The Emerging New Order: Exploring New Ways to Build an Internal Gig Employment System for IT/ITES Organizations

1. Introduction

India is emerging as a superpower, with a strong IT powerhouse and among the world’s largest five economies and over a billion potential customers [1]. Over the last couple of decades, the Indian IT industry has been a leading sector contributing to its economic growth. In 2017, the IT industry contributed nearly 8% to India’s GDP, providing direct employment to almost four million people and indirect employment to nearly 10 million people, and is approaching US $ 200 billion by 2021 [2]. With over 500 global delivery centers employing over 600,000 foreign nationals, the Indian IT industry has established its IT and BPO services dominance. For the continuous growth of this industry, intellectual capital availability is key to sustainable competitive advantage. Despite the burgeoning population, the workforce shortage in the IT sector looms large [1]. This constrains the Indian IT industry’s growth potential exploring non-linear revenue growth models [2]. With skilled talent shortage continuing to limit the industry growth [1, 3], non-linear initiatives of growth are urgently required. The survival and success of the Indian IT industry in a post-COVID-19 world depends on how work is re-imagined, redefined, and the workplace is restructured accordingly.

COVID-19 has presented an unprecedented opportunity for IT Service organizations to transform the established paradigm of working. In the new world of work, the office building or factory floor is no longer synonymous with “workplace” [4]. With clients willing to embrace the “anytime, anywhere” working, IT organizations equip their employees with the required infrastructure support and enable their remote working with requisite changes in policies and incentives. Agility and resilience are fast becoming the most appreciated competencies of employees. An uptake in demand for IT and IT-enabled services will require IT organizations to add more employees with digital skills in the future, resulting in a skew between talent available and talent needed to support the industry. The World Economic Forum’s recent study on ‘Future of Jobs- 2020’¹ shows that 90.3% of companies will provide more remote working opportunities, and 87.1% are accelerating the working process’s digitalization. 58.1% of organizations are accelerating tasks’ automation, 67% are more likely to hire new temporary staff with skills relevant to new technologies, and 65% of organizations are likely to outsource some business functions to external contractors. In comparison, 56% are likely to hire freelancers with skills relevant to new technologies. The trend of hiring more gig workers is an outcome of the economic crisis and is stronger in the IT, data, and technology service sectors [5] where skill obsolescence and mass layoffs are expected. However, gig working is associated with significant risks of income fluctuation, career path uncertainty, social isolation, low psychological well-being, and increased psychological dysfunction [3, 4, 6]. The data clearly shows that the global labour market is shifting towards a new equilibrium in the ways of working and the division of labour. However, utilizing external gig workers does not solve the talent shortage problems plaguing the IT services industry. Additionally, these external gig workers add to the cost. Therefore, we explore a new way of working, which integrates facets of gig working, but within the internal workforce of an organization, thereby reducing the cost burden and alleviating the talent shortage problem.

Based on the self-determination theory and the dynamic capabilities framework [7], we argue that internal gig organizational processes will allow the industry to effectively and efficiently address the talent shortage. By embracing this opportunity with commensurate enabling structures, IT/ITeS organization can sustain their growth trajectories and retain a competitive advantage in a rapidly changing technology environment and shortage of qualified talent to support the growth.

The proposed new mechanism requires reconfiguring internal and external ecosystems and providing enabling processes. However, the challenges of institutionalizing this new way of working are not clear. Our study, therefore, adopts a qualitative research approach to understand the mechanisms to institutionalize internal gig working, the potential issues such a system may face, and then suggest an internal and external enabling framework that organizations need to adapt to support internal gig work.

2. Gig working

Gig working has been defined as “the temporary contract work that connects self-employed workers directly with clients via a digital platform”([8], p 2). As alternative work arrangements are increasing, both in the variety of schemas and in numbers of people opting for them [9], gig work is emerging as a popular alternative to the conventional paradigm of regular employment. A gig economy is a free market system where temporary positions are common, and organizations hire independent workers for short-term commitments, fundamentally through a platform-enabled digital marketplace [10].

In the 2000s, the rapid transformations in information and communication technologies enabled the digitalization of the economy and the Internet and smartphone popularization. As a result, on-demand platforms based on digital technology have created jobs and employment forms differentiated from erstwhile offline transactions by the level of accessibility, convenience, and price competitiveness. In general, “work” is described as a full-time worker with set working hours, including benefits. But the definition of work began to change with changing economic conditions and continued technological advances, and the change in the economy created a new labour force characterized by independent and contractual labour. The workplace is changing, and with it, the concept of the employee, the employer, and organizational relationships are becoming more complex [11].

