The gig economy in India has been in a grey zone, where businesses enjoy unparalleled scalability, and workers lack traditional safety nets. The landscape is shifting radically nowadays. Following untimely deindustrialization, the manufacturing industry has been left behind, and excess agricultural labour has been channelled into the gig work service industry. What started as a side-earner has become the main source of income and livelihood for millions of people, necessitating an overhaul of labour legislation in India on a grand scale and forcing human resource (HR) managers to redefine their playing field.

The Changing Face of the Workforce

The demographic trajectory is strikingly different. It is estimated that the number of gig workers will increase to 23.5 million by 2030 and may reach 62 million by 2047, by the mark of Viksit Bharat, 2047.^[1] However, this growth is highly polarized. A vanishing middle is being experienced in the labour market, in which medium-skilled clerical work is being lost, and there is a sharp contrast between the high-skilled freelance workers and a huge mass of low-skilled, task-based workers.

In latter group, the prospect of flexibility tends to obscure the fact of so-called “algorithmic management”,^[2] a framework in which work distribution, performance evaluation, and even contract cancellation is determined by obscure algorithms, which cannot be defined by a human. Such a dynamic ensures the establishment of a condition of digital subordination, which deprives workers of the power of collective bargaining; therefore, immediate reform of regulation is necessary so that innovation does not lead to the exploitation of the workforce.^[3]

A New Regulatory Era

The era of unrestricted labour arbitrage officially closed in November 2025 with the operationalization of the Central Labour Codes. This was the first time the Code on Social Security (2020) explicitly defined gig and platform workers who are required to contribute 1% or 2% of their annual turnover to a special social security fund.^[4] Although a monumental move towards formalization, the proposed framework rules of the 90-day rule that would require workers to spend 90-120 days on a single platform continuously to receive benefits are counterproductive to the multi-apping flexibility, which the concept of gig work is founded on.^[5]

State governments are evolving at an even greater pace, developing a piecemeal compliance environment. Rajasthan pioneered localized protections with its 2023 welfare act, but Karnataka recently escalated these mandates with its 2025 Act,^[6] which enforces a 1% to 5% welfare fee on every single transaction.^[7] Most importantly, the law of Karnataka sends the representatives of algorithmic opacities against the wall demanding that technology platforms to openly reveal the effect of automated decisions on earnings and work distribution.^[8] Companies are now in the maze of state-specific regulations with Telangana and Jharkhand moving with similar bills^[9]

Implications for Hiring and HR Policy

For HR leaders, these legal changes demand total accuracy in the way labour is categorized, negotiated, and controlled. The ancient dichotomy of employee vs. contractor has been substituted by a critically examined continuum.

Since the new codes make FTEs equal to permanent employees, such as accelerated gratuity,^[10] companies might resort to using platform workers to work on one-off projects to avoid fixed liabilities.^[11] Moreover, it is no longer possible to consider gig workers as completely hands-off. HR departments are now expected to closely cooperate with engineering teams to audit their internal algorithms, as they cannot comply with quotas and withhold basic rest periods, which would conflict with the new occupational health standards.^[12]

Moreover, HR policies should go beyond compliance to ensure that they attract and retain reliable talent in a controlled market. The creation of digital proofs of skills acquired by workers, which can be transferred and verified to allow workers to enter the country and offer contracts that are easy to understand, and voluntary skills development programmes will be important strategies to attract both high-skilled consultants and crucial delivery partners.

Conclusion

The formalization of the gig economy in India is an irreversible and inevitable process. As the lines between independent contracting and traditional employment become increasingly blurred, businesses will soon have to adapt to a situation in which the use of algorithms becomes a mandatory element of accountability and social security. The future of flexible employment in India depends on HR policies that can effectively reconcile operational flexibility and the protection of workers so that the gig economy can become a sustainable driver of inclusive economic development.

^[1] Manish Vaidya and Amritha Biju, “The Future of the Gig Workforce in India”, Observer Research Foundation (3 Nov 2025) https://www.orfonline.org/expert-speak/the-future-of-the-gig-workforce-in-india.

^[2] Manish Vaidya and Amritha Biju, “The Future of the Gig Workforce in India”, Observer Research Foundation (Nov. 3, 2025) available at: https://www.orfonline.org/expert-speak/the-future-of-the-gig-workforce-in-india (last visited on Feb. 20, 2026).

^[3] Akrimna Fahmi and Adhika Satya, “Legal Protection Reform for Digital Gig Workers in Indonesia: A Comparative Analysis with the Netherlands” 3 International Journal of Global Sustainable Research 827–848 (2025).

^[4] “India Rolls Out Four Labour Codes in Historic Workforce Reform”, Staffing Industry (2 Dec 2025) https://www.staffingindustry.com/news/global-daily-news/india-rolls-out-four-labour-codes-in-historic-workforce-reform. 

^[5] “India’s Gig Economy and the Social Security Code: Progress, Paradoxes and the Road Ahead”, Corporate Professionals (28 Oct 2025) https://www.corporateprofessionals.com/articles/indias-gig-economy-and-the-social-security-code-progress-paradoxes-and-the-road-ahead/.

^[6] “Karnataka Government Notifies Gig Workers Welfare Fee Mandatory”, SCC Online (18 Feb 2026) https://www.scconline.com/blog/post/2026/02/18/karnataka-government-notifies-gig-workers-welfare-fee-mandatory/.

^[7] “Bridging the Gap: Expanding Social Security for Gig Workers in India”, The Legal 500 (21 Nov 2025) https://www.legal500.com/developments/thought-leadership/bridging-the-gap-expanding-social-security-for-gig-workers-in-india/.

^[8] “The Karnataka Platform-Based Gig Workers Social Security and Welfare Bill, 2025”, PRS Legislative Researchhttps://prsindia.org/bills/states/the-karnataka-platform-based-gig-workers-social-security-and-welfare-bill-2025.

^[9] “India: Gig Workers Welcome New Social Security Bills in Telangana, Karnataka & Jharkhand But Demand Fair Wages, Job Security & Recognition of Employment Relationship”, Business & Human Rights Resource Centre (12 Feb 2026) https://www.business-humanrights.org/en/latest-news/india-gig-workers-welcome-new-social-security-bills-in-telangana-karnataka-jharkhand-but-demand-fair-wages-job-security-recognition-of-employment-relationship/.

^[10] “New Labour Code for New India: Biggest Labour Reforms in Independent India”, India.gov.inhttps://www.india.gov.in/spotlight/details/new-labour-code-for-new-india-biggest-labour-reforms-in-independent-india.

^[11] “Flash Alert 2025-267: [India – Government of India Announces Implementation of Four Labour Codes]”, KPMG (2025) https://kpmg.com/xx/en/our-insights/gms-flash-alert/flash-alert-2025-267.html.

^[12] “Comments and Recommendations on the Draft Karnataka Platform-based Gig Workers (04 Aug 2025)”, National Law School of India University (NLSIU) https://www.nls.ac.in/wp-content/uploads/2021/04/Comments-and-Recommendation-on-the-Draft-Karnataka-Platform-based-Gig-workers_04.08.2025.docx.pdf.