The rise of the on-demand economy and what it means for outsourcing

Back in 2015, The Wall Street Journal did a nice deep dive on “the on-demand economy,” which essentially refers to companies like Amazon, Uber, et al. You can get what you want — a car, or a box of diapers — relatively soon after you want it, be it three minutes or same day, hence the general term “on-demand.” A lot of the on-demand economy overlaps with “the gig economy,” because gig workers tend to be the ones making sure the things you want (the car, the diapers) get to you quickly.

As you might expect, during COVID — when people were largely at home and various institutions in their area were closed — the gig economy and the on-demand economy boomed, with multiple industries contributing to overall staggering growth. In fact, because of all those diapers (+lots of other stuff), orders, Amazon founder/CEO Jeff Bezos’ net worth grew $72 billion in 2020 alone. 

People like having stuff quickly. That’s not a surprise. There are other people willing to make generally less money to deliver that stuff to people, because “generally less” is more than “zero.” So the equation is there, the ecosystem is there, the tech is there, the platforms are there, and people are comfortable with it. The on-demand economy is here to stay. In a year when we constantly discussed “The New Normal,” one of the surest parts of “The New Normal” is that we’re going to be focused on deliveries, contactless payments, and other societal workarounds for probably another 8-12 months, if not longer. Gig workers, and on-demand options, are not going anywhere.

Begs the question, then: what does it all mean for outsourcing?

A few theories

In many ways, the rise of gig workers has helped cement the outsourcing industry in some eyes. 20 years ago, there were a few variants to the idea of “an acceptable career” in the first world. Now there are many different paths, including stringing together gigs, and companies (and their leaders) are increasingly interested in contractors, outsourced work, or even “team of teams” models where individuals come together for a few weeks, work on a specific project, and then disband into other projects.

2020 and 2021 are such weird business years for many — certain industries, like these on-demand ones or gaming, are growing rapidly. Others are contracting. Forecasting is nearly impossible because we don’t know the status of virus variants, vaccine rollouts, and more. Because business is so different than it normally has been, the idea of full-time hiring and building up internally loses a little bit of value in the eyes of leaders. Why not enter into flexible contractual agreements where prices can scale up/down based on demand? That makes more sense in uncertain times.

One consequence of the on-demand economy in the management ranks is that brain channels have been shifted, and because many managers can get a car in three minutes, they think urgent deliverables can also be delivered “on-demand.”  This has led to spikes in employee stress, burnout, and coupled with the financial picture of 2020 for many companies, layoffs. An outsourced model is a smarter path to rebuild for many companies, because the pricing is flexible and it allows you to play defense against uncertainty in a way that full-time hiring and rushed priorities don’t benefit you.

Because of all these factors, you’re seeing industries where outsourcing was not common — such as higher education — begin to embrace the idea. In healthcare, where the biggest consumer push is to reduce prices, outsourcing has also become attractive to bigger companies.

Now, the other thing you will see in coming years is a new definition for and around contact centers. You might think of them right now as dreary places with agents packed together in rows. Instead, contact centers are changing to be more vibrant and engaging, and the model of working with a BPO is shifting too — instead of just working phones/chat, the outsourcing partner might work apps, WeChat, WhatsApp, and more. You’re going to see a shift to the mobile ecosystem in the contact center space, and you’re also going to see contracts between outsourcing partner and client shift to reflect that.

What won’t change is the need for flexible pricing and a strategic partner to deal with your customers, and that’s what we’ve been providing for 16 years at this point. If interested in discussing more the on-demand economy and what it means for contact centers, BPO, and outsourcing in general, we’d love to have a discussion.