The gig economy has emerged as a key driver of innovation and change in the way people work in Vietnam. This presents both benefits and challenges for workers and businesses alike. Here’s what foreign firms should know.
In a gig economy, individuals typically work as independent contractors, performing tasks or ‘gigs’ for various clients or companies, rather than working a traditional full-time job with a single employer. This type of work is often facilitated through digital platforms or apps that connect workers with those seeking their services.
Although the gig economy emerged quite some time ago, it was only when the COVID-19 pandemic hit that it truly took off in Vietnam with many people forced to find jobs they could do from home. After the pandemic, this new paradigm has stuck around with people still seeking freedom and flexibility in their jobs.
In fact, in an Anphabe online survey, a mere 40 percent of knowledge workers expressed a desire to return to traditional office settings entirely, with a substantial 56 percent of respondents indicating a preference for hybrid work arrangements instead. Interestingly, a further 4 percent of those surveyed opted to leave their jobs in favor of freelance work in the gig economy, seeking the flexibility to choose their work location.
Though challenging to accurately determine the number of people working in the gig economy, it is clear that the sector has become very popular in Vietnam. This can benefit foreign firms in a myriad of ways, including limiting their initial exposure, investing in local gig economy startups, and for cross-border digital payment providers.
How has the gig economy changed the labor market?
The rise of the gig economy has brought many changes to the labor market.
According to Shilpa Jain, the CEO of BeGig, as technology continues to rapidly advance, traditional work trends and cultures are becoming outdated. With the increasing implementation of automation, certain jobs are becoming redundant, and the gig economy is creating a new wave of tech experts who are taking up freelance work.
Dr. Le Van Hung, Deputy Head of the Sustainable Development Research Institute, says that it no longer takes as much time and effort to search for stable, long-term employment as it did in the past. Nowadays, workers can quickly find work in a matter of seconds, complete a task, receive immediate compensation, and then move on to find more work.
In this light, workers have become more flexible, more focused on upskilling themselves, and more adaptable to the changing dynamics of the economy.
Key sectors of the gig economy in Vietnam
Some of the key sectors of the gig economy in Vietnam are:
Ride-hailing and delivery services
These platforms connect customers with drivers who provide transportation or delivery services using their own vehicles. Some popular platforms in Vietnam are Grab, Gojek, and Be. These platforms have become popular in Vietnam, especially in urban areas, as they offer convenience, affordability, and flexibility for both customers and workers.
These platforms provide online courses, tutoring, or mentoring for learners of different ages and levels. Some of the popular platforms in Vietnam are Topica Edtech Group and Prep.vn, Hocmai.vn, and ELSA. These platforms saw a surge in demand during the COVID-19 pandemic, as more people turned to online learning in order to avoid going out in public.
According to Statista, revenue in the online education market is projected to reach US$328.20 million in 2023. Revenue is expected to show an annual growth rate (CAGR 2023-2027) of 10 percent, resulting in a projected market value of US$487.60 million by 2027.
These platforms enable online transactions of goods and services between sellers and buyers. Some popular platforms in Vietnam are Shopee, Lazada, TikTok Shop, TIKI, and Sendo. These platforms have grown rapidly in recent years, as more consumers shop online for convenience, variety, and competitive prices.
These platforms connect freelancers who offer various skills and services with clients who need them. Some of the popular platforms in Vietnam are Freelancer.com, Upwork, Fiverr, and Workana. These platforms allow freelancers to work remotely, flexibly, and independently on projects that suit their interests and abilities.
Vietnam’s gig economy: Benefits
Some of the advantages of the gig economy for businesses are:
Cost-effectiveness: Businesses can save money by hiring gig workers instead of full-time employees, as they do not have to pay for salaries, benefits, taxes, office space, or equipment. They can also adjust their labor supply according to their needs and demand.
The size of the labor force: Businesses can access a large pool of workers with diverse skills and expertise through digital platforms that match them with the best candidates. They can also hire workers from different locations and time zones, expanding their reach and availability.
Output production: Businesses can improve their productivity and quality by hiring gig workers who are motivated, flexible, and specialized in their fields. They can also benefit from the innovation and creativity that gig workers bring to their projects.
Customer satisfaction: Businesses can enhance their customer satisfaction by offering faster, cheaper, and more customized services that meet their specific needs and preferences. They can also leverage the network and reputation of gig workers to attract new customers.
Vietnam’s gig economy: Challenges
Alongside its benefits, the gig economy also brings several business challenges. These include:
Reliability: Businesses may face risks and challenges in hiring gig workers who are not bound by long-term contracts. They may encounter issues such as delays or poor performance for which they may have few options for compensation. They may also lose control over the quality and consistency of their services.
Loyalty: Businesses may struggle to build long-term relationships with gig workers who are not committed or invested in their goals or values. They may also face difficulties in retaining or motivating gig workers who may switch to other clients or competitors.
Communication: Businesses may face barriers in communicating and collaborating with gig workers who work remotely and independently. They may also have to deal with cultural or linguistic differences that may affect their understanding and expectations.
Security: Businesses may expose themselves to security risks by sharing sensitive or confidential information with gig workers who may not have adequate cyber protection or encryption software in their devices used to complete their work tasks. Businesses may also have to comply with laws and regulations that apply to different countries or regions.
Global staffing solutions
To mitigate risks and make the most of the gig economy in Vietnam, foreign businesses may prefer utilizing a Global Staffing Solutions (GSS) service. These services are quick, convenient, and cost-effective and provide foreign firms with the security of working with an established local enterprise
GSS services offer businesses a comprehensive approach to talent acquisition and workforce management. They also help businesses navigate the legal and compliance aspects of international staffing, recruitment, and talent acquisition in Vietnam without the need to establish a legal entity.
The best GSS providers in Vietnam have the expertise, resources, and networks to identify and attract top talent from both local and international markets. They understand the local job market, cultural nuances, and labor regulations, making them valuable partners for businesses seeking to expand their operations in Vietnam and offering them a more secure alternative to hiring freelancers directly.
The gig economy has emerged as a significant force in Vietnam, reshaping the labor market and providing new opportunities for both workers and businesses. The flexibility and diverse range of work options the gig economy offers continue to appeal to a growing number of individuals seeking autonomy and alternative employment arrangements.
That said, businesses may face hurdles in adapting to the gig economy, such as managing remote workers, ensuring fair compensation, and maintaining consistent quality in service delivery and in these situations, firms may find GSS a better option.
Nonetheless, with the continued development of new communications technologies and changing work cultures, the gig economy in Vietnam is likely to further expand and evolve. This promises to present both opportunities and challenges for all stakeholders involved.
For recruitment support in Vietnam, contact the human resources experts at Dezan Shira and Associates.