What benefits do companies gain from paying contractors through a gig platform, and what are the risks of taking those contractors off the platform?

On the company side, there’s the convenience of setting up the payments, where the invoicing and the payment processing is all automated. You can do it not just for one particular contract or one particular employee, but across all of your flexible workforce, along with analytics and reporting on it. So there is  a convenience factor. 

The other thing that companies look at is the trust and dispute management. If something goes wrong, they have a third party that they can go to, that third party being the platform. That is a good amount of leverage over the talent, because it can affect the ongoing reputation of the talent. If you go off the platform, you lose that dispute management and that talent-reputation leverage. If you stay on the platform, you retain that leverage. 

Now, in addition to that, the SaaS tools in many labor marketplaces provide value beyond payments after the match. On Upwork, for example, you get what they call a work diary, which keeps track of the hourly work in an automated way that builds trust in the payment amounts that need to be made. 

For some companies, particularly in SMB, to the extent that they build a reputation on the platform of their own responsiveness, payment records, disputes etc., that makes it easier for them to hire in the future. It's not as big an issue compared to the contractor side, but it’s an issue; the more people they hire, the more valuable they'll be seen, so they can hire more people more easily. 

Now, if the platform is performing the role of employer of record and serving as the W-2 employer, that's 100% a reason companies want to stay on - where the company gets compliance with employment regulations. That's what staffing agencies do, and for general labor marketplaces like Upwork do to a much lesser extent. Labor marketplaces more typically work with 1099 employees, and help with filing taxes for that in an automated way. 

I would add that on these labor platforms, they extract value in a tiered way – meaning the larger the amount of money you're spending, the lower the cost to you over time - to help reduce disintermediation.