rear its ugly head. The same Forbes article goes on to explain that Uber is running at a big loss:
“Overall, Uber remains massively unprofitable as of the data shown in these documents. GAAP losses (net revenue minus cost of revenue, operating expenses and other costs) totaled $671.4 million in 2014. Those losses expanded to $987.2 million in the first half of 2015.”
When you look at numbers like this, the first thing that comes to mind is simple: how is Uber still in business? Any other company running at such a large loss would have shut its doors a long time ago. But not Uber. Not a company that is a leader in the growing on-demand economy.
The Forbes article better explains how Uber remains in business:
“Such huge losses would put most companies out of business, but not Uber. The world’s largest private venture-backed startup has raised more than more than $9 billion in funding, including $2.1 billion in a round made public in December. Those huge fundraising totals are enabling Uber’s growth-fueled spending spree and will continue to do so for the foreseeable future. Cash and cash equivalents increased from $1.96 billion at the end of 2014 to $4.15 billion in mid-2015.”
Simply put, there are a lot of investors betting on the future of Uber. They realize the company is a major player in the on-demand economy, and that profitability will come at some point.
Why the Growth?
In this section, we aren’t going to focus on the companies that are growing the on-demand economy. Instead, we’ll examine why the growth is so robust. This comes down to one thing: a growing number of people are more interested in working for these companies than they are with traditional employment.
The reasons for this are varied:
- Control your own destiny. In some ways, working for a company like Uber allows you to run your own business. As a contractor of the service, you don’t have anybody telling you what to do.
- Tired of the nine to five grind? The on-demand economy puts this to rest once and for all. You can gain the flexibility you have been dreaming of, allowing you to spend more time on other areas of your life that are every bit as important to you.
- Opportunity to earn more. Traditional employees are growing tired of being held back by their employer. They want the opportunity to earn more money. By taking advantage of the on-demand economy, this is exactly what they get.
The on-demand economy is a two way street. There are companies that offer work and people who are willing to take it on. With benefits, such as those detailed above, it’s only natural to believe that this trend is only now beginning to grow. Scary, isn’t it?
How HR Needs to Evolve
With the on-demand economy here to stay, companies of all sizes and industries need to consider their role.
From staffing companies to recruiters to HR professionals, these people need to fully understand the growth of on-demand economy and how to deal combat any possible negative consequences.
Here are two strategies that have been proven effective thus far;
- Hire on-demand workers. This may not be possible for every company, as their business does not allow for such an arrangement, but others are realizing it is the perfect fit for them.
If you have yet to explore the idea of hiring on-demand workers, now is the time to make a list of the pros and cons. Furthermore, if this sounds like something that could work, put a system in place for not only hiring the best talent but managing workers in an effective manner.
- Give workers reason to believe that a traditional employment opportunity still has a lot to offer. Above, we discussed the many benefits of taking on on-demand work.
Employers can fight back against this by doing the following:
- Be clear when hiring workers that they have the opportunity to control their own destiny, such as through promotions.
- Provide a more flexible work schedule. Does it make sense to allow people to work from home? How about arriving earlier in the day or staying later when necessary? Flexibility is essential moving forward. This helps companies hire and retain the best talent.
- Provide an opportunity to earn more. This can include promoting from within, providing additional work when available, and giving annual raises to employees who perform at their peak.
By taking this approach, HR can evolve alongside the on-demand economy.
The Impact on Employees
The impact of the on-demand economy on employers is easy to see. What is often overlooked is the way this will impact employees, including those who are in the market for a new job.
In an overall sense, this is a good thing. And the reason for this is simple: greater opportunity.
Gone are the days when your only option was a traditional nine to five job. You can still search for this type of position, if you desire, but there are other ideas to consider. This includes jobs that are part of the on-demand economy.
Before becoming part of the on-demand economy, workers should answer the following questions:
- How will this differ from a more traditional position?
- What is the best way to join the on-demand economy?
- What are the top companies for hiring on-demand workers?
- Is it possible to earn the same amount (or more) money through this opportunity?
- What are the potential pitfalls associated with the on-demand economy?
There are people who are proud to call themselves an on-demand worker. There are also those who have experimented with this, just to find that they are not a good fit.
When it comes down to it, you will never know what to expect until you learn more and give it a try.
How to Find On-Demand Work
Are you interested in learning more about the on-demand economy, including finding a position that suits your skill set? Even if competition is fierce, you can carve out a niche regardless of where you live.
Finding on-demand work is easier said than done, but the process is growing as quickly as the economy itself.
You can search for on-demand work direct, such as by visiting a company’s website. Or, you can use a third party service that lists out all the opportunities that are available.
