The gig economy is a global work in progress. Internet of Things (IoT) connectivity, shifting demographics and changing employer needs are re-shaping the global employment landscape into a freelance-driven environment that includes both benefits and challenges for employers and contractors.

IoT and Connected Technology

Among the key factors driving the rise in the gig economy are worker mobility and technology that enables people to work together from remote locations. As the digital economy evolves, freelancing gives companies more flexibility when it comes to talent management. At the same time, it enables remote workers to connect anytime, and from just about anywhere.

While newer tech companies have embraced the notion of having a leaner and more decentralized workforce, some companies are still structured around a more traditional employment model. But the economic benefits of reduced overhead are a powerful elixir for employers of all sizes.

In fact, one of the hallmarks of the so-called fourth industrial revolution is that it is not creating massive amounts of new jobs. Technology is helping to fuel economic growth that is not necessarily increasing total employment. 

According to Diane Mulcahy, author of The Gig Economy and an adjunct professor at Babson College, “If you think about the future of business and of companies, and you look at Silicon Valley for that future, you're not seeing a lot of full-time jobs."

Not only are there fewer opportunities for full-time job seekers, employers are increasingly viewing hiring full-time employees as their last resort. Full-time employees are expensive—and they often require rigidly structured, physical work environments that are inefficient and expensive to maintain.

Ultimately, says Mulcahy, “You have to structure your workforce and your company in a way that allows you to attract and retain the talent you need to be successful, and increasingly that looks more like independent work than it does traditional full-time employment."

The Future of Work

The Gig Economy represents a fundamental shift in employment around the world. For employers, the bottom line is driving this new world order. Workers are, on the other hand, opting for self-contracting jobs out of both necessity and choice.

“Workers are figuring out that they need to work differently, because there's no job security in our economy anymore," Mulcahy says. “At any time, even if you're a full-time employee, you can be laid off, let go, downsized, right-sized, off-shored, outsourced or contracted out."

There is uncertainty for workers at every skill level. But the most vulnerable are those people with the fewest skills. “When you think about low-skilled workers, one of the reasons they're moving into doing things like driving for [rideshare companies] is because they want to be able to control how much they make, and when they work," says Mulcahy.

Side hustles, she says, can give workers a flexible way to earn extra money or test a business idea—and many people are choosing to be contractors. “When you interview independent workers, pretty consistently, more than 75 percent say they're working this way by choice," Mulcahy says. “A vast majority of them say they don't want to go back to working full-time—for any amount of money."

You have to structure your workforce and your company in a way that allows you to attract and retain the talent you need to be successful, and increasingly that looks more like independent work than it does traditional full-time employment.

—Diane Mulcahy, author, The Gig Economy

Those shifting cultural norms are impacting the growth of the gig economy. Millennials and Gen Xers, for instance, are drawn to jobs that don't require long commutes and sitting behind a desk all day. That's ultimately good news for some employers because, Mulcahy says, there is fierce competition for highly skilled independent workers.

The New Normal

In many developing countries around the world, freelance work has long been the norm. Workers everywhere have often patched together whatever they could to make ends meet.

While the gig economy has exploded in the U.S., it's still evolving in Europe. “It's encountering a lot more resistance because it is threatening the protective employment laws and regulations that exist in Europe," Mulcahy says. “Its growth is being slowed by the regulatory environment. The gig economy is more threatening to them than it is here because there isn't a framework for job security in our economy."

On the other hand, in the EU and other countries that provide national benefits, such as health care, employees are less reliant on employers. “In many ways, it's easier for the workforce to transition from full-time work to independent work, because they can access those benefits much more easily on their own," Mulcahy says.

What's more, she notes, gig workers in the U.S. face a separate self-employment tax that contractors in many other countries do not have to contend with. In the UK, for example, she says there are actually tax advantages for working for yourself.

Still, as the global workplace continues to change, the impact is being felt across the political, economic and social spectrum. The reality is that there is less job security than ever before. Baby boomers grew-up in an era in which, at least in more developed countries, they had some degree of certainty in terms of the job market. But for millennials and Generation X, Y and Z, that sense of safety and security is gone.

The lack of job security transcends demographic segments and geographic boundaries, and redefines the work environment. “Companies aren't willing to offer it and, as a society, we're not willing to mandate it," Mulcahy says. “The gig economy looks pretty appealing for that reason, because diversification reduces risk."

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