Via AdventuresInCapitalism.com,
I have now run a few companies. Over time, I have experienced a repeated epiphany; which is that you never realize which employees are useless until they go on a vacation and nothing bad happens. Now, this isn’t a dig at good employees; good ones find ways to delegate their responsibilities and still check their emails – great ones work harder while on vacation. However, the bad ones often vacation themselves out of a job – oddly, those are usually the ones who keep reminding me about how valuable they are. Ironic right?
I bring this up because most employees just went on a 3-month forced vacation. As I speak with my friends, they’re all saying the same things:
- –For 80% of employees, work from home went better than expected and my friends are now wondering why they need an office building and the associated expenses.
- For 20% of employees, it has been chaos and it seems silly to retain office space just to micro-manage these weaker employees.
- If they are going to run the business through Zoom meetings, why do they need expensive Americans when there’s some guy in Poland who will work harder for 10% of the price?
Me: Wait…, what???
Him: Yeah. We can save a fortune by outsourcing. We have considered it in the past, but we thought we needed the communication and team-building of all being in the same place. Now, we’re re-thinking this.
Me: Have you ever managed people overseas?
Him: Yeah, we outsource a few projects today. Some work better than others, but we’re getting the hang of it. We intend to dramatically increase the percentage that is outsourced because we basically outsourced everything during COVID-19. Sure, it isn’t going to be perfect, but the savings more than justify it. We can then retain a few Americans who fix the mistakes. All we really need is for senior management to be American with a few guys in Admin to support management. More than half of our staff can be offshored.
I have had this conversation a dozen times now in the past month. Rewinding a few decades; America outsourced its blue-collar manufacturing workforce and hobbled the middle class. The white-collar guys have sort of ignored this as everything at Costco got cheaper. However, there were big consequences along the way. Now I wonder if we are about to outsource a lot of the white-collar jobs too. That would be crippling for the economy.
Thinking of my expenses, I have always wondered why I spend a few hundred dollars an hour for a lawyer to review a document or regurgitate the securities laws. I have to think there’s someone overseas who can do this for a fraction of the cost. You don’t need a fancy degree to proofread a contract for me. I just need to know that you have all the facts and won’t make expensive mistakes. Fear of the unknown is all that held me back from finding a cheaper alternative. Many of my friends have said something similar. “How will we know if our bookkeeping is done right if it is done in India?” “Well, what’s the difference between India and having it done 20 miles from your office with a weekly Zoom meeting?”
Now, many of these offshoring experiments will fail. It takes a unique skill to manage people remotely and after a period of chaos, many of these jobs will stay in America, but many won’t. Much like the multi-decade process of outsourcing manufacturing, we’re about to have a similar process when it comes to office work and COVID-19 just dramatically accelerated it by removing the fear of remote work. Except, whereas manufacturing took decades to offshore, I wonder if office work is pushed offshore over only a few quarters.
COVID-19 was a bad cold that global governments overreacted to. The ramifications of this error will be ricocheting around for long after we all take our masks off and go on with life. As I sit on the beach during my vacation and piece it all together, I realize that many people are focused on the first-order effects like restaurant seating capacity, while ignoring the much larger impacts. The world will never be the same after COVID-19. History says that a crisis accelerates changes that are already in motion. Look around you and think through the permutations.
Our world will change dramatically as things open up. Is your portfolio prepared?
It is my sincere desire to provide readers of this site with the best unbiased information available, and a forum where it can be discussed openly, as our Founders intended. But it is not easy nor inexpensive to do so, especially when those who wish to prevent us from making the truth known, attack us without mercy on all fronts on a daily basis. So each time you visit the site, I would ask that you consider the value that you receive and have received from The Burning Platform and the community of which you are a vital part. I can't do it all alone, and I need your help and support to keep it alive. Please consider contributing an amount commensurate to the value that you receive from this site and community, or even by becoming a sustaining supporter through periodic contributions. [Burning Platform LLC - PO Box 1520 Kulpsville, PA 19443] or Paypal
-----------------------------------------------------
To donate via Stripe, click here.
-----------------------------------------------------
Use promo code ILMF2, and save up to 66% on all MyPillow purchases. (The Burning Platform benefits when you use this promo code.)
“Is your portfolio prepared?”
I am willing to bet that his is not.
Love to read his follow up in 10 years. Written in charcoal.
This article is written by Harris Kupperman. It’s not even an article. It’s a paid promotion for Zoom, something that none of us ever heard of three months ago. No business is going to survive with 80% of its workforce working from home. This guy was promoting real estate in Mongolia 8 years ago
Yep,me portfolio tis fine.I have me tools/truck ect.,useless(in my opion) building /lead/osha licenses and certs.The only offshore competition I will have is folks who come to the U.S.
My preps for being self sufficient as much as reasonable moving forward,working locally with others,see a future of many mini- economies(countries?) within the country that to a large degree will be decoupled from mass economies,will be a interesting ride moving forward.
