What is on-demand labor?

When first encountering on-demand labor, there are a few key things to know. Let’s answer some common questions together.

The term “on-demand labor” gets thrown around in several industries, including field service. But what does it mean, exactly? And more importantly, what does it mean for your business? We’ve compiled a list of answers to these and a few additional questions to remove any confusion about what on-demand labor is, how it works, and how it fits into the field services industry.

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What is on-demand labor?

On-demand labor is a method of connecting directly with workers via a platform to fulfill a project. It combines the flexibility of working with independent contractors with the access and technical specificity that a network of skilled laborers allows. The model is simple: a company posts work to the platform, and workers who are available and interested respond. This model of connecting with workers has gained popularity in recent years across a wide swath of consumer services––ridesharing, caregiving, and even dog-walking are a few services you can now contract through on-demand labor platforms. It has also gained traction in the B2B space with talent platforms like Fiverr and Upwork. Field Nation taps into this growing talent economy by connecting service companies with skilled technicians.

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Subcontractor vs. independent contractor vs on-demand labor––what’s the difference?

On-demand labor is an alternative to subcontractors, contract staffing, and full-time employees. Unlike full-time employees, on-demand workers work for themselves and therefore are not subject to the extraneous costs of traditional employment (overtime, benefits, etc.). Unlike subcontractors and contract staffing arrangements, on-demand labor creates a direct relationship between the company and the worker, eliminating third parties as a part of the arrangement.

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How does on-demand labor work?

One way on-demand labor works is through a talent platform like Field Nation. After businesses determine the scope and technical details of a job, they can post that job to the network. On-demand workers can then express interest in the job, giving businesses the opportunity to select the technician(s) whose experience and qualifications best fit the job’s particulars.

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What types of companies use on-demand labor?

Many different types of companies use on-demand labor, especially in the on-site service delivery industry. MSPs, OEMs, VARs––all can benefit from adding on-demand labor to their labor sourcing strategy. Service companies like Vology, Pomeroy, and Service Express all leverage on-demand labor to improve customer experience, protect their margins, and scale with confidence.

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How do on-demand labor costs compare to full-time employee costs?

The cost of on-demand labor varies based on the type of work being done. In the field service space, this price variance often depends on location, the kind of field service skillset required, and how quickly the job needs to be completed. Fixing a one-time laptop issue will probably have a lower hourly cost than a more extensive and complicated cabling job, for example. Tight service-level agreements affect costs as well: a 4-hour SLA will likely be more expensive than work that needs to be completed next week.

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What factors affect field service costs?

As with any type of labor market, high demand for a certain type of work will drive the cost of that work up. This trend holds true in reverse: when the number of technicians looking to complete a certain type of work outweighs the demand for that type of work, on-demand labor costs go down. Material costs also impact the overall cost of on-demand labor; if the costs of materials and/or gas go up or down, the overall cost of a specific job will adjust accordingly. Additionally, the location of a job and the expected turnaround time have an effect on cost. Jobs that need to be completed immediately and on a tight schedule come with higher labor costs, whereas more flexible schedules come with lower costs.

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What are the benefits of on-demand labor?

On-demand can solve a number of business problems. For example, businesses dealing with capacity planning problems can leverage on-demand labor to manage demand that fluctuates dramatically and unpredictably over the course of the year. Supplementing a full-time workforce with on-demand labor allows businesses to meet demand when it is high without committing to labor resources that would go underutilized when demand is lower. On the flip side, if volatile demand is not a key part of a company’s business planning, traditional full-time employees might be a better fit when it comes to their labor sourcing. On-demand labor also might not be a good fit for businesses that rely on a core set of employees for consistent, site-specific, full-time work.

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