Long gone are the days when Ford, J.C. Penney and General Electric were the largest U.S. employers. A new analysis shows that the country's outsourcing companies – including the likes of Compass Group and Accenture – are the largest employers, leasing out workers to some of the largest businesses in corporate America.
According to The Wall Street Journal, citing S&P Global Market Intelligence, of the 20 biggest employers this year, five are outsourcing companies. Back in 2000, only one employer in the top 20 was an outsourcer, and that was International Business Machines Corp.
The move to let outsourcing companies provide the talent comes as businesses are increasingly handing over operational tasks to non-employees and/or contract workers. Over the course of the last 20 years, the annual value of outsourcing contracts jumped. In 2016, it stood at $37 billion compared to $12.5 billion in 2000. That number is expected to increase this year, and is likely to increase by double digits in 2018 – likely driven by the migration of company data to the cloud.
The prominent role outsourcers are playing in U.S. employment, according to the report, has a big impact on workers' compensation and job prospects. The employers enjoy a cost savings, but for the workers, it often means fewer benefits and lower pay. In fact, a growing amount of economic research suggests that outsourcing is a major factor in the income inequality seen in the last decade.
“If all the engineers are in one firm and the cleaners are in another, you get less diversity within firms and more inequality across firms,” said Nicholas Bloom, an economist at Stanford University.