How gig economy powers Swiggy
Goutam Das April 1, 2019
The gig economy is helping companies convert what could have been a fixed cost structure into a variable one. Start-ups have infectiously caught on with the more established corporates who have all realised the flexibility gig workers bring to the table. Product cycles are shrinking and technology is disrupting industries at a rapid rate. Companies no longer want to be saddled with a very high fixed cost. Any planning of the workforce, therefore, isn't complete without thinking through a blended model where gigs work alongside those on the payroll. We often don't realise this - India already has one of the world's largest gig workforce when both white and blue collar workers are accounted for. In the blue-collar space, there are the drivers on Ola and Uber, the delivery executives on Swiggy and Zomato, the services professionals on UrbanClap among others. Swiggy, alone, has 1,25,000 delivery executives on its platform.
Business Today recently spoke to Vivek Sundar, COO of Swiggy, to understand the emergence of the gig model in India and why it is working for the company. Excerpts:
1. Why is India emerging as a large gig economy: There are certain conditions that go in India's favour, Sundar says. If you don't have an open and digital economy, it becomes very difficult for the gig economy to flourish. In Western economies, the digital landscape is higher but the economy is not very vibrant - there are not many start-ups as a proportion in a country. The regulatory burden is higher too, in places like that of Western Europe. "We are in a sweet spot of having the right demographic, the right level of technology orientation, as well as a supportive ecosystem. Employment has transformed just the way consumers consume products. Gone are the days of terrestrial TV; on-demand TV is overtaking. That is a digital disruption. More books are sold online than in-store. Work contracts are also getting disrupted. Millennials have a multitasking view of life and gig economy is a place where you bring many of those things together - technology, workforce, digital economy, etc," he says.
2. The gigs on Swiggy: The company's model is powered by an army of over one lakh gig economy workers. They log-in at a time of their choosing and are paid for the effort - the more they work, the more they are paid. "About six months ago, we were in 15 cities. Today, we are in over 80 cities. This includes tier 2 and 3 cities. We are finding meaningful employment opportunities for these folks. Some of them work for additional pocket money after classes and there are people for whom this is primary employment. We have also attracted a lot of women delivery executives," Sundar says.
3. The reward model: Over the course of a week, there is surge on different days and during different time slots in a day. "To cater to the asymmetry in demand we have different types of delivery executives. It is the perfect economic model because it says that when there is greater demand, we offer more incentives to delivery executives to log-in. We had a very high number of delivery executives working during Christmas and New Year's Eve. We transfer the demand into extra pay for the delivery executive," the COO tells. The temporary delivery executives on Swiggy might only log-in over weekends. The person who is closest to the restaurant is assigned the order. The gig is paid for the number of deliveries made; in addition, there are incentives at the end of the month if she/he works for 22-25 days.
4. Social security: The company has a programme called 'Swiggy Smiles'. The programme brings together benefits such as accidental insurance, doctors for families, educational scholarship programmes. Swiggy says the company can also enable personal loans at a better rate by helping delivery executives co-ordinate with banks. "This is available to different people at different levels depending on how much they work and how hard they work. No delivery executive is devoid of basics such as insurance. We do spend money on accidental insurance - it is entirely Swiggy's investment," Sundar says.