Those merry mercenaries

Today, Labor Day, I’d like to give a thought to several hundred thousands (millions already, surely?) of professionals that are increasingly out of the traditional picture of labour.

If you visit the business parks around any city, or the offices of any important organization, you will likely come across them. If you deal with any creative teamwork, thet are probably involved. They are salaried professionals without a labour contract. They are the merry mercenaries.

From consulting to outsourcing

“Consultants” became frequent a couple of generations ago. Experts or specialists that came in to solve a problem and left again once it was finished. They were more expensive, and presumed to be more effective, than your usual labourer. They dressed in a suit, and those that hired them heeded them.

Then something weird happened. Organizations started to hire those consulting companies to handle projects, areas and whole functions. They called it “outsourcing” and it means that most support and IT work at companies like Bankia, Beam Suntory or the Spanish Foreign Office is done by workers that are not part of the organization but of a subcontractor. Hundreds of thousands of workers that hardy ever visit their home company, long-term “implants” that no longer often use a tie.

And since subcontracting comes in any shape, from IT to Human Resources to logistics, call centers or inbound marketing (don’t get me started on journalism), the model of “I work for that company, but not at it” becomes pervasive. It is not infrequent to see a department where less than half the workers have a direct labour contract.

“Consultants” have usually become “technical consultantes”, parked by a specific function or application, and as interchangeable as the bolts in the chairs on which they sit.

From freelances to fake contractors

In parallel, something else happened. The real experts were in increasing demand, but salaries did not rise in line. Tie that with the different crises, and you have a wave of qualified pros that leave the corporate shelter and offer themselves directly to the market, either because they are known to the customer or because the market can qualify them. These pros don’t always wear a tie (they are mostly “creative workers”) but they are, again, respected for their knowledge at the places they go.

But the market is large and the freelances are very lonely (even if ever more numerous). Some, yes, work small enough niches and can differentiate, and still fend for themselves. But most find it difficult to sell and to work at the same time. They gravitate to “platforms” where their proposals compete on the common factors (price, time, location) instead of on their differentiation (experience, work practices). This is the “gig economy”, where a professional must sell her own weight several times a month to feed herself.

The worst is that most of the business is not on those platforms. Serious, long-term contracts are still handled by organizations able to handle project risks. Companies with ever less permanent labour, because they don’t need it: it is far more confortable to grab someof those freelances (contractors or microntrepreneurs) as needed.

So, the same “flesh merchants” that feed workers to their customers (outsourcing as we called it) start to have two levels: a bunch of people with low or middle training, usually hired… and another bunch of more experienced, veteran pros, more expensive, who are either working in a project or off the books, because they are (magic word) contractors.

Some pros become contractors by their own decision (better wages), some for lack of choice (nobody wants to pay those wages as a fixed salary). Once many have gone into the new state, a new problem emerges: where before the “freelance” was an exceptional figure closely tied to expertise… now it is an euphemism for the fake contractor, hired and fired according to workdload.

In that context, the pro is no longer part of the company she serves, not even part of the one that manages her. She is just another piece, a component, reasonably interchangeable, without any more emotional investment in the project than her bond with her coworkers.

The system works: a qualified pro can usually get a gig and live well, if shes’s flexible and hardworking. Job security and career growth are just out of the question.

And then came the temps

Where proud consulting companies used to stand, there were “professional services” firms and then “systems integrators”. Then they were “oursourcing and services companies”. The business model had increasingly less to do with (commodified) expertise and more to do with “body shopping”, the actual term for the business of putting technical bums on seats at the customers’ demand.

“Body shopping” is a volume business, as it competes essentially on cost. There is no margin nor interest in investing in differentiation. That is why “roll-up” operations proliferate, where an IT firm rapidly buys up others to build up a customer base and achieve efficiencies in management and lower “bench” (pros without a project). That is how Tecnocom was built, and many more are being built now.

The latest wave is meaningful. Temporary work companies have seen the synergies and are entering the field, either setting up subsidiaries or snapping up companies, as is the case with Manpower’s latest acquisitions.

The merry mercenaries

In this way, the old consultants, the expert freelances, and all the rest of them too, are ending up in the hands of a shrinking number of service providers who have locked up he access to customers, to those accounts that provide long-term work. They become subcontrators of the subcontractor, and that as long as there is work to parcel out, since this business model allows the dreamed-of “zero bench”. Where there is no business, there is no employee.

The model we are going towards is an ever-dwindling base of ungenerously-hired employees, with a changing crew of more senior profiles that only enter the game where they are needed (and the seniority cutoff is going lower). Services companies are becoming, just as newsrooms, “agenda managers”, that build up their abilities with external resources only when they need them.

In this model, innovation is external (new products). Training investment is what you manage in your free time. Contracts are long term but at the whim of customers. But they pay (relatively) well, and you can almost always change or recycle as needed.

And so you see them, roaming peaceably in groups in their natural habitats. Without the pressure of projects that they aren’t invested in, or of career competition. They just take care to do their work well and to keep their swords sharp, because that is the only thing that keeps them fed. They trust themselves and their mates, because that is what they can depend upon. They fight together not for their client, but for themselves.

They are a growing part of the services sector. They are what is coming.

They are the merry mercenaries.

(This article was originally published in Spanish at https://losdelacasta.es/2017/05/01/los-alegres-mercenarios/)