About Modern Job Trade — The Big Picture
In this blog series we will paint a picture of the job market, its inefficiencies and how blockchain technology might save society a lot of money by removing third-parties from the market. If you are impatient, hate long stories and love technical information — we encourage you to skip the queue and read our whitepaper at www.nomadlabs.xyz.
Now, let’s paint this picture.
Heads up, it gets a bit grim.
The job market is in constant change. The times where an employee walked into the office of his first job and stayed there until retirement are long gone. Modern work life is filled with high-skilled employees switching jobs frequently to build their careers.
Modern work life is also filled with third-parties — recruiters, platforms, and consulting firms, that connect companies (producers of goods and services) with the talent they need to realize the potential of their business.
It’s a golden era for these middlemen — the global market was $900 Billion in 2021.
And almost every penny is the price of trust.
These third parties exist mainly because of the trust barrier between an employer and a candidate for a vacant position — can we trust him to have the proper skill set to fill the role to our needs? The average cost of recruiting an employee is ~40% of a one-year salary, incentivizing companies to outsource both the hiring process and the work. The absolute minimum cost in the current market is ~10% for sourcing and filtering candidates — a service mostly delivered by digital marketplaces like TopTal, Upwork, Braintrust (a third-party disguised as a DAO) etc. If you add staffing to the mix, the price resembles that of a hiring process, ranging from 20–50%. Sprinkle some flexibility requirements and network effects, and we have the consulting houses at 50–80%.
In short, the lack of trust costs society approximately 20% of the job market and expensive value chains feeding middlemen are everywhere.
Higher costs is not the only issue arising from the emergence of third-parties. Lack of supply of full-time employed competence is another — amidst a massive and growing tech talent shortage. If all talents are locked up at consultancy firms or databases of recruitment firms, the company must either 1) attract the talents organically 2) hire the consultancy firm 3) hire a headhunter to recruit a talent from the consultancy firm or 4) give up their projects. It’s a Mexican standoff, an expensive one, and the third-parties are winning.
To Summarize, we have a job market where expensive third-parties impose high costs on the companies trying to produce the goods and services society demands — also known as innovation. $900 Billion is a high price for innovation. What if there was a way to get more bang for the buck?
Well, the market for freelancers is booming. But 75% of freelancers are still reliant on third-parties to surpass the trust barrier.
Blockchain technology can help freelancers engage directly with companies without the need of third-parties to surpass the trust barrier. A decentralized peer-to-peer network of freelancers with on-chain governance can emulate a consulting firm at minimum cost.
Such a network might look something like this: If I have a surplus of projects, I sell them to members in the network. If I’m out of work, I find a project through the surplus of other members of the network. If my current client requires expertise I don’t possess, I buy it from the network. If my current project requires more resources, I get them from the network, perhaps through international trade. If I’m unable to work for private reasons, I find a replacement in the network. But wait…isn’t this some sort of consultancy firm all over again? Almost, this consultancy firm is owned and controlled by the members, allowing the freelancers to reap the benefits of collaboration without surrendering profits or autonomy.
How can we achieve this? An economic game with rules deployed immutably on blockchain aligns the incentives of the members — incorporating the recruitment process in the economic game itself. Contribute to the network according to the rules of the game and gain ownership of the network according to the contribution.
Similar networks have existed in the Web3-sphere for sometime — LabourX, for instance. But they serve Web3 and are focusing on the niche market of blockchain developers. BrainTrust claims to bring the technology to the rest of us, but they’re unfortunately just a third-party in disguise, claiming to decentralize when they’re actually not — resulting in bad exploitation of good technology (they’re not even able to solve the problem of recruitment, which we will explore in our next post).
The power of such networks cannot be invoked without handing over control and ownership to the members. Decentralization is the only way — you can’t have your cake and eat it too.
Our modern freelancer 1) controls and owns the network through participation 2) keeps his high salary 3) keeps his autonomy 4) shares his private network to gain access to an international network 5) works in the team of his choice 6) has access to capital to fund any (ad)venture he may have
We call such a freelancer a Nomad. We believe that a Nomad can 1) remove the costs imposed by third-parties on the job trade 2) meet the demand for skilled workers worldwide, and 3) accelerate innovation by taking the step from freelancing to entrepreneurship.
Is this possible? We believe so. Nomad Labs is building it as we speak and we will use this blog to explain exactly how.
In the next post, we deep dive into the industry of recruiting and see how blockchain might offer a better solution. If you can’t wait, check out our whitepaper at www.nomadlabs.xyz and subscribe to our newsletter.
References
McKinsey & Company, Beyond Hiring
Korn Ferry, Future of Work — The new era of humanity
Boston Consulting Group, Freelancing in Europe 2021
Upwork, Futures Workforce Report
Indeed, Cost of Hiring Employees
Shrm, The Real Costs of Recruitment
Recruitee, Cost Per Hire
Glassdoor, Calculate Cost Per Hire
