How technology is displacing the marginal workforce for SMBEs

Looking at P.R. AnnouncementsRecently, the Wall Street Journal had published two seemingly unrelated articles, “Can the Table Please take the Order Now? – As Wages Rise, Employers Consider Replacing Workers With Technology; Burger-Flipping Robot May Be on Horizon,” WSJ, March 27, 2013 and “Job Growth Slows to a Trickle – Unemployment Rate Falls One-Tenth of a Percentage Point to 7.6%“, WSJ, April 5, 2013. Based on an earlier, editorial opinion article by Mort Zuckerman, “The Great Recession has been followed by the Grand Illusion”, WSJ, March 25, 2013, Mr. Zuckerman anticipated the larger unemployment rate with a greater fall of displaced workers no longer seeking employment. Where is the source of these displaced workers? In fact, these maudlin, economic statistics and these three articles now confirm a dramatic restructuring of the U.S. labor economy where technology is leveraging labor more and more throughout the fabric of the Small Medium Size Enterprise ecosystem in order to reduce labor costs.

Technology, whether through a smartphone or Pad or notebook, is getting so powerful and so inexpensive that it can adopted by any size business enterprise throughout the United States.

In 2009, according to Office of Advocacy estimates, there were 27.5 million businesses in the United States. The latest available Census data show that there were 6.0 million firms with employees in 2007 and 21.4 million without employees in 2008. Small firms with fewer than 500 employees represent 99.9 percent of the total ( employers and nonemployers), as the most recent data show there were about 18,311 large businesses in 2007.
In December 2012, IDC predicts that 122.3 million tablets will be sold in 2012, rising to 172.4 million units in 2013 and 282.7 million units in 2016. Apple leads the pack. In 2011, global mobile handset sales outnumbered tablet sales by 22:1. Tablets sold: 68 million… mobile handsets sold: 1.5 billion.

Under Moore’s Law, we are witnessing the doubling of computing and data storage power every year. Witness that adjusted for inflation, today’s (2009) iMac is 26% percent cheaper that a 1984 one. In terms of CPU – computing power, the 2009 iMac is only $0.34 vs. the 1984 price per CPU of $662.25. RAM processing power difference is more dramatic from $0.00025 (2009) TO $40.52 (1984).

As the prices for computing power continue to drop, the SMBE will have greater opportunities to apply such computing power to its day-to-day operations that trumps over the actual costs of even hiring minimum wage employees. In other words, whatever a computer can simulate, calculate, or organize will soon displace human counterparts. The greater affordability is creating greater numbers of applications for the SMBEs.

Those personnel being displaced are being pushed down the economic ladder of manual labor, which requires far less or the minimal amount of education – house cleaning, gardening, and so forth – manual labor that cannot be displaced by computers. And, even in the professional labor, a Los Angeles newspaper attribute a large portion in the drop in demand for attorneys to digital technologies which stores, organizes and indexes documents. In other words, the days of Herman Melville’s Bartleby the Scrivener are long gone. Then, in the legal profession, who has value? The attorney-rainmaker, attorney-barrister, or any attorney not replaceable by digital technologies. On the other hand, there are attorneys who translate from one language to another, even that can be substituted by a Google translator application.

The most important trend is that the technology market has begun to develop new business applications further integrated into the day-to-day operations of SMBEs. When I visited the country of Chile some years back, I noted that labor there was far less expensive than technology. One retail store had three people to handle your purchase: one to take your item and note it for inventory purposes, another employee would take that item and accept/process your payment, and the third employee would wrap or place that item in a bag with the receipt. If I were to visit that same store today, I would not be surprised that all three people would be rolled up into one with mobile Pad payment systems. And I believe that we will witness more software applications for mobile hardware directed to SMBEs that increase efficiencies and reduces labor costs.


About Juan Ramón Zarco, SVVGP 胡安•雷蒙•扎尔科

Juan Ramon Zarco, 胡安•雷蒙•扎尔科, Silicon Valley Ventures Growth Partners llp, Hygieia Healthcare Technologies Company, AllRest Technologies LLC, Crimson Growth Partners LLP,, is an experienced as CxO, General Counsel and Secretary to public and private companies with global operations. Established track record of producing practical, revenue-focused solutions. As Counselor and Secretary, demonstrating vision, integrity, and sound business judgment, to CxOs. Managed complex, strategic transactions, M&A, contracts support, PE Financing, IPO, SEC compliance, Corporate/HR governance, IP licensing, Budgeting, Staff, outside counsel management, International market access strategies, Domestic & foreign government relations and advocacy. Creative in designing and implementing market access strategies. Practices law beyond conventional model with low-overhead and project-based fees. Effective at managing departments, formulating marketing strategies, balancing budgets, and implementing cost-saving measures. Extensive in-house and private practice experience, advising clients on commercial, corporate, international business, and technology law and policy.; For Sprint, he managed iDen international development in Southeast Asia, Middle East, and Africa, and contractual issues with Verizon. In Private Equity, he worked with Pegasus in vetting international investment deals and interim President for portfolio companies, such as Data Foundation, a data storage company, handling marketing, strategy, fund raising, and accounting. Before Pegasus, Mr. Zarco, as CLO and V.P. of Corporate Development, played a principal role in the structuring, international expansions for 2 telecom companies, U.S. Cable Group and Viatel, Inc. in financing and M&A deals exceeding $200 million. Mr. Zarco earned a J.D. from NYU Law School, M.B.A. from Cornell, and B.A. from Williams College; is fluent in Spanish, Portuguese, French, and German, with working knowledge of Russian, Arabic and Japanese.
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