For some positions, such as those with Uber, you are best off heading straight for its website. This will put you on the right track to getting started without delay.
If you are unsure of what type of position you are seeking, a more generalized website is better for you.
Finding work as a freelancer, for instance, can be as simple as searching one of the many websites dedicated to this. This Entrepreneur article breaks down the top website for finding freelance worker, with some of the top services including:
- Demand Media
- College Recruiter
With sites like these, there is no guarantee that you will find work. This is in stark contrast to an opportunity, such a Uber, where all you have to do is sign up and begin to offer your services.
The on-demand economy doesn’t grow on its own. It takes companies willing to hire these types of workers. It also takes services, such as those above, with the idea of helping interested parties find work.
What to Expect in the Future
There is no denying the fact that the on-demand economy is hot, hot, hot. But here is what we don’t know: what will happen to this trend in the future?
For now, it appears that it is here to stay. There is no reason to believe that the on-demand economy will take a nosedive in the near future.
But just like anything in life, there is no guarantee. It is always possible that this is nothing more than a short term trend.
Despite the fact that many people are happy with their setup as a “gig” worker, there are concerns. Some of these are outlined in a recent U.S. News & World Report article. Check out this excerpt:
“On-demand workers say they want benefits, training and expense reimbursement, as you would expect. But interestingly, roughly half of them oppose regulation that would require on-demand companies to treat their workers the same as if they were employees rather than contractors. Those who oppose regulations that require gig workers to be treated as employees are, in essence, trusting the market: They assume that competition between companies (like Uber and Lyft) will force companies to pay workers fairly, without any regulation imposed.”
For now, due to the infancy of this trend, people are willing to overlook the downfalls of this work arrangement. This may not last forever, as noted above, with on-demand workers wanting more.
It is possible that a demand for higher pay, better benefits, and more training could drag down the on-demand economy, causing issues in the future. How big of a problem this truly poses is based largely on the companies that hire on-demand workers.
Will Ubser and Lyft make changes that their workforce applauds? Or will companies like these continue down the same path, hoping that things level off?
The same article examines the two different types of workers within this economy, explaining that they are in an entirely different position:
“In essence, the on-demand economy contains two very different segments among workers: the “Want Tos” and the “Need Tos.” The two groups may need different social policy. The “Want Tos” like their independence. Many of them may have another major time commitment, for example they might drive Uber only during the lucrative surge pricing periods, while at other times they work toward their graduate degree. They are “skimming the cream” of the on-demand economy. But the “Need Tos” are forced into the on-demand economy for lack of other opportunity, and they may not make as much money. The split between these two segments is close to 50/50.”
Interesting On-Demand Economy Statistics
If you don’t fully understand the on-demand economy, including what it brings to the table in 2016, you can learn a lot by reviewing some of the most important statistics associated with this growing trend.
The Atlantic shared a variety of interesting statistics on the on-demand economy, such as:
- 57 percent of on-demand workers are white.
- The largest percentage of on-demand workers are between the ages of 18 and 24.
- The majority of on-demand workers are single (65.7 percent).
- The median hourly wage of on-demand workers is $18/hour.
- 9 percent of people decide to become an on-demand worker for the flexibility.
- The number one reason a person stops working with a specific company is insufficient pay (42.9 percent).
Here is another statistic worth noting, based on the following question: could you see yourself working as an independent contractor for the rest of your life?
The answers may surprise you:
- No: 32.3 percent
- Not sure: 12.8 percent
- Yes, even if earnings decline a little bit: 1.8 percent
- Yes, even if earnings remain the same: 7.7 percent
- Yes, if the earnings increase a little bit: 14 percent
- Yes, if the earnings increase a lot: 31.4 percent
These statistics, in particular, should give you a better idea of what the future of the on-demand workforce looks like. There are people who are sure to stick with this for as long as possible, but they could be influenced by wages. There are also those who are likely to bail out as soon as something better comes along.
Final Thoughts on the On-Demand Economy
The on-demand economy is relatively new, meaning that we don’t have a true idea of what to expect in the years to come. What we can see right now is that this is a growing trend, with tens of millions of people already moving in this direction.
For the time being, the on-demand economy is changing the way companies hire talent. It is also changing the way recruiters and staffing agencies search for qualified candidates. And it is most definitely altering the approach of those who are seeking employment.
It is important to fully understand the impact of the on-demand economy on both companies and employees. There are times when this trend appears to be a bad thing. There are also times when it looks like something that is helping a lot of people out.
What are your thoughts on the on-demand economy? Would you ever try your hand at being an on-demand worker? Do you know anybody who has done this in the past
If you have anything to share, be sure to do so in the comment section below. This is a topic that can be approached from many angles.
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