Workplace flexibility arrangements have been categorized along the dimensions of scheduling work, locational flexibility, and flexibility of employment relationships [9]. The gig is the online mediated work arrangement that provides maximum flexibility on all three dimensions [8], along with individuals to create “mosaic careers” ([3], p 25).

With jobs becoming unstable, individuals opting for gig working may prefer it due to the high work autonomy, potential for work-non work integration, better management of career opportunities resulting in boundary-less, individualized, and whole life careers [3, 6]. On the other hand, risks associated with gig working involve uncertainty of work, sporadic pay, lack of benefits such as welfare and insurance, social isolation, and possibly less developmental opportunities and low psychological well-being, and increased psychological dysfunction [3, 4, 5, 6]. There is also a differentiation in workers’ skills and qualifications and the types of platforms that populate these workers’ segments. Highly skilled workers are better equipped and more employable and can better cope with ambiguity than low-skilled workers [11].

The Covid-19 pandemic has significantly impacted people’s working lives and changed working arrangements for regular employment relationships. Flexible working hours and locations, temporary agency work, and newer forms of subcontracted work, such as gig working, have emerged as possibilities [8]. Also, the growth in gig working is attributed to low entry barriers, increased technological advancements, and high levels of flexibility that enable workers to work wherever and whenever they like [5]. The pandemic has presented opportunities for individuals and organizations to explore the potential emerging schemas in work relationships, both short-term and long-term, which enhance flexibility and build resilience [8]. The current labor market is shifting towards precarious work, with the market’s composition and characteristics evolving rapidly [6]. Studies have indicated that workers are willing to sacrifice 8–20% of their income to maintain their desired flexibility of working anywhere and anytime [5]. The changing work arrangements have the potential to develop new paradigms that enable career development, address work motivations and behaviors, and help organizations with multiple desirable outcomes of managing talent, increasing profitability, and encouraging flexibility in managing talent demand variability. Organizations are presented with an opportunity to alter their business models as employees expect more flexibility and an employment structure that advances with technology [12]. Practitioners need to be supported by academic research that helps understand the challenges and constraints of gig working and focuses on building more compatible HRM practices [11].

Basis this emerging context, the needs of the highly skilled workforce which is in short supply, and the business challenges of managing profitable growth, our study focuses on the following research question. How would IT and ITeS organizations build an internal gig ecosystem within their organizations? What external and environmental factors need to be considered to enable this? What would be the motivations and resistance to this new way of working by these organizations’ internal workforce?

3. Theoretical premises

Our study is based on the Dynamic Capability Framework to explain the need and rationale for organizations to adopt internal gig working and Self-Determination theory to justify the appeal of this new way of working for the permanent employees.

Competence, autonomy, and relatedness are the fundamental needs per Self – Determination Theory [13]. These needs’ satisfaction leads to intrinsic motivation and psychological well-being [10].

Gig work, in its current avatar of temporary work undertaken by external workers, appears to be a prime example of a boundary-less work type, with low thresholds for crossing between platforms, lack of hierarchical reporting relationships, low geographical and time constraints, and high levels of autonomy in task selection [11]. However, the expected complete autonomy over where and when to work is still bounded, with the automation of decision making, new forms of control and surveillance, and regulated work arrangements, ratings, and evaluations [10]. Additionally, work and economic uncertainty and lower organizational identification reduce organizational commitment building and engagement [14, 15]. This dimension of external gig working does not align with the psychological need for relatedness and affiliation. This aspect may be needed for a high-skilled workforce.“ Established findings on organizational leadership, identity, culture, or commitment may not be readily applicable to an emerging, dispersed, desynchronized, anonymized workforce”([12], p 2). Constraints of the digital intermediating platforms create information asymmetries, which may turn into power asymmetries [10, 14].

The potential downsides of the technology-focused flexible, fluid, and short-lived gig working can be diminished by close work relationships and the advantages of traditional internal HRM practices [12]. While organizations may view gig working as an alternative to recruitment and selection of internal labor markets, they may be better served by developing policies and guidelines to support an internal gig work design. By considering job crafting, structural factors, and personal factors for internal employees while enabling gig-like flexibility, the relevant work characteristics of task autonomy, knowledge characteristics of skill variety and job complexity, social reputation, and self-efficacy can be maintained. Simultaneously, the negative aspects of an external gig working, uncertain career path, fluctuating income, psychological stress caused by social isolation, and lack of organizational identity are mitigated.

