The rise of the on-demand economy and what it means for outsourcing

Back in 2015, The Wall Street Journal did a nice deep dive on “the on-demand economy,” which essentially refers to companies like Amazon, Uber, et al. You can get what you want -- a car, or a box of diapers -- relatively soon after you want it, be it three minutes or same day, hence the general term “on-demand.” A lot of the on-demand economy overlaps with “the gig economy,” because gig workers tend to be the ones making sure the things you want (the car, the diapers) get to you quickly.

As you might expect, during COVID -- when people were largely at home and various institutions in their area were closed -- the gig economy and the on-demand economy boomed, with multiple industries contributing to overall staggering growth. In fact, because of all those diaper (+lots of other stuff) orders, Amazon founder/CEO Jeff Bezos’ net worth grew $72 billion in 2020 alone.

People like having stuff quickly. That’s not a surprise.

The on-demand economy is here to stay. In a year when we constantly discussed “The New Normal,” one of the surest parts of “The New Normal” is that we’re going to be focused on deliveries, working from home, contactless payments, and other new aspects of society for probably another 8-12 months, if not longer. Gig workers, and on-demand options, are not going anywhere.

Begs the question, then: what does it all mean for the outsourcing of work?

A few theories

1. Companies (and their leaders) are increasingly interested in contractors, outsourced work, or even “team of teams” models where individuals come together for a few weeks, work on a specific project, and then disband into other projects. Our version of this is the “team extension model,” where we bake our developers into your existing team to complete value-driven, innovative projects with you, not for you. We become a team.
2. 2020 and 2021 are such weird business years for many -- certain industries, like these on-demand ones or gaming, are growing rapidly. Others are contracting. Forecasting is nearly impossible because we don’t know the status of virus variants, vaccine rollouts, and more. Because business is so different than it normally has been, the idea of full-time hiring and building up internally loses a little bit of value in the eyes of leaders. Why not enter into flexible contractual agreements where prices can scale up/down based on demand? That makes more sense in uncertain times.
3. One consequence of the on-demand economy in the management ranks is that brain channels have been shifted, and because many managers can get a car in three minutes, they think urgent deliverables can also be delivered “on-demand.”  This has led to spikes in employee stress, burnout, and coupled with the financial picture of 2020 for many companies, layoffs. An outsourced model is a smarter path to rebuild for many companies, because the pricing is flexible and it allows you to play defense against uncertainty in a way that full-time hiring and rushed priorities don’t benefit you.
4. AI and machine learning are powering a lot of these on-demand platforms and gig assignments. As a result, on the software development side, you need to make sure you find people with expertise in those areas. It’s essential, and probably the most important tech of the next two decades.

What won’t change is the need for quality and expertise in the outsourcing partners you choose, especially for software development. We put together a checklist of the factors you need to consider and look out for, which you can download below.