The Virtual Estate: Workplace Transformation to Create Ripple Effects Across Industries
Advances in technology have made it extremely easy for individuals to connect across the globe. The words such as local presence and the number of branches or offices are gradually losing their significance. Employers, individuals or firms are demanding the best talent at the least possible cost. For them where the service provider or manufacturer is “really” based seldom matters.
There is an ever growing wave of virtual workers that is making its mark on the wider talent pool. The entrepreneurial spirit is spreading like a wildfire across the globe. According to the Global Entrepreneurship Monitor 2011 Report, there were about 400 million entrepreneurs across 54 countries in 2011. The total early stage activity increased 25% Y-o-Y in 2011 in 16 developing nations and 22% in 20 developed nations. China, Argentina and Chile led the surge among developing nations, while US and Australia led the charge among the developed nations.
On the other hand, there are a growing number of freelancers joining the virtual talent pool. There are a number of online marketplaces such as Upwork, Freelancer, Guru and few more that offer a wide range of opportunities to these tech-savvy freelancers. According to Upwork (oDesk), in 2013 there were about 4.5 million freelancers and about 1 million employers who posted over 35 million jobs. According to the Freelancers Union, every one in three American is a freelancer, i.e. an eye popping 42 million people working as freelancers. It has become increasingly difficult for Americans to find permanent jobs with full-time paychecks.
There are a number of statistics to highlight this shift, however the first and foremost question is what is driving the change? For employers it is the rapidly growing search for means to increase efficiency and for employees it is about their interests and independence. Technology acts as an enabler that makes it possible for an employer to hire an individual anywhere in the world and for the employee to deliver what client needs irrespective of the location. Of course there are exceptions where location/s will continue to play a key role, e.g. local market research requiring personal interaction or a typical manufacturing and construction work that requires manual supervision and collaboration at the site.
Employers can now hire talent as per their requirement, there is no fixed cost involved as they employ and pay as per their need. There is no cost related to health benefits and real estate. The cost of maintaining employee records is also much lower. Employees on the other hand have the flexibility to work from any location they prefer and have the choice of taking up jobs as per their specific requirement.
Although the shift might seem pretty basic on the face of it, these trends have major implications on a number of industry sectors, e.g. in case of real estate, as more and more full-time workers turn into freelancers, the demand for commercial property may shrink and/or new models will emerge. Rent-a-cubicle is one such example in which real estate companies now rent out individual workstations instead of a complete office. A number of freelancers though do prefer to work from their homes at least during the initial stages and that leads to a much better utilization of real estate space as well as significant reduction in travel cost, time and pollution. Usually, a number of homes lie vacant during the day as both spouses move out of home to work in their respective offices, thus leading to inefficient utilization of real estate. This would however change as the shift continues to gather steam. Moreover, demand for both commercial and residential real estate in today’s employment hubs or metros will diminish as location becomes less important for employers. As basic infrastructure spreads into the interiors, people will start making the move out of the crowded metro cities and it will also lead to more equitable opportunities for everyone across the globe.
The shift to freelance or entrepreneurship is not a completely smooth one. As any other change, freelancing market also faces a number of challenges. Employers initially find it difficult to find the right talent, while freelancers find it challenging to get the right job despite of having best of skills and experience. For both employers and freelances on one end the stakes are high and risks are abound and on the other end benefits are enormous. As with any new process, it takes time to figure out efficient mechanisms and then the benefits start to outweigh the risks by a huge margin. That is when the transformation hits its peak and almost everyone starts to buy into the change.
What could be the future like?
For employers it is critical to build a virtual talent pool to tap into to drive efficiency and remain competitive. Those who continue to rely heavily on their full-time employee base will soon become expensive and start to lose out on their business, irrespective of their size and brand value. For employees, it will be about keeping pace with the changes in the marketplace and honing their skills to cater to evolving needs of the market. It will be their responsibility to update their skill sets as the full-time secured job will soon become passé.
In the near future, the virtual freelance community will compete with small enterprises and will erode into their business. As time progresses, they will build strong networks with freelancers who provide complementary services. The network will grow and soon they will be able to offer a wide range of services that a medium and large firm offers. The key differentiation will be that the best of networks will have the top talents in the market as they come together and become a force to reckon with. All of this minus the heavy administration, per employee and advertising costs. Each will have their set of clients and massive cross-selling will pursue. They will challenge every organization who will remain heavily dependent on full-time employees.
A massive workplace disruption is about to happen. The “virtual estate” era has arrived and those who turn their backs on this shift are bound to lose on immense opportunities it has to offer and probably even run out of business before they realize.
About the Author:
Atul Gulrajani has over 10 years of experience analyzing businesses and advising strategic and investment decisions to clients across the globe. To initiate specific in-depth analysis related to this topic across any industry sector please drop in an e-mail to the mailbox firstname.lastname@example.org