Theoretical developments in organization strategy and organizational economics recommend leveraging organization-specific factors to help provide a competitive advantage. By capturing entrepreneurial rents that stem from fundamental organizational level efficiency advantages, organizations can develop and exploit dynamic capabilities [7]. This approach focuses on “rents accruing to owners of scarce firm-specific resources”([7], p 513). Applying the dynamic capabilities perspective to service innovation is recommended for service-oriented firms to retain their competitiveness [16]. Service organizations need to develop proficiency in service design and reconfigure fundamental elements of their business model. For IT/ITeS service firms, the highly skilled workforce is a source of competitive advantage. Rapidly coordinating and redeploying these internal resources would be an innovative response allowing organizations to renew competencies congruent with the changing environment.

4. Method

Given our research questions’ nature, we adopted an explorative-qualitative empirical approach (involving in-depth and focus group interviews) for this study. Past studies have used qualitative methods to capture dynamic capability in organizations [16, 17]. The interview-based techniques typically focus on problems that are not immediately gullible, requiring unique exploration and analysis methods instead of descriptive and interpretive research using statistics [18, 19] and help understand processes not well explored. To build the correspondence between theory and data, we looked for replication logic to test for emerging theoretical insights [20].

Focus group discussions and face-to-face interviews were conducted to collect data for analysis. The focus group element approach helps evolve a collaborative inquiry to co-produce knowledge about a complex problem [16].

In the context of limited scholarship and understanding the plausible challenges and opportunities of internal gig working, we conducted initial focus group meetings with individual contributors and project managers from a leading IT services organization based in Bangalore to develop appropriate questions. This was followed up with in-depth interviews of 27 participants. One of the authors works in the organization, and the authors’ contacts were leveraged for the purposive sampling of the target participants. The main aim was to ensure that interviewees represented individual contributors, managers, and business leaders, had significant active work experience and tenure within the organization to understand the organization’s nuances, and a gender balance congruent with the industry representation. The interviews helped us understand the acceptance and challenges of setting up an internal gig platform and process. We interviewed these individuals as these professionals are the key informants [21], who can provide useful insights and minimize response errors. We established the informants’ credibility by capturing the overall evaluations of responsibilities and knowledge of the focal organization’s practices.

Among the 27 participants of the study, 9 were females, and 18 were males, the demographics of the population had given in Table 1. All the participants are from an engineering background with experience ranging from 4 years to 30 years. Among the participants, 13 had a total experience of more than 20 years; 9 had experience from 10 to 20 years, and 6 had 4 to 10 years of experience. Participants were selected across different functions, levels, and roles. The sample includes engineers, consultants, managers, heads, Assistant Vice President (AVP), and Vice Presidents (VP) of the various delivery functions.

Since much of this research is an exploratory analysis, the relevant research questions focused on the challenges, both internal and external in IT Service organizations and the managers’ and leaders’ perceptions of what was needed to accommodate this new working way. We specifically wanted to discover individual programmers’ challenges and motivations in embracing this new form of working. We also wanted to understand the managerial and leadership issues, concerns, and possible solutions in building an enabling environment. A semi-structured interview was prepared based on previous external gig work studies; all the questions were open-ended. An in-depth interview protocol was used to explore the personal insights, viewpoints, and opinions that provided the flexibility and freedom to change the directions and explore additional paths. After selecting the participants, the purpose of the interview was clarified, consent was acquired from them, and confidentiality was assured. The time and place for the interview were decided as per interviewee’s convenience and comfort. All interviews were face-to-face interviews, and a rapport was build at the starting to ease the process. All the interviews were voice recorded, and interviewers made personal notes. Depending on the interviewee’s answers, some interview questions were skipped, and the questions’ order was changed across research participants. While the interviewees were allowed the lead the conversation, many probing questions were asked to make an in-depth exploration of the topics. The average interview time was thirty to forty-five minutes. The interview transcription was done by one of the authors and comprised of 121367 words in total.

The researchers worked independently to develop their own clusters, representative statements and to complete the coding. While analyzing the data, we sought the help of our judgment, literature, and expert advice to explicate theoretical dimensions. The coding list was then exchanged among the researchers, the rationale for coding was explained and debated, and the next iteration of cluster/coding was developed. We also collected and examined expert reviews for all the categories to ensure that: 1) researcher biases are minimized in our analysis, and 2) the emergence of theoretical dimensions from the data. An abridged version of the findings is provided in the following section. Based on the constant comparison of data and theory throughout the data collection and analysis process [22], a framework emerged indicating how organizations foster ethical competence among their employees.

