Recruiting in the gig economy – how it’s different and what does it take

gig economy recruitment

The ‘gig economy,’ an economy dominated by freelancers, independent contractors, and other contingent workers, is fast approaching (or has already arrived, as some might argue). Although full-time, permanent employees still make up a majority of the workforce, the growth of the freelance workforce is outpacing the overall workforce growth in the US. Considering the rate at which the contingent workforce is growing, it is safe to say that a majority of the workforce will soon comprise freelancers. The growth of the freelance market, combined with the unprecedentedly low unemployment rate in the US, has shifted the power of choice from the employers to the workers. Employers and HR leaders are grappling with the issue of low employee engagement rates and are finding it hard to hold on to their top talent. Meanwhile, more and more skilled workers are happy working on short contracts with a series of different clients, without feeling the need to commit long-term.


To ensure organizations have their demand for skills fulfilled via the best talent, HR leaders must be aware of the phenomenon that is the gig economy, along with the associated implications, challenges, and opportunities. For this, HR leaders should not just leverage their prior knowledge and experience but also deploy the right HR technology and HR tech tools.


Gig economy: the implications


The emergence of the gig economy is a reflection of the paradigm shift that has occurred in the minds of a significant – mainly millennial – share of the US workforce. Most young workers, and even some older ones, are preferring freelance employment due to the increased freedom, flexibility, and great sense of self-actualization that comes with it. Although freelancing and short-term employment have always been around, the explosive growth of digital technology and the consequent boom in global interconnectivity has enabled the birth of a global freelance job market. It is much easier today for freelancers to find jobs or ‘gigs’ in, let’s say, coding, marketing, designing, or writing, from anywhere in the world. With so much freedom being offered at a lucrative work fee, it is natural for most skilled workers to prefer a gig economy. But the increasing preference for, and the consequent growth of, the gig economy is leading to numerous challenges for HR leaders.


: the challenges


One of the most significant challenges for HR managers operating in the gig economy is undertaking the legal compliance and documentation of freelance hires, who are spread across various countries and regions. Since each country or province will have its unique rules and regulations, standardization of recruitment processes is a herculean task.

Furthermore, retaining top talent becomes a challenge in a gig economy due to frequent shifts in the supply-demand dynamics. Freelancers are almost always dictating the terms of negotiation. As a result, freelancers have a tough time keeping both, freelancers and employers, happy.

Another challenge for recruiters is attracting the best talent available in the market. Attracting the best talent requires an organization to be viewed as the most preferred employer in a gig dominated job market. This, in turn, requires the recruiters to ensure that they maintain excellent working relationships with the freelancers, which is not as easy as it may sound.

HR leaders find it tricky to align the work attitude, ethics, and cultural values of the temporary hires with that of the full-time teams. Consequently, team collaboration and overall productivity in an organization suffer.  On the other hand, as there is no ‘long-term relationship’ between an organization and a freelancer, there is no incentive for a recruiter to invest resources in training such employees as rigorously as the full-time ones. Recruiters, therefore, land in a catch 22 paradox!

Communication and confidentiality is another dilemma faced by organizations hiring resources in a gig economy. Organizations need to determine the amount of information that can be shared with temporary employees, to ensure their smooth performance, while not giving away any sensitive information.


: the opportunities


The biggest benefit that employers and hiring managers can gain from a gig economy is the ease of finding skilled workers for non-critical functions that are not needed regularly. The ease of finding non-core skills means there is no need to maintain internal teams on-roll for contingent functions, ultimately saving the HR costs for a company.

Then there is the opportunity to hire freelance workers who specialize and are experienced, in niche skills. Hiring highly focused specialists for individual projects can be more beneficial than keeping on-roll generalists, who may entail more cost than return.


: the imperative


The most effective step HR leaders can take to keep up with the changes brought about by the gig economy is to learn and adapt. To ensure compliance with global labor and taxation laws, HR leaders will need to standardize their internal legal procedures with due diligence.

Encouraging a liberal work culture, offering flexibility by investing in remote working and digital business initiatives, and promising more lateral mobility are some important ways to ensure high employee engagement level and maximize employee retention. Increasing employee retention will prevent the need for depending on a freelance market for core functions and projects.

Standardizing the vetting and hiring protocol for freelancers and short-contract employees can make the job contracting process smoother and more efficient. Fairly appraising positive results and performance by freelancers can improve relationships with top freelance talent and can lead to increased preference as an employer in the gig market.


Using HR technology to source and hire candidates can go a long way in ensuring an easily replenished talent pool, even in gig economies and competitive job markets. Using HR tech tools that provide employers with real-time job market insights like Talismatic, employers can not only identify the exact locations to hire from for any given skill, but can also identify the passive candidates working with the competitors. A well-planned HR strategy and hiring framework, combined with the right HR technology, can guarantee a well-stacked workforce in any economy.


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