(Analysis by Steve King of Emergent Research. a regular contributor to SmallBusiness.com. A version of this appeared also on his blog, SmallBizLabs.com.)
Almost every day, it seems an on-demand economy company (the companies that are “like Uber,” sometimes described as Uber for X) announces a big round of funding. For example, the delivery service Door Dash announced last week it has raised an additional $40 million.
With so many companies raising so much money to become the “Uber of X,” an elephant of a question has strolled into the room: Are there enough independent contractors to meet the demand for the on-demand workers necessary to operate these companies?
Here are just some of the challenges these companies face:
- They all have business models built on the use of independent contractors as service providers.
- Most of companies are trying to attract independent contractors from roughly the same pool—people looking for flexible, independent work in the service sector.
- A lot of these types of workers are only interested in part time work.
Companies that depend on on-demand workers came of age during the post 2008 recession and its “jobless recovery” are already facing worker recruitment issues. Otherwise they wouldn’t be spending so much money trying to find and hire people.
“With the economy improving, unemployment continuing to fall and traditional employers starting to raise wages (Walmart, Target and McDonald’s being examples), talent is already harder to attract than it was just a year or two ago.”
In fact, there are many professions/job categories where the war for talent is quite real today. Mobile device programmers and welders are two examples.
Add in dozens (maybe many dozens) of on-demand companies collectively planning to hire literally millions of independent workers over the next few years, and you have the makings of potential bidding war for on-demand talent.
So will there be an on-demand economy war for talent? And if there is, what impact will it have on on-demand economy companies and their providers? To be honest, we’re asking these questions because we don’t know the answers.
Over the next couple of months we’re going to explore this issue and try to figure it out.