If you have been living under a rock, you might have missed all the RTO1 discussions, mandates, and controversies. Or you might just have RTO fatigue and not engaged with any of this.
While RTO policies are kicking in with force – Amazon mandating 3 days, Apple similar, and even the egalitarian Salesforce beginning to unwind some of their “family” mantra just to get more people in the office (I guess when you invest $1.1B in the tallest fucking building in SF, you want people to bask in its glory). Additionally almost all of the major banks have been merciless in their crusade to return to the office, because of course.
It is clear that leaders and managers really want people back at their desks, flashing their smiley faces, looking busy, justifying the Managers’ salary and station within the company.
Depending on what you read, for the white collar class, prior to the pandemic, remote workers were about 20% of the workforce, and now that is about 33%. Clearly the pandemic shifted some thinking from management. Yet you still read screeds by the tech-Bro class railing against the practice, the loss of productivity, and the need to get the creative juices flowing by serendipitous encounters in the mythical office between team members. I am thinking outspoken assholes like Elon Musk and his lickspittles, DHH, and other “luminaries” who just have to be able to see their minions to ensure that they are busily toiling at their workstations, the creation of widgets to enable them to buy one more ivory back scratcher (or in the case of Marc Benioff expand his private land holdings in Hawaii).
Regardless of their proposed reasoning, the reality is that the pandemic has proven that remote work can and does work, that people can be just as productive (and in some cases more productive) as being in the office day after day. The pandemic spurred the fastest improvement in online collaboration tools, from Zoom, to Miro boards, and many more, instantly driving the addition of features to reduce the barriers of success.
Plenty of people worked with their leaders, and used the pandemic to escape the tech hubs, to move to places with lower costs of living, infrastructure that supports the remote work, and thus spreading the abundance of the Silicon Valley to communities that really could use the rejuvenation2.
But that isn’t the whole story.
Enter the Layoffs
Last fall, as sticky inflation stubbornly refused to abate even as the Fed kept raising interest rates, another trend was happening.
The pandemic was a once in a century event, and from the first lockdown, people had nowhere to go, and turned to the internet. Gaming, gambling, shopping, and other activities fueled HUGE increases people’s online consumption. This led to all the major tech companies (the MANGA3 crowd) to think that this increase was structural, durable, and thus permanent. This thinking drove an insane bout of hiring at the majors (one exception being Apple, who is always cautious) to allow them to grow to fill this permanent reordering of the economy.
Naturally, when the vaccine became plentiful, the restrictions raised, and people could go out in safety, they did, and the behaviors that drove the huge uptick in their fortunes during the pandemic returned to - not normal, but nearly so, the revenues that were elevated came back to reality. Zoom’s stock that truly soared during the pandemic fell to less than a third of its peak, and others were similarly affected.
Note that profits didn’t disappear, they just declined. That drives Wall Street nuts, and the executives need to do something about it.
And, executives being executives, they reached for the RIF4 lever. The blood was spilled, and somewhere around 260K jobs were cut in tech (and in 2023, over 127K positions were eliminated). So much doom and gloom in the business press, so much hand wringing, but the reality is these selfsame executives chose to expand the hiring, assumed that the pandemic shifts were permanent, and in general were negligent in really understanding the ephemeral nature of the pandemic affect on the economy.
Of course, there were layoffs outside of major tech, hell - my company did some “rebalancing” of the workforce, using the pandemic era shifts (remember, the number of fully remote workers is up from about 20% to 33% or so) to justify the actions - but in the wider economy, the pressure to cut staff was muted, and in fact there are still plenty of open jobs, and anecdotes that it is harder than ever to find qualified employees.
So surely, the Microsoft’s, the Netflix’s, the Google’s of the world are not hiring anyone, right?
The Part where we get to the thesis
Microsoft laid off 11,000 employees in late 2022, and more in 2023. That must mean that they aren’t hiring anyone, right?
Wrong. If you look for jobs at Microsoft, you will find tons of openings. But there is a catch. They are mostly contractor positions. Replace Microsoft with Meta, or Google, or Amazon for similar tales.
A recent post I read on Medium5 posited that due to the struggle that big tech companies are having with the RTO motion(s), there is likely a shift to more workers being brought in as contract employees or as "C-Workers6” that are essentially “hourly” positions, and thus it allows managers to track every motion, and activity. Getting back to the MBWA that piss poor middle managers seem to thrive on to justify their existence.
And frankly, this feels like a trend that is accelerating. Back in 2016 when I was between jobs, I signed up for some of the services that provided gig work, and to this day, I get emails from a handful of contracting intermediaries seeking product managers, product marketing people, marketing managers, and the like. They are all filled with verbiage like “6 month term, extensions likely” or “12 month full time, with chance to convert to permanent” and the like.
