Trading Off: Virtual Companies and Relative Economics

The advantages of going virtual for companies are obvious. One
of the greatest of these, yet one that’s often overlooked, is the ability to
select employees without geographical limitations or relocation costs. This
also carries cost-of-living possibilities even within national borders, as, for
example, the price of an editor outside of New York City is rather lower than
the price of one in Manhattan.

However, the most obvious and admittedly greatest saving for
companies is the real estate or total lack thereof. The comparison between a
month’s rent in an office complex to a month’s hosting on a web server is
laughable, and when IBM freed their sales and service personnel from corporate ties,
the savings on office space alone ranged from 40% to 60% per location and
totaled $35 million annually. AT&T gave their sales staff wifi laptops and
turned them loose, also letting go almost ten stories of office space and
cutting costs by 50%.

In addition to reducing direct property costs such as
maintenance and utilities, this also reduces other, less tangible ones as well,
such as liability premiums. After all, how many customers have ever slipped and
broken a leg on a website?

Shifting grounds

For employees, the benefits also seem obvious: save on
transportation, stress, clothing, and dry cleaning, work at home rather than fight
the traffic, live anywhere rather than stick near the office, be home for the
kids, dogs, Maytag repairman. But economically speaking, is it that simple?

In their thought-provoking book Revolutionary Wealth,
Alvin and Heidi Toffler put forward the concept of the “third job.” A person’s
first job, of course, is employment, what we do to earn money; the second,
unpaid job is the tasks that make up the background of life, such as running
the kids to soccer practice or cleaning the kitchen. But the third job, also
unpaid, consists of all the jobs that employees of businesses used to do for us
as part of customer service, but which we are now expected to perform for

The classic example of the third job is banking, and the
very alteration of the word symbolizes the change. The word “bank” used to be a
noun. It was a place people went to deposit or withdraw money, get a copy of a
check, or clear up a discrepancy in one’s statement. Now, however, the word has
become a verb, something that we’re supposed to do for ourselves either online
or at an ATM. The teller behind the counter hasn’t yet become a dinosaur, but
their employment trend is definitely on a downward slope.

This same dynamic is at work in telecommuting. The cost of a
brick-and-mortar establishment doesn’t evaporate; it’s shifted onto the
employee as a percentage of her home is reallocated to serve as her office. To
the mortgage or lease can be added supplementary costs such as electricity,
telecommunications, water and sewage, and even coffee. Additional expenses that
may be incurred include a back-up computer, equipment insurance, and
uninterruptible power supply. While some of these costs would, of course, be
taken as tax deductions or reimbursed by the parent company, or offset by the
savings in other areas, the idea of itemizing one’s beverage of choice is
humorous rather than businesslike. Yet the reality of the cost increase remains.

This third job has been touted as self-service, the ability
to manage our time and tasks for ourselves, and truly there is a gain in
convenience. But that convenience comes at a cost as efficiency is achieved not
through higher productivity per se but through fewer employees.

In addition, rather than merely collecting a paycheck, the
employee is now expected to request reimbursement for those costs considered
reasonable—that third job again, convenient but at a cost of time and effort
nevertheless. It’s also worth noting that the burden of proof has also shifted,
as a business generally pays their own light bill without question but scours employee
reimbursement requests for the same utility for evidence of artificial

The concept of an employee-less society seems to be in the
same category as the paperless office we were promised in the 1980s. But the
parameters of employment are changing. As the Tofflers point out in Revolutionary
the job as we currently know it is less than 300 years old; before
that time, craftsmen were expected to provide their own tools and workspace.
Perhaps that wheel is completing its circle.

Join the forum discussion on this post - (2) Posts

Leave a Reply




You can use these HTML tags

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>