Why Self-employment is the Answer — Part II of III

Trends in Outsourcing | ONtrepreneur Academy

Self-employment may be less than an option for some. Learn why more 9-to-5’ers are taking the plunge into entrepreneurship.


This post is part of 2 of a 3-part series. For part 1, click here.


In part one of this series, we discussed what it might mean to you to become freed of the burdens carried by traditional 9-to-5’s. We also talked about “treading water” and how it might feel to receive that life raft. Now we’d like to provide more context and discuss how the future of the labor force may make your decision a bit easier.

Thanks to the Baby Boomers, an estimated 25% of the U.S. workforce will be retiring in the next 10 years, and while that may scream “job security” to you, we would argue that may not be the case. As labor costs continue to rise, businesses will become more dynamic and lean, ultimately leading to offshoring and other outsourcing methods as the retirees say their goodbyes. Rethinking that second degree yet?

With the greatest economic recession since the Great Depression coupled with poor credit and housing markets, the labor force has never been so uncertain than it is today. That uncertainty has led to dramatic downsizing; and although the economy has seen some improvement, the level of unemployment hasn’t moved much. Why is that? Businesses are afraid to commit to the future and that means less jobs and more outsourcing.

Let’s take a minute to discuss outsourcing. Outsourcing is essentially obtaining goods or services from an outside supplier, either locally or internationally (sometimes referred to as offshoring). It affords businesses the opportunity to farm out work that would otherwise be beyond their normal scope of practice so they can concentrate on their core competencies. An example might be a business relying on an outside source to do their accounting or a telecommunications firm using an outside sales force. Businesses have been doing it for years, realizing that they can dramatically decrease costs and improve their bottom line. Take a look at the example below and notice that 95% of companies believed that outsourcing was effective at reducing their operating costs:


Outsourcing Facts | ONtrepreneur Academy


New companies (or those new to outsourcing) are realizing that after having adapted to the uncertain markets, they can actually run leaner operations by not hiring employees. Increased levels of companies are seeing the potential, while others do not have a choice. Many are ultimately deciding that in order to keep their business alive, they must find leaner solutions, i.e. cut jobs and begin outsourcing. Experts predict[1] that outsourcing is now a strategic tool that may power the future of our global economy. The Internet revolution has led to a new industrial revolution, whereby global competition has led to the need to maximize resources at a global scale. For most, that means offshoring.

If you’re still on the fence about the future of the labor market, let’s take a look at the facts:

  • Increased outsourcing percentages – the average manufacturer now outsources 70-80% of their finished product; more than 90% say its part of their growth strategy [1].
  • Natural unemployment rate increase – since the recession, there has been a 2.6% increase in the natural unemployment rate, to over 9%[2]. This is not to be confused with cyclical unemployment, where the labor market is out of equilibrium.
  • The Federal Reserve changes rate guidance – the policy has changed from a quantitative measure of the unemployment rate (previously set at 6.5%) to a qualitative one[3]. What this subjective approach implies is that the drop in unemployment rate may be a false sense of security and a poor indicator of the strength of the labor force. With inflation rates in flux, the policy makers see a weak market and don’t predict a change in the near future.
  • Equity crowdfunding in effect – the SEC unveiled a law (JOBS Act) that would ease securities regulations around raising capital for startups and small businesses. In part, the law approves the selling of securities through open platforms and the microfinancing of loans for small businesses. With bipartisan support, were able to see that our legislation predicts small business and entrepreneurship to be the future of our economy. Read more about equity crowdfunding


Outsourcing Graph | ONtrepreneur Academy


We’re not here to argue the benefits of outsourcing or push a political agenda; we’re simply suggesting you take a look at the patterns and facts to make an educated decision for your future and the future of your family. Your “job” may not be as secure as you think, but that doesn’t mean you have to be a part of the problem; you can be a part of the solution. In fact, history will tell you that where most see problems, leaders see opportunities. In next week’s post we’re going to talk about how you can leverage this opportunity to become financially independent and completely escape the 9-to-5 dilemma.


[UPDATE] Our flagship course, Launch Blueprint 2.0 is here! Within 6 weeks, you could be running your own online business and working towards a happier existence in no time at all. Check out all of the awesome modules that are available within the course here. I also encourage you to sign up for our newsletter below, so you’re getting (free) actionable tips on how to create financial freedom through online business.


1. http://www.economist.com/media/globalexecutive/outsourcing_revolution_e_02.pdf
2. http://www.frbsf.org/economic-research/files/wp11-05bk.pdf
3. http://www.bloomberg.com/news/2014-02-19/yellen-says-recovery-in-labor-market-far-from-complete.html

Header image is licensed under a Creative Commons Attribution 2.0 Generic License. It is attributed to Scott Ingram, and the original work can be found here.


Brice D. M. Holmes

Brice D. M. Holmes in an online business consultant, author, & entrepreneur who helps ordinary people and businesses establish, grow, & monetize their online presence. he holds an MBA in Entrepreneurship from San Diego State University and currently lives in San Diego, California.