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Comment by mattzito | Hacker News Reader

One item that I find potentially misleading is that, to my understanding, oil and gas companies outsource/subcontract a lot of the seasonal/irregular/less predictable work to third-parties. This means that these people aren't calculated in these numbers, but they generate a good chunk of the revenue.

I could be wrong about that, but I used to work with Exxon and they talked about this - that the total employee base would be much larger if you included all of the subcontractors.

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I think people often don't realize the scale at which energy companies use contractors/etc. The "boots on the ground" folks are almost entirely contractors or hired through another company. Plenty of companies exist purely to provide employees to one oil company in one field.

Exxon/Chevron/Total/BP/etc each have around 50-100k employees (I may be a bit off there, but it's in the ballpark). The workforce required for each of their operations globally is in the low millions.

At the end of the day, a major oil company is actually a construction company. Their specialty is managing complex projects with lots of subcontractors. As a result, they have a surprisingly low employee count.

Telecomms do this for laying new wires/fiber too. They subcontract most all of the lashing, digging, and boring and the pulling of actual fiber lines, leaving the ends loose, and only then use their own employees to go out and actually splice them into the previous lines or into an active network. The connections at the end are quick and easy with little liability risks, unlike climbing electric or telephone poles, trimming trees near aerial cables, going into underground utility tunnels, and digging trenches through power and gas and water and other cables. They also don't have to buy and maintain nearly as many boom trucks and excavating machines like horizontal boring machines or mini excavators.

> then use their own employees to go out and actually splice them into the previous lines or into an active network.

Hahahaha - no. We use contractors for that too - no one who is outside our offices is an employee. GIS jockeys are contractors too. My developers also and most of the call centers. Essentially the only in-house functions are architecture, project management - everything else is contracted out.

And even a good part of those in the offices are contractors. Think Accenture, Capgemini for IT and project management as well as many others, including receptionists, secretaries, facility management, cleaners.

Note too that they don't have to own those machines when they aren't pulling new lines. The same boring machine that pulls a new cable today can pull a waterline for someone else tomorrow, and a gas line next week. By out sourcing there is one machine and crew busy all the time vs 3 machines/crews used only a third of the time.

And at the other end of the business they outsource billing and technical support, and franchise their stores. And seem to be forever laying off thousands of workers.

True, but many of those contractors will themselves be classified as energy companies according to the S&P (GICS) sector classification.

For instance, energy services companies such as Schlumberger or Halliburton belong to the energy sector as well.

But it's true that there will be a ton of low value work that gets outsourced to services companies that are mostly classified as industrials (construction, environmental services, transportation, etc).

These contracting companies the OP is referring to aren't like Schlumberger. They are just temp agencies basically. The one I used to work for in the power industry also does contracting jobs in oil and gas, tech, mining, chemical. They don't own equipment or anything like Haliburton, they just provide bodies. Maybe they get classified as employing people in those industries but it seems unlikely.

Sounds a lot like mining, although you could go a step further and say that (depending on where in the mining boom/bust cycle we are) mining companies are actually finance companies. They find a location (by paying geological survey companies, or by just buying an established claim from someone else), they pay other companies to design and build a mine site, then they pay yet other companies to staff and operate the site. Sometimes the company has very little direct involvement in actually digging ore out of the ground and processing it.

For smallcap you can just consider them an option contract that is heavily marketed.

Most of the materials from the mine are presold.

As one data point, I had no idea

The same could be said for a lot of other industries; only not the other industries which fall in these rankings.

But, the prominent 3 categories that made the list are:

- known as the most corrupt 3 industries in America

- a poor American’s only means of access to 3 of the most critical commodities in their life. The other 2 (food, housing) are disqualified by their own unique attributes.

- oil, healthcare, finance

This is also true with many consumer electronics companies. Design and some level of QC in house, most everything else from the vendors, at cut throat rates.

I think this is probably quite similar for a lot of the companies on the list regardless of sector, ie should Apples figure include Foxconn employees?

Oil companies / energy companies are more like investment companies who invest large amounts of money in projects, have them constructed and maintained by subcontractors and then realise profits based on production / generation from said project.

I think if you follow this line of thinking you end up with a (economic) rent to labor ratio. Any kind of expensive piece of equipment could have been built by employees so by the same token that you count contractors you can include the labor component of those capital expenditures and so on and so forth.

I think there's a difference between capex and opex here - it clearly doesn't make sense for Exxon to build and design their own oil wells and pumps, as there's economies of scale and domain expertise for a dedicated vendor to provide those things as a capital expenditure. But if we're going to measure "revenue per employee", where the desired measure is "how efficient is each company at extracting value for every person engaged in value extraction", maybe there's a better measure like "human opex relative to revenue"?

When you think about it, everyone relies on many external people, who in turn relies on others. I mean, every time you buy something – a building, a phone, food, insurance, etc. – it raises the question if those who sell that should be counted as part of your operations.

Also revenues in a low margin business aren't really comparable to revenues in a high margin business. Profits per employees I think would be more interesting.

Well highest revenue per employee is kind of bound to result in companies that outsource a lot of work.

Profit per employee would probably be more interesting.

Grouping by company is simply artificial in a market economy. And using revenue other profit is ridiculous. It makes more sense to just look at where the highest paid employees are and the most profitable companies are by return on invested capital and operational expenses (which must including proper weighting of the float between expenses and reimbursement). Unsurprisingly, the company that applies this metric deep across its corporate DNA -- Amazon -- is the onr of the most profitable and one of very few with no natural or secret-sauce barriers to competition, just ruthless excellent execution.

In Europe, it is not easy to fire people. So hiring employees via detachment companies is also the norm for big companies.

But that's exactly the definition of an employee vs a contractor. Your last statement is a contradiction of terms.

Right, sorry if I wasn't clear - what I was saying was "there's a lot of oil and gas companies on this list. A lot of the revenue for these companies aren't actually generated by employees, but rather by contractors, and I wonder how much this is skewing the metric of 'revenue per employee'"

there is a 50/40 split of EE's to contractors just in IT

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