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Arthur T Knackerbracket has found the following story:
Until the 1980s, big companies in America tended to take a paternalistic attitude toward their workforce. Many corporate CEOs took pride in taking care of everyone who worked at their corporate campuses. Business leaders loved to tell stories about someone working their way up from the mailroom to a C-suite office.
But this began to change in the 1980s. Wall Street investors demanded that companies focus more on maximizing returns for shareholders. An emerging corporate orthodoxy held that a company should focus on its "core competence"—the one or two functions that truly sets it apart from other companies—while contracting out other functions to third parties.
Often, companies found they could save money this way. Big companies often pay above the market rate for routine services like cleaning offices, answering phones, staffing a cafeteria, or working on an assembly line. Putting these services out for competitive bid helped the companies get these functions completed at rock-bottom rates, while avoiding the hassle of managing employees. It also saved them from having to pay the same generous benefits they offered to higher-skilled employees.
Of course, the very things that made the new arrangement attractive for big companies made it lousy for the affected workers. Not only were companies trying to spend less money on these services, but now there were companies in the middle taking a cut. Once a job got contracted out, it was much less likely to become a first step up the corporate ladder. It's hard to work your way up from the mailroom if the mailroom is run by a separate contracting firm.
[...] The existence of such a two-tier workplace is especially ironic in Silicon Valley, a region that takes pride in its egalitarian ethos. Former Google CEO Eric Schmidt gave a remarkably candid assessment of the situation in 2012, in a statement quoted by author Chrystia Freeland.
"Many tech companies solved this problem by having the lowest-paid workers not actually be employees. They’re contracted out," Schmidt said. "We can treat them differently, because we don’t really hire them. The person who’s cleaning the bathroom is not exactly the same sort of person. Which I find sort of offensive, but it is the way it’s done."
(Score: 3, Interesting) by Anonymous Coward on Tuesday March 03 2020, @01:11AM (1 child)
I had this same epiphany back in 2001.
I saw two kinds of companies in the Bay Area. Products, and services.
Product-oriented companies made products - IE, Sun Microsystems, HP, SGI, IBM, etc - but they also offered services (technical support contracts and onsite consulting engineers, for instance). When things were good, Sun Microsystems outsourced almost all of its onsite service calls to third party companies. They all did.
Service-oriented companies mostly prospered by doing the onsite services for the product-oriented companies. They did not actually have a product, and were dependent upon the other kind of company for their entire business model.
For example, Linuxcare. They were a services company. They had no products - they just handled support for other companies. They employed 'way more salespeople than they did anything else. When things got tight, the contracts dried up, and so did Linuxcare - overnight, they went from 200+ to ~20 employees, and 90% of the survivors were managers, and executives. The company had no IP. Too bad.
When things got tight, the companies with products - hardware and software - sat on their inventory and brought their service contracts back inhouse, leaving the service-oriented vendors high and dry.
When things got tight at the service-oriented dot-coms, they laid off all the engineers who had done all the actual work, but they kept all the salespeople and middle management. If one was an engineer and was so fortunate as to survive a few such layoffs one found oneself the lone engineer in a so-called "technical support" company, with everyone else being management ... and, if one was at all sharp, one gradually realized that one was the sole breadwinner of the entire fucking corporation, and that one was carrying a dozen or more people who were all being paid more than one was, on one's shoulders.
It was then that I had my epiphany. These people needed me more than I needed them. They were helpless without me or someone like me. I was NOT helpless without them. I had skills, and adaptability, and was quick to learn new things. These are still valuable, in any marketplace. They just needed repackaging.
If you're going to build your own product, you don't want to share ownership. If you ever do an IPO you will quickly discover that 10% of your company is nothing. You will gain a grudging respect for successful dot-com entrepreneurs.
If you are going to build your own service bureau, you WILL need partners. Or a nest egg. Or both. You'll need someone to answer the phone, talk to customers, and make appointments. You'll need someone else, to make sales calls and drum up your next gig while your head is buried in a server diagnosing a boot problem. You cannot do that alone - trust me. You will gain a grudging respect for salespeople - good salespeople - as a necessary evil.
Services are an incredibly lush source of after-market continuing income but they can not replace actually having a product - something tangible, a widget of some sort. Services follow products. Products do not follow services.
So when the individual before me says, 'lemonade stand', what he means is not just, 'own a business', but 'develop a product'.
I'd one-up it and say, 'develop some intellectual property'. Then you can keep it and develop it - or sell it, take some time off, then try again. Or put on the back shelf and wait for the world to mature enough to recognize your genius.
Don't depend upon someone else to employ you. Give some serious thought to products or services you can provide to your neighbors and your community. Look for something techno that needs to be done, that nobody's doing, and consider developing a weekend business. 3D printer repair, for instance. Internet-connected backyard chicken coops. See? That wasn't so hard.
Food for thought.
~childo
(Score: 0) by Anonymous Coward on Tuesday March 03 2020, @08:54AM
Why does the service company need to survive a market shift? A company is just like a service, it's not "something tangible".
I think it's long past the point where it's wise to see a corpo as a monument built by the founder or a benefit to the public. It's just a phenomenon, both causing and caused by the economy.