Last year Maurice Levy, chief executive of global advertising group Publicis made a comment to the Financial Times saying “Everyone is starting to worry about being Ubered”. Levy was referring to the rise of the freelance economy as an increasing proportion of workers choose or are forced to become self-employed as contractors in what is becoming known as the ‘gig economy’. This theme was picked up by Peter Ankerstjerne Head of Group Marketing/CMO at ISS World Service speaking at last years Workplace Futures conference, where Ankerstjerne noted that something similar could be coming, with the ‘Uberisation” of Facilities Management and the Workplace industry.
Uber is the world largest transportation company, it owns no vehicles and yet it is valued at around $50 billion, making it the world’s most valuable tech start-up. AirBnB has gone from students renting a blow-up mattress on someone else’s floor to being the world’s largest provider of accommodation and a $25 billion company in just 10 years. AirBnB does not own or even lease the accommodation space it sells. Facebook is the largest content provider on the web but produces none of its own content.
The success of these organisations illustrates the point that consumers are not hesitant to move away from traditional business models and practices. The resulting disruption to the existing providers in those industries has been massive and well publicised, causing many businesses to fail, but perhaps the most disruptive element is not that a new competitor appeared on the block with a totally different business model, but that like muggers in the night they seemingly came from nowhere.
A survey conducted by Ipsos Mori in the UK found that more than five million people are now being paid for work through online platforms. It also found that “42 percent of respondents, equivalent to more than 18.5 million people, said they have turned to apps and online services to find taxi drivers, builders, designers and accountants. Backers of these services, which last year PricewaterhouseCoopers [PwC] said could be worth as much as £9 billion to the UK economy by 2025, are reinventing employment.”
Professor Ursula Huws, an academic from University of Hertfordshire, who led a survey of more than 2,200 adults in the UK commented: “The size of this crowd-working army is surprising even to me and our findings confirm that policymakers and academic researchers have been caught on the hop by the explosion of what we might call platform labour. It has been labelled the ‘sharing economy’, but many of those participating in it are doing so not for altruistic reasons or in their spare time but relying on it to earn a living.”
Uber, AirBnb and Facebook are all in the service industry but largely on a Business to Consumer (B2C) basis. Uber and AirBnB’s services revolve around leveraging access to assets i.e. cars and accommodation. As service providers in the FM industry, we own very few assets that directly enable our service and we are generally a Business to Business (B2B) provider. Consumers are generally the first adopters of these types of disruptive innovation but does this mean we in FM are immune to these disruptions?
Ankerstjerne says “possibly the future will see us as service providers with no service individuals”. In this scenario “You could go online, you could book a service employee, a caterer, a cleaner, a security officer, and you can share that with other customers. You can then rate that person, and put that online for others to use that person.”
Taken to a logical conclusion customers would share service employees on a needs basis which from purely a cost perspective would be very attractive to the customers and possibly to the employees given that certain basic criteria are met. This sort of crowd-sourcing is becoming more and more popular. It allows organisations to harness the collective resources of a large group of people through the Internet.
Whilst the Internet is the new means of accessing this capability, there is nothing new in this approach. In reality, this is currently the business model utilised by Outsourced providers to deliver the cost savings that Customers need and expect when outsourcing their service requirements. Both labour arbitrage and the ability to apply marginal costing to both labour and physical assets mean that economies of scale are the reality that in-house providers find almost impossible to achieve.
There is no doubt that using the Internet to access services has some compelling attractions and may in the short term provide access to services at lower cost. Short-term there is probably an upside for both the customers as well as the employees. However, the long-term perspectives are largely unknown and need to be considered fully.
As a counter to this scenario let’s look at what the growing trend of ‘Uberisation’ means to law practitioners in America. Most, if not all, contracted lawyers working under the auspices of one of the new style law firms that are springing up all over the USA, are essentially self-employed with the freedom and positive challenges this brings. But they have no security of income, no superannuation, no permanent social work environment, no paid annual leave, no long service leave and, usually, no training and organised continuing professional development.
For young practitioners, in particular, there is no structured professional education program and no employer-provided training in the basics of practice and certainly no apprenticeships. These are the foundation on which future of the profession has been built for generations.
If professional, self-starting and self-managed individuals such as lawyers are struggling with adaptation to these types of new business models then I can foresee additional issues for what is we in the FM industry deal with which is largely an unsophisticated labour market.
The out-tasking of basic types of service on a once off basis have been with us for years, it is merely the mechanism of connecting the market and the service providers that has changed, the actual service hasn’t. This is, after all, the business model for what is euphemistically called the ‘oldest profession in the world’.
The Uberisation scenario put forward by many probably represents the ultimate end game of commoditisation. This model, however, presupposes that there is scalability in what amounts to an unmanaged labour-broking service, which in South Africa has to all intents and purposes been outlawed. Notwithstanding this, we need to understand that difficulties arise when the requirement is not a once off directive task but a day to day service that requires management input in the form of guidance, direction and integration with other service related activities. Indeed the softer issues we as FM’s deal with on a day to day basis such as the need to foster effective teamwork, loyalty and high standards of service would be impossible to achieve if staff members were different every day. At an operational level, compliance and risk management issues complicate this situation further.
However, as a potential antidote to this Orwellian model, the general move in outsourcing seems to be away from price as the major factor in the outsourcing decisions with a greater acceptance that the workplace is becoming the ‘biggest enabler of strategy’. 10 years ago, the price was 90% of an outsourcing decision. Last year, it was around 63%. The second largest concern was access to talent, and the third largest was innovation.
Under this lens, the efficiency of labour related tasks such as cleaning, or security should not be high on the list of priorities. Rather the focus falls on the connection of our service outputs to business-related outcomes, cultural change, employee engagement and customer satisfaction.
I’m not saying that this certainly will or will not happen, it is one possible scenario and our industry needs to consider this carefully and deeply after all the ‘left field’ has been the entrance gate for some of the largest gate crashing game changing mavericks that are now household names. The only certain thing seems to be that the industry is going to change, perhaps with shorter, leaner, more flexible and transparent ‘call off’ agreements with shared goals and risks becoming the norm?
How do you see the ‘gig’ economy affecting your Workplace? Please leave a comment below.