In recent years, we have seen the rise of what is often referred as on-demand or access or shared or collaborative economy. On-demand economy can be defined as economic activities delivered, using a technology platform, that meet client’s demand of immediate fulfillment of goods or services. Both supply and demand sides use the power of internet to connect and exchange their offerings.
Today you can find a taxi, get medicines delivered, hire a plumber, order groceries – all at a click and your demand is met in a matter of minutes. This convenience and ease is changing the consumer behavior as new businesses go online each day.
Statistics show that this new trend has changed the way businesses serve people and has thus become the most talked about business term of this decade. According to Intuit’s on demand economy survey:
According to a Freelancers Union study in 2014, it was found that more than one in three workers — 53 million Americans — are now “freelancing”. In India too, we are going to find out that more and more workers exist in simultaneous categories – part-time job supplemented by temp/freelancing gig.
All this is the manifestation of technological innovations in the past decade. Internet has been a great enabler in bringing global community together and tapping into under-used resources. The growth of smartphones and a rising middle class keen to use them to make life more convenient is leading to a surge of on-demand commerce services to meet those demands.
This on-demand economy completely breaks the traditional mentality of having large offices, huge staff with guaranteed salary and benefits, heavy management teams to oversee quality of work. Now, you don’t need to employ people full-time. Choose the best available provider, just pay for the time the provider works for you and don’t bother about their insurance or provident fund.
The on-demand economy is also creating jobs and bringing work to people who otherwise are not able to find a decent job. These folks have all the freedom and flexibility to choose their work hours, their price and work on their own terms.
Now more and more of the routine parts of knowledge work are being distributed out to individuals, just as they were previously distributed out to companies. This could be bad news for the business models of professional-service companies which use juniors to do fairly routine work – thus providing the firm with income and the juniors with training – while the partners do the more sophisticated stuff. This ultimately benefits the enterprises that avail of these services with reduced burden, reduced risk, increased convenience and speed. On the other hand it also benefits people who value flexibility more than security: students who want to supplement their incomes; bohemians who can afford to dip in and out of the labour market; young mothers who want to combine bringing up children with part-time jobs; the semi-retired, whether voluntarily so or not.
McKinsey has estimated that on-line talent platforms, including the on-demand economy, could provide up to 72 million full-time-equivalent positions, and boost global GDP by $2.7 Trillion by 2025.
Today, the on-demand economy continues to move forward. In market segment after market segment, ubiquitous communications and very low transaction costs continue to give rise to new firms which aim to efficiently bring together consumers and providers of goods and services with their highly scalable platforms and innovative applications.
With growing consumer popularity and business adoption, the future of this economy is bright and will expand well beyond the industries it currently touches. Undoubtedly, the on demand economy is here to stay and grow.