5. Findings

All respondents agreed that Gig working was emerging as a popular mode of employment for individuals seeking autonomy and flexibility in the choice and time of work. The discussions with the respondents provided interesting insights into an internal gig working, as well as enabling and motivation for sustaining the same. Based on the discussion, four broad themes have emerged from the data: motivation to work in an internal gig, client support, and acceptance, systemic organizational enablers, the role of leadership.

5.5 Framework for developing an internal gig working

Basis the findings, we propose the model (Figure 1) to institutionalize internal gig working within the IT Service organizations. In other words, leaders can increase or decrease each of these activities’ effectiveness and impact the alignment among them. The participants highlighted that not only internal fit but also external fit is critical. As a result, we positioned leadership as a link between the organization’s desired state and organizational activities. This is consistent with the existing literature. For example, ([26], p. 458) suggested that leaders need to “articulate a vision that focuses on employees’ attention on their contributions.”

Since IT Service organizations cater to client needs, getting the client concurrence on inducting internal gig workers needs to be navigated. With concerns on the quality of talent, work accountability, data privacy and security, and mandatory compliances emerging as some commonly cited concerns, clients may resist this model. Additionally, if value appropriation is not managed in the service contracts, the clients may have no incentive to allow this model of working to flourish.

The IT Service organization has to set up an enabling ecosystem, including infrastructural support, gig-work internal market platforms, robust performance management, reward systems, career paths for I-Gig workers, and employee support systems to help employees navigate and adopt this. Not all employees may adopt I-Gig, but motivations may differ for ones that may experiment with this new way of working. The organization’s HR practices would significantly shape I-Gig’s adoption and acceptance in IT Service organizations.

The success of institutionalizing I-Gig in IT/ITeS organizations would hinge on successful change management on multiple fronts. We argue that a weak link in any of these dimensions may derail the entire mechanism within organizations looking to adopt this.

6. Conclusion

The workplace is changing, and the concept of the employee, employer, organizational relationships are becoming more complex. Alternative work arrangements are increasing, both in various schemas and in numbers of people opting for them [9]. To sustain gig working, all the stakeholders should understand the challenges and constraints of gig working and focus on building more compatible HRM practices [11]. Gig working, as a phenomenon, has seen a significant recent growth trend. This can be attributed to low barriers to entry, flexibility, i.e., enabling workers to work whenever and wherever they like, made feasible by technological advancement [5]. However, the pitfalls of external gig working necessitate the exploration of new models of internal gig working. Internal gig working in organizations helps build connections and provide a broader purpose to individuals, establishing work identities and legitimacy, a sense of self-esteem, and security [4]. While these can be argued to enhance productivity and profitability, there have been studies to understand the challenges of building an enabling ecosystem within organizations.

Our study found that organizations need a multi-pronged approach to build an internal gig environment in the workplace. Internal gig working can emerge as a viable solution since the organizations can benefit from labour cost reduction, increased flexibility, enhanced scalability, and immediate availability of efficient labour [14]. Workers will also benefit from increased work opportunities that were not available before, low barriers to entry, and more flexibility.

The role of leadership in developing and incubating this system and orchestrate the appropriate change management is fundamental to the new order of working.

The three significant stakeholders in accepting and promoting I-GIG in IT and ITeS organizations are the clients, the IT/ITeS organizations, and their employees. We examined the potential concerns and suggest the commensurate mitigation for each of these stakeholders.

7. Client organizations

The primary concerns of client organizations revolve around Data and IT security, talent quality and availability, on-time project delivery, and project costs. For enabling I-GIG, clients may have concerns about how data privacy and confidentiality are maintained. The solution is to ensure appropriate rights, non-disclosure agreements, and robust IT security and infrastructure support enabled by the client and IT service organization, all of which can mitigate this risk. Many clients vet the quality of talent being inducted to manage the project delivery. The same practice may be continued for I-GIG working. However, IT service organizations may also provide assurances on on-time completion and quality standard of project delivery and circumvent the need for client interviews. The conventional models of project pricing (Time and Material, Fixed Price Project), may evolve to a more mature outcome-based pricing.

Additionally, value appropriation accruing from I-GIG working in the IT/ITeS organization may be shared with the client through changes in the master service agreements. This could incorporate a change in pricing for a certain percentage for I-GIG working in the client projects. With penalty charges enforced for project delays, a reduction in project costs is likely to be attractive to the client organizations since this model’s risks would have been mitigated.