The above referenced Medium article implied that the managerial class and executive class is going to counter the desire for remote work with the unspooling of permanent, FTE work (salaried) with this quasi-gig work, contracting, and de-risking the enterprise of keeping the staff on the books, and instead use one of the staffing providers (Stage 4, Hays, etc) to handle the hiring and the HR functions.
I started my current job as a C-Worker, and was converted to a FTE at about the 1 year mark. My observations:
You don’t really work for the company, you work for the contracting company. If there is feedback, reviews, or complaints, your “handler” (a.k.a. the person at your company that would be your “boss”) can’t have those conversations. Instead, they report to the contracting company, and then they talk to you
It feels weird to be on a rolling contract that renews each quarter, but you are developing and executing plans that cover years, even if at each quarter roll over you bite your nails as to whether your contract will be renewed
The benefits are shit. Because I live in California, my contracting company had to provide a handful of sick days (that you are NOT allowed to use for personal, or vacation use) but in general, there is no paid time off. Furthermore – even in California – you do not get paid time off for holidays. Thus, instead of looking forward to the holidays, you get boned, time off without pay. That meant that for the Christmas break (the 2nd quarter) there were 11 unpaid days. That hurts. Also, there was no assistance with the cost of health care insurance, so you are paying full boat (for my wife and I, an ACA “Silver” tier plan was ~ $1,400 per month, yikes. Lastly, if you want a 401K, they offer it, but no matching7 so you get little acceleration of your retirement savings.
You get the idea. But it seems that in the future white collar work is going to shift more and more to this contractor relationship. In a sense, this was inevitable with the rise of th gig economy. But it is not going to be great for the bulk of office workers. Less security, fewer benefits, and if anything more surveillance of your activities.
And for product management, that is not a great place. We rarely have a well defined role, with clear expectations, and instead are measured on results, and adaptability is key to success. That is hard to wrap into a contractor worldview.
But why do employers like this?
It is simple, regardless of how many times the mouth the mantra “Our Employees are our Greatest Resource” the truth is that employees are expensive. There are benefits, taxes, local regulations, retirement planning, stock/equity and compensation, bonuses, and the far too frequent legal action when a manager acts badly (really common), or when a termination is not well documented (far too common). All these are worries of the leadership and executive team.
Outsourcing to these contracting suppliers makes a lot of sense.
Note that this doesn’t always mean that the company is paying less. The hourly rate is comparable to a salary paid to a worker, but there is overhead paid to the contracting company that makes up almost all of the benefits package.
And, here is the real juice: when a company decides to cut costs, it is really easy to terminate the contracts, and let the contracting supplier deal with the actual firing of the worker.
You can ramp up quickly and ramp down even quicker. You don’t have to interview for the position, if the contractor or C-Worker isn’t cutting it, you can just “get someone else” without the recruitment cost.
Win win, right?
Why this might work?
I have written in the past about the technocratic evolution of product management:
Much of the mechanics of product management is being captured in tools, removing the skill of the practitioner. The “Art” of product management is being replaced with defined tools and processes, and many of the secret sauce that great product managers brought to the profession are being moved to other groups, designers, UX researchers, and even product marketing doubling down on segment research, while product managers are being commoditized to fulfill roles in frameworks like SAFe.
Thus, a shift to ephemeral product managers, under contract, and separated from direct employment might work.
For this to function well, there does need to be some changes to healthcare. In particular, the US health system is completely trash, tied to employment. Ideally, some form of single payer health insurance would smooth this transition, but that is not likely. In the absence of that, these contracting companies that handle the logistics and staffing concerns need to begin offering enough benefits to attract good talent. The benefits don’t need to be a generous as a FTE salaried employee of the company, but it does have to be generous enough to keep employees in the system.
I have my doubts that this will work long term.
Unfortunately, this whole shift seems likely. Employers are pretty good at increasing they leverage, and since tech workers are highly resistant to unionizing, basking in their belief that they are “special” and that as individuals they can get a better deal.
This shift is really going to put pressure on the workers to begin to demand more protections. A union might be just the ticket.
But, what do you think? I am going to open up this post to comments, so if you have thoughts, please weigh in.
Return to Office - the unwinding of the pandemic era remote work trend ↩
Not everybody is cool with this. The migration from the SF Bay Area and NYC to other locales has driven up local housing costs, angering the locals. There are always unintended consequences, and until these local economies adjust to the new influx of tech bucks, there will be resentment, and ill will to the invaders. A story as old as time itself! ↩
Meta, Amazon, Netflix, Google, Apple ↩
RIF is Reduction in Force, the sugar-coated term for layoffs that sounds less ominous, but somehow isn’t ↩
Sorry, I didn’t bookmark it so no link ↩
Well, my employer mandated that these contracting support companies provide a 401K match, so my second calendar year I got a match. The match? $25. No, that is not a typo