Say Bye to Full-Time Employment: You’re Likely to be a Temp in the Future

by Darwin on September 6, 2011

There’s been a growing trend in corporate America whereby positions that were historically held by full-time employees are now being sourced to more “flexible” temporary employees.  They may be termed “contractors”, “consultants”, “independent contractors” or myriad other names, but the temp worker concept remains the same.  The reasons businesses are increasingly going the temp workforce route are the following:

  • Lower Compensation Costs
  • No Healthcare, Benefits
  • No Paid Vacation
  • Easier to Terminate or “Release”
  • … Everyone else is doing it…

Contractors Are Now Doing My Job!

I was pretty shocked when I heard our group was going to employ contractors to help with some of our peak workload we’re encountering.  What I do is project management for transitioning biopharma products from one site to another.  It could be internal plant sites, or often times, it’s from a site to a contract manufacturer.  Not only do these projects take years from start to finish, but management of these projects requires years of relevant historical experience in manufacturing, executing deals, supplier management, etc., which I have.  I used to think that I had a pretty unique skill set as a Chemical Engineer, MBA and various Procurement/Supply Chain certifications that made me uniquely qualified for this type of role.  I was therefore pretty shocked when I first heard we were going to use contractors to fulfill what I believed to be such a critical, entrenched role in the company.

The reasons for going to contractors were valid in retrospect.  Primarily, our projects were picking up much faster than our bandwidth and we simply didn’t have enough qualified candidates internally to fill open Project Manager roles.  But what we found was that there were plenty of suitable candidates outside the company that had either been previously laid off (massive consolidation in the industry in recent years), were coming back from taking time off with the kids, or just looking for the flexibility contracting brings.  I was initially skeptical that this model could work, but admittedly, it is.  The contractors are doing fine, none of them have quit for a full-time position elsewhere and frankly, when the workload peak drops off, it will be less painful for the company to sever ties.  They already know this is the endgame and contracts are only allowed to run something like 2 years anyway, so presumably, as that time approaches, they’ll be looking for roles elsewhere.

My Epiphany on the Future of the US Worker

Once our company started down this road with what I had viewed as a “core” function, I had a bit of an epiphany.  What if all companies started to go the “virtual company” route and have very few employees that make core strategy decisions and outsource everything else?  I started thinking about various jobs people fulfill and then questioning why they couldn’t be outsourced.  Thinking about virtually everything we employ full-time now and what could be outsourced, it’s tough to find a reason why these couldn’t go the same route.

  • Legal – Corporate lawyers make a pretty penny.  So do external law firms.  Who’s to say companies can’t just spend money on their peak work with external law firms instead of having a bunch of internal attorneys?  Maybe there’s just a head counsel who dictates strategy and oversees external attorneys similar to how companies outsource manufacturing and other services.
  • Manufacturing – Companies have been increasingly outsourcing manufacturing for decades so this is nothing new.  I’d just expect it to continue.  It doesn’t necessarily even have to be “off-shoring”, just outsourcing.  It frees up capital and allows for workforce flexibility instead of being tied to hundreds or thousands of employees at each plant site.
  • Procurement – In kind of ironic twist, the very people who negotiate deals to outsource manufacturing and services can be outsourced themselves.  A old colleague of mine actually left a role in Procurement to go work for a firm that does just that.  His company acts as a contract negotiating service for other firms that don’t want to employ full-time Procurement functions.  They more than pay for themselves with the money they save in negotiating and it allows the company to avoid the commitment to full-time employees.
  • R&D – I used to think of R&D as the “lifeblood” of our industry and was left scratching my head when I started to see layoffs there and outsourcing.  What I’ve come to realize is that the industry is starting to rely more heavily on in-licensing and deals instead of organic drug discovery.  Also, many employees in the R&D umbrella are performing functions that could be outsourced easily like testing, analytics, analysis, and other tasks that are becoming more commoditized than core these days.
  • IT – IT is an area that’s seen a lot of outsourcing in recent years and I’d expect that to continue.  While certain industries have particular nuances and regulations to adhere to, there are niche firms sprouting up to address those needs in everything from software for clinical trials to running Sharepoint sites. 
  • Sales Force – There are contract sales forces popping up all over the place which companies love because they can scale their force depending on the product cycle, new launches and costs are much lower.
  • Supply Chain – Rather than using internal employees for everything from Planning to Logistics, I’m seeing companies start to outsource large parts of their supply chain groups to true “center of excellence” outfits like FedEx.
  • Everything Else – This trend is so evident to many, that entire companies are being started up in niche categories.  For instance, an old college buddy and I started up a computer-aided design company for outsourcing everything from Plumbing CAD to structural 3D modeling.  We’re well aware of the notion that for many firms, it doesn’t make sense to carry full-time CAD drafters when the workload might be nothing 1 month and 4 full-time equivalents the next month.

What are your thoughts? 

Is it realistic to assume your company will be the same size (or larger) in 10 years, 20 years, when they could simply start shifting to the temp workforce model for higher complexity roles? 

Is your role bullet-proof?  Really?


{ 17 comments… read them below or add one }

Jeff @ Sustainable life blog September 6, 2011 at 12:03 pm

I dont think my role is bulletproof, but I do work for a government agency as opposed to a private firm. There are skills that need to be learned on the job, but anyone can be trained for them.


Darwin September 6, 2011 at 11:05 pm

Yeah, pretty much. Do you figure austerity will result in government outsourcing more?


MoneyCone September 6, 2011 at 4:08 pm

Anything labor intensive will move out unless it is related to medical devices or defense items where you can get a pretty good return on your investment.