And there are employees who save the owner from the idiotic decisions he makes…repeatedly . Some owners make you wonder how they got the money etc to start the business. Usually it dads,moms or other peoples money that the con man was able to talk out of in short order .
I remind everyone of the Law of Unintended Consequences:
Sure, off-shoring office help sounds great in the short term. And many companies could do this for some sectors of some of their businesses.
Law of Unintended Consequence:
Americans are not fond of dealing with non-native English speaking people
Consequence: Decreased drive to that company/loss of business when frustrated people turn else where
Off-shoring drives down payroll cost/SSI/FICA/State income taxes cost is down as well
Consequence: State, local, and federal government raises taxes elsewhere furthering the cycle
Secondary consequence: off-shored “employees” are loyal to the parent company that hires and manages them, not the parent company. These are typically run with a hard hand and more like a sweat shop type environment
https://www.business-humanrights.org/en/malaysia-panasonic-samsung-face-allegations-that-workers-in-their-supply-chains-are-being-cheated-exploited-underpaid-companies-launch-investigations-0 (and this is but one of many). So while the bottom line may increase, your company reputation may decrease, leading to a decrease in overall business
The bigger picture to look at here, and one which will almost certainly happen and happen in the next 18-24 months is employers SIGNIFICANTLY reduce their physical footprint. If 80% of your employees now work from home, then why are you paying a massive lease for a physical presence?
Class “A” commercial space lease in the Fenway area of Boston: $3-$5 per square foot, and this does not include utilities, and if it’s a stand-alone property, you’re talking “triple net” meaning the proprietor must also pay water, sewer, trash, maintenance, and very often, real estate taxes. So let’s just say this is 16,000 sq feet X $5=$80,000 per month. How high is your payroll?
Businesses that rely on foot traffic for their income are surrounded by empty office space
Unintended Consequence:
These buisinesses are now severely hurt by the lack of the foot traffic from these employees coming into their store. The businesses most hurt are always going to be the restaurants and bars. When I was in the restaurant biz, the “lunch rush” was a huge part of our income, and then the Thursday/Friday after-work bar crowd.
Here’s a better option, and one that I think will take hold and gain major traction once physical office space starts emptying out:
Employers now start to change to sub-contract work for all “employees”. This is not a bad thing, although many who lack the discipline to work at home will find themselves in big trouble. If you are contracted for X amount of work for Company Y, and you can efficiently manage your time, then imagine the income opportunities that await you. You could easily work for more than Company Y, thereby increasing your income. The lack of a commute will easily add 2+ hours to your work day if you so choose. Want to work Saturdays instead of Wednesdays? No problem, the “office” in your house is open.
Law of Unintended Consequence:
A bigger push for Nationalized Healthcare to cover all these sub-contractors. Not a fan of this, but perhaps the free market will respond with better options and stop this BS with not being able to cross state lines.
Law of Unintended Consequence:
Subcontractors of similar fields can band together to form some kind of non-profits that specifically cater to a “benefits” package for these types of workers. Imagine like-minded individuals who can group together to get the type of insurance they want, vacation coverage, disability, retirement, etc.
And lastly, the opportunities for child-care are MASSIVE here. But, why would that be if all these people are working from home? Has anyone had a two or three year old in the house while they try to work? Exactly.
So remember, folks, every time you flip a switch, or close a door, something else happens. Sometimes it’s good, and sometimes it’s not, but there’s always opportunity.
A good illustration of what you speak is the movie: Bedazzled- with Elizabeth Hurley playing the the Devil who granted ten wishes to Brendan Frazier. Be careful of what you ask for.
My favorite part was when she made him the tall basketball player…without the corresponding “parts”. Hilarious.
Yes, me too. “damn the devil to hell”
If I design my systems properly and provide support docs to the right people I can go on vacation and leadership will never know whether or not something went wrong. Prajeet and his pals would rather be constantly tinkering and being seen to be busy, and lady managers like lots of meetings to build a process that a team will follow to design a system, and if the result has failures, well, that leads to more meetings while Prajeet now has something to tinker with, and nobody’s to blame; it was just a “miss” in the process. Executives like this author see the constant flurry of emails and call it “work”.
The author of this piece ought to worry about something other than his portfolio.
It’s people like this that are employing illegal aliens, outsourcing jobs and going along to get along with crooked politicians. They don’t care about America, only about more profit.
You can only outsource so much. Once you outsource enough, there’s no one left working to buy your stuff. Unintended consequence.
You’re quite right, but this will likely be the fully unveiled (maskless) face of post-covid small-scale capitalism. I’m retired and plan to stay that way save for ramping up fruit and veggie production here at home, but the temptation to earn never fully disappears and at times rears its somewhat seductive head. I live abroad, you see. That said, I’m not throwing my hat in the ring. Be warned, however: this latest insult to fellow Americans will proceed.