LatAm's Local Gig Economy

Exploring the LatAm Local Gig Economy

The "gig economy" typically refers to a labor market in which a workforce of people engage in various short-term, flexible, and freelance-based jobs. It can normally be broken into two distinct areas: location-based jobs and online jobs. Online gig economy work includes any work that can be done completely remote and online — this would include outsourcing on platforms like Upwork, Fiverr, or Freelancer. On the other hand, location-based gig economy work requires workers to do tasks that have some physical in-person presence. Examples include ride-sharing, delivery, and other tasks or errands. Today, we will focus specifically on location-based gig work in Latin America (LatAm).

2010s: Rapid Growth and Expansion

The location-based gig economy in LatAm got its start in the early 2010s when early movers in the ride-hailing space such as Cabify (from Spain) and Uber (from the US) launched across the region (LA Times). Uber launched in Mexico and Colombia in 2013 (Forbes) and by 2014 had expanded to Brazil, Peru, and Chile.

At the same time, local food ordering and delivery apps were being introduced. iFood was launched in 2011 in São Paulo and rapidly expanded across the country. In 2015, Rappi, an e-commerce and last-mile delivery app, was founded in Colombia and quickly raised significant capital to expand to additional major LatAm markets (Mexico, Brazil) over the next few years.

In 2017, Brazil's first Unicorn, 99Taxi (a service that initially connected taxi drivers and passengers), expanded to allow non-taxi drivers, adopting the gig economy ride-sharing model (KFund Podcast). In 2018, Chinese ride-sharing giant, Didi, acquired 99Taxi and also began direct operations in Mexico (TechCrunch). That same year, global ride-sharing app InDrive started operations in Mexico and began expansions across LatAm. By 2018, MercadoLibre (LatAm's largest e-commerce platform) had also begun leveraging gig workers for last-mile delivery.

When the pandemic hit in 2020, similar to its global impact, ride-sharing services took a major hit as people were confined to their homes due to travel and in-person restrictions. Conversely, though, the demand for the delivery of groceries, food, and other goods surged. Ride-hailing across Brazil, for example, dropped markedly in the immediate months following the COVID-19 pandemic (Measurable). However, the number of Brazilian e-grocery shoppers nearly doubled ( 96% increase) in late March 2020 (Statista).

Brazil Ride-Hailing Order Volume (Measurable)

2020s: Entrenchment, Efficiency Maximization, and Immigration

In 2025, the ride-hailing market in LatAm's four biggest economies—Brazil, Mexico, Argentina and Colombia—is expected to reach $6.2bn. The online food delivery sector, serving as an imperfect proxy for the delivery-based gig economy, is forecast to generate $36.1bn in gross merchandise value (GMV). For the gig economy, the 2020s have been marked by further consolidation and the entrenchment of major platform players.

Because ride-hailing companies have homogenous business models and poor defensibility, they compete fiercely across markets. Delivery platform models, on the other hand, have historically been more diverse. MercardoLibre, for example, historically leveraged its own workforce and network for deliveries, but as noted above, they are mixing gig worker delivery into its operations. While Rappi started purely as a software business matching delivery drivers (Rappitenderos) to customers and stores, over the past two years, they have developed a hub-and-spoke model where best-selling items are stored in small and medium-sized warehouses accessible only to Rappitenderos. These "dark stores" as they are known, enable delivery in less than 10 minutes across a number of major cities (Americas Market Intelligence). Importantly, most of these "dark store" warehouses are not owned and operated by Rappi, rather they are contracted out to 3rd parties. This model provides Rappi the best of both worlds: the flexibility of a marketplace platform with the benefits of a brick-and-mortar presence.

