Distributed Computing – Fuelling Sharing Economies

The sharing economy can be attributed to various names – collaborative economy, peer economy, gig economy. Call it what you may, the sharing economy has become ubiquitous and mainstream in a very short period of time. Ordering groceries, food and medicines, hailing a cab, renting apartments, you name it, it can be done from the comfort of our homes using an app. Not only that, one can even get a loan without going to the bank, which is just one of the many big-ticket applications of a sharing economy.

Following are some applications of a sharing economy –

· Cab hailing – Uber is the best-known example of a sharing economy. In India, we also know of Ola as a competitor to Uber, while there is Lyft in the USA and Canada. These apps basically match the rider with the driver who picks up the rider from the designated location and takes her to her destination for a fee.

Benefit – for the rider, ease of reaching the destination without the hassle of driving, parking and maintaining a vehicle. For the driver, income in return for time and effort.

· Peer-to-peer lending – individuals can lend or borrow money without going through the bank. The platform itself acts as the intermediary and the interest rate is decided based on the credit history of the individual who is borrowing. The risk of default by the borrower is borne by the lender.

Benefit – opens-up possibilities for borrowers who typically would not be entertained by banks and financial institutions for a variety of reasons. For the lender, it is an attractive avenue for investment, the risk notwithstanding.

· Apartment renting – platforms such as Airbnb operate across the globe and help people find accommodation, whether for a short duration on vacation or on a long-term lease.

Benefit – helps find low-cost apartments as opposed to hotel rooms and in locations where hotels may not be available.

· There are other platforms that provide –

o Grocery and food delivery

o Co-working spaces

o Crowd funding

The driving force behind these new-age businesses is a technology known as distributed computing. These marketplaces and platforms are powered by software components residing on different machines and running on interconnected networks hosted in data centres spread across multiple locations. Computers in a distributed system operate in parallel but in case of a failure of one, the others continue to function. That makes the overall platform highly fault tolerant and business continuity is assured.

The key characteristics of distributed computing are –

· Openness – the design of the software is open and shareable with others

· Transparency – easy interaction with different nodes

· Concurrency – multiple machines running in parallel

· Fault tolerance – the ability to continue operations despite some points of failure

· Scalability – an exponential increase in computing power, on demand

The earliest example of distributed computing was the Client-Server architecture. This has now evolved into n-tier and peer-to-peer networks.

Client-Server: One machine acting as a shared resource and interacting with multiple machines including client computers, backend computers, printers, etc.

Three-tier/n-tier: An advanced version of Client-Server architecture, it has a presentation layer, application layer and data layer, all communicating seamlessly with each other.

Peer-to-peer: In this type, all machines are equal and client, as well as server functions, are split amongst them; hence, peers.

While there are many advantages of distributed computing, the initial cost of setting up not only the hardware but also sophisticated software is quite high. Once that is accomplished, there is the complexity of operating and maintaining the system. In addition, there are concerns around data access control and security. That said, distributed computing, despite its disadvantages, provides unmatched scaling capability, high performance and last but not least more reliable business continuity to the sharing economy platforms.

The fundamental trait of the sharing economy is a quick response to a demand via an instant messaging service and flexibility on both sides to accept or reject the product/service. The easy availability of smartphones and the Internet has given businesses unfettered reach to their customers and suppliers which, hitherto was not so possible. With the advantages of lower cost and easy access for consumers on the one hand and extra income and independence for the gig workers on the other, come the disadvantages of concerns over the safety of both consumers and workers and regulatory issues. The fact that this ecosystem works on trust also gives rise to other challenges in terms of possible fraud, data privacy, product quality, after-sales service, etc.

Nonetheless, the sharing ecosystem is growing at a fast pace and according to PricewaterhouseCoopers, globally it should reach $335 billion by 2025. From an Indian perspective, according to a NITI Aayog report, the gig economy engaged an estimated 77 lakh workers in 2020-21 constituting 2.6 per cent of the non-agricultural workforce and 1.5 per cent of the total workforce. It is estimated that this number will go up to 2.35 crores by 2029-30 forming 6.7 per cent of the non-agricultural workforce and 4.1 per cent of the total workforce. The sector distribution of this workforce is highest in Retail, followed by Transportation and then equally in Manufacturing and Insurance. Interestingly, the workforce engaged by passenger mobility and hyperlocal delivery services platforms is significantly larger than that employed by the Indian Railways, India’s highest employer.

*Why is the sharing economy so attractive

This ecosystem provides consumers with cheaper goods and efficient services, using online platforms. The participating companies have the benefit of a flexible workforce and better efficiencies and cost-effectiveness due to the digital nature of their asset-light businesses wherein they are just the facilitators. It also gives them access to global markets because the location doesn’t remain a constraint anymore. There are regulatory concerns amongst governments the world over, but since trust is the keyword of the sharing economy, one way to assuage these concerns is by the businesses themselves to share data transparently with the regulators, thereby increasing the comfort levels of all stakeholders.

From the perspective of gig workers, it provides them with the opportunity to work independently without being tied to a corporate entity and more often than not for a higher income. It allows them to have a work-life balance which may or may not have been possible in a job. No wonder then that it is attracting youngsters, both men and women, to this new work model. As John McAfee famously said, “The gig economy is empowerment. This new business paradigm empowers individuals to better shape their own destiny and leverage their existing assets to their benefit”.

Jayesh Shah

Guest Author Jayesh Shah