Like many of you out there, I was floored last night to see Presidential candidate Hillary Clinton openly attack the Sharing Economy in a speech outlining her economic theory.
Clearly taking a swipe at the likes of Uber and Airbnb Mrs Clinton states, “This on-demand or so-called gig economy is creating exciting opportunities and unleashing innovation. But it’s also raising hard questions about workplace protections and what a good job will look like in the future”. Clinton “Vows to crack down on employers who misclassify workers as independent contractors”, which she says is “wage theft”. Along with globalization and automation, Clinton describes the “Sharing Economy” as “conspiring against sustainable wage growth”. The report says “she will argue that policy choices have contributed to the problem, and that she can fix it.”
So why does added protectionism of US workers help offshore and nearshore outsourcing?
While the open attack on innovative business models is in itself mind-boggling, the less obvious impact of her focus here is to discourage service providers and enterprises from hiring US talent to provide business support services. As service delivery becomes increasingly focused on higher value needs, such as organizational design, analytics modeling and supporting complex apps development across multiple environments, the opportunity for local US talent to be leveraged is huge.
In addition, the way in which new generation As-a-Service providers want to engage with talent needs to be more “As-a-Service” to be competitive. Virtual support models are becoming critical for BPaaS support functions where clients need quick, on-tap support, and – in many cases – the new generation of service provider isn’t simply looking to stock up hoards of full time employees in a call center somewhere in the Midwest – they are also seeking to engage talent which prefer a flexi-model and do not demand entitlements such as healthcare, 401K etc. Isn’t that what things like ObamaCare are for? Just look at how the new class of Workday service providers, such as Collaborative Solutions, Meterorix, and OneSource Virtual, all of whom are upending the old guard of “Was-a-Service” providers, clinging to costly legacy models that have already been disrupted. These firms are all employers of local US talent in support of innovative As-a-Service delivery. Does Hillary really want to discourage these firms from flexing up with more staff locally as they grow, or would she prefer them to invest more in India, South America etc where talent is more fungible and flexible to manage? Because that is what will happen if more protectionist employment laws are put through.
Why not make it easy and fluid to hire local talent to scale up – as and when needed? Why not support our service-driven businesses to be more agile and cost-effective with their delivery? Because if services firms and enterprises are being strong-armed into hiring fulltime employees (many of whom don’t even want to be fulltime employees), they are going to evaluate alternative talent models to deliver their services, such as hiring more local people part-time, or outsourcing to service providers which can provide talent from across the globe.
Bottom-line: The US is an increasingly unattractive place to do business. Let’s not make it even worse
For starters, the US has stayed at the lead of the global economy ever since Winston Churchill stuck two fingers in the air because their leadership has embraced innovation in technology and life sciences – and supported their leading firms and academia in the process. Now, rather than staying ahead of the curve and realizing the future of work doesn’t look anything like the past, we are seeing the leading Presidential candidate come down heavily in support of protectionism in order to win a few cheap votes from taxi drivers who overcharge us. Aren’t our wage costs, payroll taxes, healthcare contributions etc already off the scale? Why not give our innovative employers a chance to be successful so they can create new jobs for the future, as opposed to discouraging them from hiring in this country at all? It’s not as if there is a huge unemployment problem in the US these days…
Uber is an easy target for Hillary as it has to rely on local contract workers to be effective and the government can step in to interfere. However, what about all the tech start-ups, As-a-Service providers, major enterprises which can leverage fungible labor from anywhere across the globe to fulfil their needs? Don’t bite off your nose to spite your face Mrs Clinton – protecting a few taxi drivers who overcharge us would have much broader impacts on the attractiveness of US talent at large. Let’s just hope this is a minor aberration as she realizes the consequences of this bewildering campaigning and quickly corrects course to avoid being seen as a dated, legacy politician.