Acquisition Signals Consolidation in IT Field Service Contractor Platform Space and Continued Emergence of Freelancer Management Systems
Field Nation, which describes itself as a “leading work platform connecting organizations with independent contractors to get work done,” today announced its acquisition of another platform provider Field Solutions. In the broader procurement solution provider marketplace, Spend Matters research suggests that M&A in 2015 is set for a record number of transactions.
According to the press release announcing the transaction, the combined company will have over 100 full-time employees and more than $60 million in revenue. However, revenue in this market often includes all of the labor costs or “pass through” components. Given this consideration, a comparable estimate to cloud providers in the services procurement market working on a subscription model compared to those cases with a mark-up or pass through component is roughly 6%-15% of quoted trading revenue.
Regardless, the revenue number for the parties involved in this transaction is less important than the overall revenue/volume growth rate, primarily because both firms are competing in a nascent market.
In the case of Field Nation and Field Solutions, both companies have almost exclusively functioned in the IT field services contractor management vertical, alongside OnForce (acquired by Adecco-Beeline last year) and Work Market. In 2014, Field Nation began positioning itself as not just simply a vertical IT field services platform, but (like OnForce and WorkMarket) as a broader (multiple labor category) Freelance Management System (FMS) play.
A Brief History of Work Intermediation Platforms
Indeed, all of these companies have been pushing the envelope on developing a species of online work intermediation platforms (WIPs) that allow enterprise users to more directly consume “labor as a service,” rather than hiring employees or sourcing contingent workforce through traditional staffing supply chain channels.
Over the years (starting in the early 2000s, with OnForce), platforms like Field Nation and Field Solutions, et al, have provided IT/equipment OEMs and its service management companies a means to access, engage, dispatch and pay qualified IT field contractors to service-deployed equipment/system distributed to customers across vast geographies (an efficient alternative to employing their own field service personnel).
The rise of WIP models represented good timing in the market, mapping to customer needs. During this period, the use of contractor workforce by IT OEMs/service companies, cable/telecom companies and other businesses with serviceable equipment in the field has become common place, with platform players like Field Nation providing the essential supporting linkage in the service delivery chain.
Active innovators, such as platform players, have approached the market with different models to pursue their competitive and expansionary strategies. Consider:
- Field Nation has tended to allow companies to access and engage workers through its online contractor marketplace
- Field Solutions has provided a broader solution set, including “managed services” (providing a complete managed field workforce, eliminating the need for the companies themselves to engage individual contractors)
The combination of these 2 players seems to be a new development on the path (in what has become a competitive space for a handful of innovative work intermediation platform players market) to find the optimal business model in terms of economics, scope of services and future platform strategy.
Beyond the Headlines
Clearly, the acquisition of Field Solutions by Field Nation brings consolidation/scale-economy benefits and also brings together complementary service delivery and enablement capabilities in a single company in the IT field services contractor space, potential creating a more robust competitor there. That is in itself an important bit of news for the contingent workforce/procurement community.
But the real story (and a crucial subject for further analysis and understanding) is the continued, innovative, combinatorial emergence of a new species of work arrangement intermediary, which has – over the past year – come to be called FMS or Freelancer Management System by many contingent workforce/staffing supply chain practitioners. Forthcoming Spend Matters research and analysis will be focused on what this emerging species of WIP actually is, what it is starting to do for enterprise users of contingent workforce/services and what the growing implications of it are for contingent workforce/services procurement management.
Later today on Spend Matters PRO, we will provide additional commentary on what this transaction means for the market and some of the broader implications it may signal for new business models, industry consolidation and services procurement generally.