Why an improving economy will not improve the job market

Some quick bullet points.

In a tanking economy, companies that are unfit for the situation will also tank. Many, many small and midsize companies did tank.

The ones that did not crash and burn were the ones that were able to reduce costs and overhead as income also shrank.

Reducing costs and overhead means these things: accepting tradeoffs in terms of taking performance hits in flexibility, in uptime, in turnaround, in inventory; outsourcing everything that can possibly be outsourced in terms of infrastructure and labor; reducing headcount; reducing payroll/compensation/benefits

Until companies require the extra flexibility and speed of turnaround and reliability, they will not tolerate the expense of adding these things back in. Companies will not require these traits until there are more companies competing with each other. When the herd got thinned, competition was reduced. With corporate/business credit availability depressed, there will be no startups or spinoffs leaping into the fray.

Of the business components that got outsourced… those aren’t coming back either. Manufacturing, skilled labor and assembly, IT infrastructure (including telephony, training/support, even applications and office automation), sales, customer support — it is a flexibility hit to have these things offsite, but good planning replaces the need for flexibility to a huge extent. These jobs now only exist in huge farms that work for many different companies, composed of teams of people and pools of resources that shrink and grow without the need to hire and fire and train.

No company who has made a transition to this form is going to say, “Now that profits are back up, let’s rehire 30% of the sales force we outsourced. Let’s bring our Google-hosted email back onsite. Let’s reopen a customer-facing datacenter in our basement and migrate our data back to a custom in-house application maintained by a small team of onsite designers and developers.” Instead they will say, “Spend a few extra bucks expanding our outsourced capacity and dump the rest into that marketing firm we hired.”

If your work was in sales, in customer support, in application development, in infrastructure support, in training, in marketing, in manufacturing, in skilled labor — your job is never coming back. You have no choice but to sign on with one of these huge pooled-resource scenarios — if the one that replaced you is actually in the country — or retrain for something that is impossible (for now) to outsource. Like hands-on healthcare. Or K-12/college/university teaching. Automotive repair. Construction. Mining. Transportation. Bureaucracy.

The cataclysm has happened. Extinctions have occurred. Your old niche no longer exists. It has gone to where all the Hummers have gone.


April 30, 2010 · by xalieri · Posted in Everything Else  


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