This article was contributed by Tim Fung, Co-founder of Airtasker.
Uber’s recently leaked growth stats indicate that the transport company is processing annualized revenues of about $3 million per employee per year. To put that into context, that’s about $1,000 per person per hour that works for Uber and about 3 times higher than each employee generates at Goldman Sachs, one of the world’s most lucrative investment banks.
Companies like oDesk, 99 Designs and Airtasker all similarly have strong revenue per employee metrics and whilst each one provides a completely unique service to consumers, they all have one thing in common – they put distributed labor forces to work. Distributed labor is a movement which is now seeing massive growth – both in terms of VC investment and consumer adoption.
So what is a “distributed labor” platform? Sometimes described as part of the collaborative consumption or sharing economy, or referred to as “labor on-demand”, distributed labor is essentially the concept which powers platforms that connect consumers that need something (virtual staffing, graphic design or flexible labor) done with a workforce of people who have the skills and/or the time to get it done.
At the heart of the distributed labor movement is the ongoing desire to break the mould of inflexible working arrangements that were developed mainly during the industrial revolution and that have restricted human productivity, leaving many of us struggling to find a work-life balance.
To help explain the concept of distributed labor in a more colorful way, let’s take a look at an example from the Disney Pixar film Wall-E. Here, the future is a place in which the human race is so overcome with on-demand product and service consumerism that they hover around on floating chairs, requesting robots to meet their every demand.
Now whilst outsourcing an entire existence to technology might be some people’s idea of work-life utopia, this is not where distributed labor will take us. I believe that distributed and on-demand labor will have a far more profound and positive outcome that we should all be pretty excited about as part of the human race.
In the next one or two decades, we’re going to see distributed labor platforms continue to empower individuals, creating a labor market that will usher in more opportunities for both the buyer and the seller of services. So rather than all of us doing less (and floating around as gluttonous, mega-consumers), these service platforms will enable us to do more as humans and do it more efficiently too.
Here are three trends I believe will shape the future of distributed labor for good:
1. Distributed labor platforms will evolve to handle increasingly complex tasks
Distributed labor is only now reaching mainstream status, thanks to pioneering efforts from disruptive platforms like Uber shaking up transport and 99 Designs redefining design and we’re already witnessing significant evolution in the types of tasks that can be completed through online and mobile platforms.
The table below shows the evolution of distributed labor services, and illustrates the way in which platforms that have more recently hit the mainstream are tackling more and more complex tasks:
Initially, technology was only able to facilitate simple human actions, like picking out unscrupulous photos through Amazon’s Mechanical Turk, but as platforms continue to evolve, we’re seeing more complex tasks, like website coding, deliveries or home services being completed through labor distribution platforms. As these platforms and marketplaces continue to improve, so too will the opportunities for more people to monetize their skills and offering more value to people selling their services.
2. Services will be split into customizable and commoditize-able
Many platforms are currently attempting to product-ize or commodit-ize services into “off the shelf” packages (like a unit of transport distance or a single logo design) that can be easily sold. This won’t be possible in industries that require complex involvement from skilled labor, particularly where the outcome isn’t a simple ‘complete’ or ‘incomplete’ the outcome is dependent on the seller being fulfilled with the end product – often a determination that is highly subjective (think a single line of data entry versus recruiting a new developer through Recruitloop). This is a different challenge and one that will usher in the next phase of the distributed labor movement.
The next few years will continue to see huge industry transformation in commoditizable service industries but as platforms continue to develop and facilitate higher involvement “customiz-able” tasks, a whole range of traditional service industries will migrate to distributed labor platforms. This will enable more skilled people to efficiently do more and earn more in a liquid environment.
3. Growing liquidity in the labor marketplace will create a fair environment for those selling their skills.
Labor distribution platforms are often criticized for disempowering the suppliers of services by commoditizing their value and then driving prices down to keep their “customers” happy and increasing their margins.
This assumes that the power in the sales transaction is held entirely by the employer (the buyer of the services) but with increasingly high involvement labor distribution platforms and more job liquidity, a counterbalancing effect will start to impact the buyers of labor too. Detailed and meaningful feedback, comments and improved communication systems will allow the same marketplace dynamics that exist in the current job market to be created on web platforms. For example, right now to hire someone for a higher skilled service like management accounting or front-end web development, most service “buyers” would want to run a face-to-face interview, see previous work and perhaps complete a third party reference check. However as online data transparency increases (via social networks, third party endorsements, user feedback) and platforms facilitate specific communication channels (like video interviews, customizable testing and competitions), these requirements will be able to be fulfilled through service platforms, allowing the buyer to accurately pick the best person for the role.
This means that the buyer of services will have greater flexibility to choose if and when they want to buy services whilst the seller of the services will also have a flexible marketplace in which they can sell their services as they choose – they will also now have bigger choice. Once a “tipping point” of transaction volumes is reached we’ll see a super high level of marketplace efficiency and then reputation will be the key differentiator amongst buyers and sellers, which (assuming accurate reputation scoring) will create a much more fair and efficient market economy.
Over the next years labor distribution will start seeing increasingly complex tasks handled through platforms and service marketplaces rather than only through the current form of employee/employer arrangements. As the marketplace for labor becomes more flexible we’ll see a re-balancing of power towards the suppliers of services – those people who have sought after skills – who will be able to choose how and when they sell their services, rather than being at the mercy of any specific single employer.
The distributed labor movement will continue to see the dynamics of real world services being replicated through online and mobile platforms, bringing about changes in work-life balance and giving people more freedom to work efficiently in a manner that suits their lifestyle.
It’s a fascinating prospect and I think a positive evolution of human interaction – the growing adoption of distributed labor and on-demand services is going to result in more jobs (and more work) for humans, not less. A shame really, those hover-chairs and onesies look pretty comfortable.
Contributor: Tim Fung is co-founder of Airtasker, a trusted community marketplace for people to outsource tasks, find local services or complete flexible jobs to earn money. It has helped to create over 24,000 Australian jobs worth more than $2.0 million.