Another significant contributing factor to the growth of gig workers across LatAm has been the rise of intra-regional immigration in the late 2010s and 2020s. With political unrest, economic instability, and violence, an increasing number of migrants from places like Venezuela, Nicaragua, and Haiti are fleeing to other nearby countries in the region. According to the Economist, some 8 million Venezuelans now live outside the country, with 85% of them spread across LatAm and the Caribbean. Since 2010, LatAm and the Caribbean have experienced the greatest relative increase in international migration of any region. The migrant population nearly "doubled from 8.3 million in 2010 to 16.3 million in 2022" (Migration Policy Institute).

Migration Policy Institute (MPI)

Gig economy work is freelance or contractor-based, which lacks many of the benefits that usually come with formal employment: labor protections, job security, and benefits. Still, many migrants turn to gig work, which is attractive for a number of reasons: it is flexible, relatively easy to get started, requires few qualifications, and largely skirts labor law requirements (MPI). This growth in worker supply drives down the costs of gig economy services, making them more affordable for larger portions of the population. According to a World Bank study (cited by BBC), a 1% increase in migration from Venezuela led to an average 3% decline in wages in Colombian host communities. Economic growth across LatAm over the past decade has been unsteady and fairly stagnant; average annual growth in the 2015-2024 decade was 1% across LatAm and the Caribbean (UN ECLAC). Even so, the gig economy has expanded rapidly. The flywheel of migration increasing supply, which lowers costs, and in turn grows the overall demand makes the gig economy recession resilient in the region.

Just looking at Ride-Hailing and Online Food Delivery as a percentage of GDP, we can see there is an array of adoption across LatAm's largest economies. Interestingly, the general trend seems to be the larger the economy the higher the percentage of GDP both Ride-Hailing and Online Food Delivery comprise. This potentially spells opportunity for further gig economy growth in places like Argentina, Colombia, and some of the middle-sized economies of LatAm as they catch up to the penetration rates in Brazil and Mexico. Comparing these LatAm countries to other economies across the rest of the world we can see room for significant growth in both Ride-Hailing and Online Food Delivery, even in markets like Brazil and Mexico.

The Future of LatAm's Gig Economy

We expect the overall gig economy market to continue to grow across LatAm. In ride-hailing, we expect the existing players to continue jostling with no new legitimate entrants as the costs to get started are too high. We see an opportunity for delivery platforms to address local needs by establishing specialized supply chain infrastructure that delivers a competitive advantage.

Additionally, Diego Rodriguez, Director at Americas Market Intelligence, who focuses on the logistics and industrial sectors, said: "I anticipate that delivery platforms such as iFood and Rappi will expand into parcel delivery for traditional retail e-commerce." We expect the largest opportunity for new gig economy platform startups will be in local services beyond delivery, such as home services (house cleaning, landscaping, plumbing), personal services (child sitting, tutors), and event and creative work (event staff, musicians, videographers). A notable example is GetNinjas in Brazil, a leading platform for local services that has been in operation since 2011.

Beyond the gig economy platforms themselves, there is an opportunity for adjacent businesses. Similarly to how e-commerce growth in the 2000s led to the need for a host of supporting businesses and services (e.g., payment gateways, hosting, SEO and digital marketing, drop-shipping, etc), the gig economy in LatAm is opening up opportunities for net new businesses to service gig-economy platforms as well as gig workers themselves. These may include financing products, insurance, tax management offerings, banking solutions, rental services, compliance solutions, and workforce management platforms. Existing offerings in other markets will compete, but we expect many of these needs across LatAm to require local context, expertise, and support.

Takeaway: LatAm's location-based gig economy has seen rapid growth since the early 2010s, fueled by the spread of ride-hailing services and delivery apps across major markets. The pandemic drove further expansion in delivery services while ride-hailing briefly faltered. In recent years, intra-regional migration has provided a steady influx of gig workers, increasing service affordability and overall adoption. Looking ahead, we expect the gig economy in LatAm to see continued growth — not just in transportation and delivery but also in new service sectors and supporting businesses geared toward the unique needs of LatAm gig platforms and their workers.