In the early 20th century, Henry Ford made the automobile, once considered a luxury item, available to the masses with the introduction of the assembly line in Ford motor factories. Since that time there has been a great rise of factory production as an industry for developed countries around the world, with significant impacts on the global economy as a whole.
This has created major challenges for many industries and new entrepreneurs who have been unsure of how to move into the next phase of business. We are seeing startups and well-established businesses alike offering a new form of luxury made available to the masses, on-demand services.
Similar to the way that automobiles were once out of reach for most people, the new “on-demand economy” (sometimes also referred to as the “sharing economy”) allows the average person to obtain services that were only available to the wealthy just a few years ago. In our new on-demand economy, those with a bit of extra money but no time and those with extra time but not enough money can come together and trade services for a fee.
On-demand service industries are scaling at a rapid pace, with new players like Uber for ridesharing, Airbnb for home sharing, and Upwork and Fiverr for outsourcing business projects becoming successful almost overnight. And now that even established retailers are moving to the on-demand model - think Amazon’s conversion from a basic retail marketplace to a service delivery conglomerate - there is no shortage of new startups that are jumping onto the on-demand bandwagon to deliver almost any service you can think of for a small fee.
But what does this industry shift mean in the grand scheme of things?
A New Workforce.
According to a recent article by The Economist, there are more freelancers today than ever before, with over 53 million workers in the U.S. alone, as the demand for quick access to specialized skills and services increases.
In the on-demand economy, workers will enjoy more flexibility and freedom - working on what they want, when they want. College students, stay-at-home parents, individuals with disabilities, and retirees who previously may not have been able to work a full-time job now have the ability to work remotely to accommodate their availability and schedules. People who may previously have been idle, unfulfilled, having a hard time making ends meet, or even those who have just been overworked and are experiencing burnout now have virtually unlimited options at their fingertips to create the type of career that works for them, on their own terms.
This is a significant deviation from the way business has operated for the last 50 years and the change does not come without some challenges. Workers who crave long-term job security and stability will likely struggle with this new economy as it becomes easier than ever to find specialists in every field that can be hired in a moment’s notice. Many will need to adjust to the idea that the development of your personal brand will become just as important as the work that you do to remain competitive for jobs.
New Business Operation Models.
The cost of outsourcing skilled work has decreased and the ease of outsourcing has increased tremendously with the introduction of platforms like oDesk where you can find, hire, and begin managing remote designers, engineers, web developers, writers, and virtual assistants in less than an hour. These platforms and today’s technology also make it surprisingly easy to manage a remote workforce, with apps for everything from screenshots and keystroke logging to time tracking built in to many freelance platforms.
Businesses will likely move to on-demand service models internally to decrease project completion time and costs. Rather than being limited by internal resources, startups are able to easily hire several people on a temporary basis to quickly execute projects that could otherwise have taken months or years. This is great news for businesses who want to drive innovation and evolve quickly, which are necessary to remain competitive in every industry.
Some business managers who are used to the more structured business operations of the past will struggle adapting to this new flexible workforce trend but they will have to move past their control issues if they want to compete for top talent. Creating a company culture that values the work-life balance of its employees will be essential to foster employee loyalty and retention in the coming years.
Maintaining workforce loyalty may also become more difficult in the on-demand economy as more work is outsourced to freelancers and contractors, who tend to work for whoever will pay them the highest rate and it may be tough to compete with larger companies who are competing for your contractors. Some employees may also become fearful about their own job security as they see more and more work being outsourced and this insecurity will need to be managed carefully to prevent employee churn.
New Government Regulations.
There have been a lot of regulatory challenges with services like Uber and Airbnb, as governments are being pressured by existing industries to prevent these companies from doing business due to fear of competition that is masked as a “concern for public safety”. The on-demand economy will require several new regulations and governments are often slow to act, which may impact industry growth initially but will likely not be an issue long-term as public demand for on-demand service providers continues to rise.
So What Does This Mean?
There are many obvious benefits to people having more of the things they need at their fingertips and according to their schedules - consumers definitely win in the on-demand economy. As people begin to adopt new on-demand services, the demand for more on-demand services in every industry will likely continue to increase and shape expectations about customer service in general going forward. All product suppliers and service based business should consider how the demand for on-demand may affect them and determine how they can integrate on-demand services into their current and future business models. As with any major industry shift, there will be a combination of both positive and negative outcomes. Some workers may perceive threats to their job security as on-demand businesses become more prevalent while other workers will be happier with the flexibility to do the work they want, when they want. Businesses can expect to see a decrease in operating costs but will also need to focus on offering competitive benefits to secure employee loyalty and retention. While we can’t predict the kind of world the on-demand economy will create for us in the future, it is safe to say that this an industry trend that is here to stay for a while and interesting to watch.
What are your favorite services that are now available on-demand in the Middle East? Do you have concerns about how the on-demand economy will affect your career in the future? Tweet your thoughts to me @reachhamdy and tag with #OnDemand to discuss.