Most design work will remain, though some of it is bound to be outsourced. How long can we maintain an edge will be the next million dollar question. Intel is beginning to outsource design work to India, China and Israel. Others might follow.

But some point, this will stabilize. Manufacturing will be hit hard.

A thought provoking post Darwin!


Darwin September 6, 2011 at 11:06 pm

I’m thinking even all (or most) stuff outside of manufacturing right? Design’s a good point, ideas and decisions have to come from somewhere, but that’s like 10% of a business unit. All the tactical stuff? out.


retirebyforty September 6, 2011 at 5:27 pm

That’s what I’ve been saying for a long time – anyone is replaceable. I’m sure part time workforce is the way of the future. My company has been doing this for years. The company reports 30,000 salary employees in their financial report, but they have another 10,000 non-exempt employees. Contractors provide great flexibility like you said above.


Darwin September 6, 2011 at 11:07 pm

Yeah, I’ve always kinda known it but always worked under the premise that the company will always retain their top talent. But last month, I saw some really good veteran employees let go. It’s tough out there!


Kevin@OutOfYourRut September 6, 2011 at 5:41 pm

I’ve been writing on this very topic for quite a while, and it’s more pervasive than most people think. Because of technology and outsourcing/offshoring no job is safe. Technology is linking businesses making outsourcing even easier, robots are replacing workers, and education and skill levels are rising in the developing world creating a wage advantage to go offshore.

We all need to prepare for a world of less certain employment. I believe that having a back up career (for down times) and/or a side business (for income continuity) are becoming necessities. Building up savings and paying down/staying out of debt are survival skills. Learning to sell yourself in your primary occupation is taking on new meaning. You may have to do it many times during your career. Contract assignments, short term jobs–they’re becoming the new normal.

A friend of mine who works in IT recruiting said that jobs that used to be secure aren’t, and the ones we think still are won’t be very soon. No matter how safe you might think you’re job is, it’s best to prepare for otherwise.


Darwin September 6, 2011 at 11:09 pm

It still surprises me just how many IT positions there ARE within blue chip companies. I would have thought much more would have gone out by now. I know several folks in IT for 10+ years with the same blue chip. I guess they’re bringing something to the table a contractor can’t?


krantcents September 6, 2011 at 5:49 pm

So far my role is safe! I am a teacher, but state budgets are in flux and they keep cutting. Will education ever be outsourced? Who knows, I am very glad that I will retire in 6 years.


Darwin September 6, 2011 at 11:10 pm

Ah, teacher. So’s my wife. Teachers have that union/seniority thing going for them. You’ve probably got a 99% chance of making that retirement date. I think outside public sector union jobs, younger and corporate positions are going to be more short-lived than prior generations.


Squirrelers September 7, 2011 at 1:39 am

There are many jobs that could be outsourced, or even cut, in today’s economy. This will likely increase going forward, all signs point toward it.

I recall dealing with a consulting firm years ago that got paid a handsome amount of money (probably 7 figures annually, from what I surmise) to do some analytical work . Good people, guys that would talk sports with you, talk golf, etc. Sharp, good MBA program-types it seemed. They had a nice gig, it appeared.

A few years later when I was no longer involved, I heard that an overseas company came in and undercut them significantly. The relationships, the rapport, sports talk,etc – all kicked to the curb. What was lacked in communication skills was made up for by heavy price competition for obstensibly the same kind of work.

The era of entitlement is over.


Darwin September 7, 2011 at 8:41 am

Yeah, the sports talk only goes so far. The entitlement, denial, complacency, whatever we call it. It’s quickly coming to an end in some segments. Many appear to remain untouched (govt, unions, etc), but same ultimate outcome.


Revanche September 7, 2011 at 7:41 am

I think that no jobs are ever safe in principle, so have always acted accordingly when it comes to my own. In more senior roles, I have had to work with groups to increase outsourcing where appropriate and necessary to keep the business running because we literally could not keep pace with the growth hiring internally, however, that’s not a sign of the end times.

We are also now taking a close look at redefining which core functions may remain outsourced, which may be outsourced in the future and which outsourced functions need to return to internal staff. It’s an interesting exercise and we have been able to make a good many logical and sound business arguments for a fair number of tasks to be brought back in-house to some degree and therefore created new jobs. I’ve actually doubled my staff in house and outsource staff over the last six months. Conservatively, it wouldn’t be outrageous to expect more of that.


Darwin September 7, 2011 at 8:42 am

Yeah, that’s kinda what happened to us. We basically ran out of qualified project managers and had to go external. Usually PMs were like 15-25 years industry experience (and these contractors are), and it was assumed only core high performers could handle the job, but we’ve found several contractors to manage some peak work. If you asked me a year ago, I would have said impossible. now it’s reality.


JT September 7, 2011 at 1:31 pm

The difference between jobs that can be outsourced and those that can’t is thought, in my view.

Data entry, for example, is something that is easily outsourced. However, interpretation of the data for use in marketing, financing, or other high-level business management processes will never be outsourced. There’s just too much risk to allow another firm or outside individuals to run a portion of the business dedicated to building a competitive edge.


101 Centavos September 8, 2011 at 6:58 am

Outsourcing is part of my job description. We like to joke around that in least in theory, we could outsource the whole company function to our competition.


Pam September 10, 2011 at 9:59 pm

After reading several books written by entrepreneurs and business people, I have learned that no job is really all that “secure” as companies rise and fall, downsize, or outsource to countries with cheaper labor, which can result in a decrease in hours or the loss of a steady paycheck.


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