I am a member of Arup’s global Foresight +...
Much has been written about the way that companies like Airbnb and Uber have shaken up the hotel and taxi industries. This shift towards a sharing economy is now taking place in professional services too.
It’s called platform capitalism: a web-enabled marketplace that connects businesses and other organisations to freelancers, consultants and independent service providers. I believe that the professional services industry is now at risk of losing market share to these new platforms, in the same way the hotel and leisure industry has lost market share to Airbnb.
Professional services firms like ours are already using freelancers as a flexible resource, and to source specific services and skills quickly – on demand. In fact, nearly 8% of Arup’s 4,620 UK-based staff are now freelancers (up from 5% in 2011).
In the US, it is estimated that as much as 33% of the total workforce is freelance; and this number is expected to grow to 50% of the workforce by 2020, according to Forbes. In Europe, the number of freelancers grew by 45% to almost nine million in 2013, making it the fastest-growing segment within the EU labour market.
Perhaps surprisingly, freelancing is seen as a highly attractive and lucrative career option by 87% of graduates with first- or second-class degrees, at least according to one report. I think this upward trend will continue, independent of the economic cycle (evidence suggests that recessions often generate new work opportunities for self-employment).
New business models that embrace the platform economy are emerging in professional services. Upwork, based in California, connects companies with freelancers, professionals and consultants including lawyers, accountants, consultants, engineers and architects. According to the website, three million jobs were posted on Upwork last year, representing US$1bn in fees. At British management consulting firm Eden McCallum, every one of its 500 senior level consultants works on a freelance basis.
What does this trend mean for Arup, an employee-owned firm founded upon shared ideals? While the number of freelancers we engage may increase, I believe our ownership structure will protect Arup from the “hollowing-out” that may occur elsewhere. Our values-led culture of membership, together with the benefits and incentives on offer to staff, will make the firm more resilient as we continue to attract, retain and continuously train skilled people.
As an example, Arup enables permanent staff to continue their training and professional development through Arup University (a cluster of central services). Arup University also enables staff to benefit fully from shared knowledge and peer expertise. This will be an attractive alternative for those considering joining the increasingly competitive platform economy, with the lack of benefits, training and job security that freelancing often entails.
Firms that stick doggedly to traditional models could find themselves losing market share as they are repeatedly undercut on price. Arup’s focus on providing clients with greater quality, albeit through some collaboration with the freelance community, means that the firm can maintain its focus on high value, rather than on low price. This should ensure that employee-owned firms remain relevant and valued in a changing marketplace.