India’s gig workers are up in arms, and tech firms should be worried


Government of India Giggs workers have been hailed as Covid-19 heroes as they face brutal lockdowns in 2020. The awards offset growing dissatisfaction among gig workers with variable pay and incentives. Now they want their share of victory.

Naspers-backed Swiggy, which delivers food and groceries, found itself struggling with protests from drivers late last week. They’re called for now, but there’s no guarantee they won’t pop up again. Rival Zomato 543320 2.63%

Against incentives, some ships saw some in March. And last year, a city company that provides home and beauty services sued its female employees against the law, which they said would hurt their earnings. Ride-hailing apps Uber and Ola have seen many such actions since their inception.

While protests are mostly on and off and isolated, there is a risk that they will become more systematic, especially in times of high inflation. App-based platforms, e-commerce, food and grocery delivery, and ride-hailing all rely on a large contract labor base for fast and efficient deliveries. As traditional service sector jobs return in the wake of the pandemic, these companies are facing a shortage of drivers. Estimated pay for employees makes business sense—despite pressure to cut costs in a tough economic environment and a technology fund winter. Firms calculate fees based on distance traveled, day order, total company stay and mode of transportation used.

Shipping and related charges are the biggest expense for Zomato. Brokerage Macquarie believes unit costs will fall in the coming years as the economy picks up and customers are willing to pay outright for delivery costs. However, as long as the company is aggressively acquiring customers, it will be difficult to continue subsidizing drivers.

Big economies like the US and China have been pushing for better protections for gig workers, with mixed success. The Indian government, meanwhile, has been slow to implement labor reforms passed in 2020 that will make app-based workers eligible for social security benefits. Vikram Shroff, partner and HR law specialist at law firm Nishit Desai Associates, says the lack of basic laws protecting gig workers means it’s left up to each employer to determine the levels of protection.

Such a laissez-faire environment, combined with high inflation, means that the conditions are ripe for wider operating problems for companies.

According to a report last year from the Boston Consulting Group and the Michael and Susan Dell Foundation, long-term gig work could add up to 90 million jobs to India’s non-farm economy and account for $250 billion in transactions. That could include a million net new jobs over the next two to three years — if companies do more to match their own recent incentives to their workforce.

A more significant disruption among Indian delivery firms and its workers is inevitable. But some relationship advice is needed to pull it off.

Write to Megha Mandavia at megha.mandavia@wsj.com

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