8. IT/ITeS service organization

The onus of making the I-GIG successful largely rests on the IT/ITeS organization.

• Talent Matching: The organization needs to set up an internal marketplace platform to make gig opportunities visible to the internal workforce. Most mid to large-sized organizations have well-developed talent management platforms, which leverage artificial intelligence and machine learning to manage the talent demand–supply coordination. Minor changes in this platform would make visible the talent demand to the workforce, allowing employees across all locations to apply as per their interests and motivations. Additionally, the platform would need to manage the time and work outcome allocation between projects for I-GIG workers so that they have the required flexibility to juggle multiple client demands.

• Performance and Reward Management: Conventional performance management systems are designed for a one-to-one project mapping of employee and client projects. With I-GIG workers simultaneously engaging with multiple projects of varying durations, the performance management system would need to align with this one-to-many I-GIG to project relationships. The same talent demand-matching platform may be enhanced to provide performance management and reward disbursement, akin to the Uber platform. Client feedback and IT/ITeS organization managers can jointly review the performance after completing the gig assignment.

The reward system of successful completion may also be linked through the talent management system. This incentive may be separate from the annual variable pay mechanisms. Hence, the aspect of instant gratification would appeal to the I-GIG workers. Additionally, training needs and client and project inputs provide a robust feedback mechanism, enhancing individual motivation for continuous learning. Lastly, the platform may also be developed to publish the “rank” of the I-GIG workers, similar to Uber’s reputation score. This may serve as a robust mechanism for improvement for the I-GIG workers. Clients may prefer high-ranking I-GIG workers for more prestigious projects.

• Change Management for I-GIG adoption: Apart from enabling client buy-in for I-GIG working, enabling commensurate infrastructure, security, and compliance adherence, the organization needs to create support for the I-GIG working. This starts with the leadership team promoting I-GIG working and taking affirmative targets to increase I-GIG working within their teams. The organization also has to celebrate I-GIG success stories to demonstrate its benefit to the larger organization. This is likely to enhance adoption, with other employees seeing the faster growth and learning trajectories of I-GIG workers.

• Career and Talent Management Support: I-GIG workers may need additional training to balance work flexibility, time management, and multiple stakeholder management. Apart from this, employee assistance programs would be required to help them manage any associated stress. Furthermore, proactive career counseling and guidance to help them map assignments aligned with their aspirations will be critical for I-GIG employees to feel they are truly empowered in their career decisions.

HRM challenges of an internal digital gig working platform include the ease with which the employees can leave the platform and manage workers’ supervision [10]. The sustainability of the internal gig platforms depends on workers to self-motivate and would be significantly enabled by a supporting ecosystem, which would address their motivations and needs. Internal gig workers’ self-motivation is expected to address retention and supervision issues as employee motivation directly links to several desired organizational behaviors. However, the “Autonomy paradox” [25] continues with internal gig workers, who, while demonstrating autonomy over where to work and when to work, still they are bound to some level of new forms of control and surveillance, with the internal organization policies and client mandates, influencing who, what and how much of internal gig working can be supported.

If 5% of the employee base takes on I-GIG working, the direct impact of enhanced productivity and better utilization is likely to yield a 1% increase in EBIDTA. For the top four IT service companies in India, with revenues of $122 Billion, this would produce a whopping $ 1.2 billion increase in profitability. Assumptions on the monetized indirect costs of reduced attrition, continuous upskilling, higher engagement, and reduced recruitment costs yield a conservative improvement of 0.5–1.5% increase in operating profits. Based on the I-GIG program’s success, organizations can further seek to reduce their contingent workforce and increase the permanent workforce utilization. This can address the variability in skill needs, also increasing the profitability for the organization.

While the above estimates have been made for the IT-ITeS industry, I-GIG as a concept could be applicable to all knowledge workers and industries where revenue is linked to client billing. Hence, consulting, audit, and knowledge management services could also benefit from adopting I-GIG. However, these organizations may not have well-evolved talent demand–supply matching IT platforms. The existing IT/ITeS service organizations may also productize their platform to make these available as a platform as a Service (PAAS) model. This could yield additional revenue to the IT firms.

Although some may consider using internal gig workers to be an alternative to the recruitment and selection of external labour, HR departments should still consider employee preferences in terms of their interests and motivations. Rather than relying on individual managers to determine which roles are appropriate for gig workers and which digital platforms to use, HR departments can develop policies or guidelines for what tasks are appropriate to I-Gig and which tasks are more suitable for full-time in-house employees.