Enlisting a Global Work Force of Freelancers

Enlisting a Global Work Force of Freelancers

By KERMIT PATTISON
Published: June 24, 2009

Small businesses increasingly are tapping a new talent pool: the world


A new generation of online service marketplaces is giving small companies more opportunities than ever to find specialized expertise and affordable labor. Main Street businesses can shop a virtual international bazaar of freelancers to recruit computer programmers in Russia, graphic designers in San Francisco or data analysts in India.

“This is one more step in the path to leveling the playing field between small and large businesses,” said Thomas W. Malone, a professor at the Sloan School of Management at the Massachusetts Institute of Technology and author of “The Future of Work” (Harvard Business School Press, 2004). “A small-business person in a company of one can look to the world like a very large company and have access to all kinds of services — and that’s largely because of this kind of model.”

These online marketplaces are fueled by several trends. The recession and recent wave of downsizing have forced many corporations to eliminate in-house services and use independent contractors instead. Buyouts and layoffs have pushed many skilled professionals into the freelance marketplace.

Meanwhile, technological advances make remote work and virtual teams more feasible. Business processes are allowing companies to mix and match services with more ease than ever. An array of freelance marketplaces are making services tradable online, much as eBay and Craigslist made goods tradable a decade ago. These sites include general freelance marketplaces (Guru, Elance, oDesk) and others offering specialties like software (Rent A Coder), personal assistants (virtualassistants.com), graphics (99designs), or creative services (CrowdSpring).

Some of these freelance marketplaces are booming. In the first quarter of this year, oDesk freelancers logged 830,000 hours, more than double the figure for the same period the year before and five times the rate in 2007. Nearly 234,000 jobs were posted at Elance last year, an increase of 64 percent over the previous year.

Fabio Rosati, chief executive of Elance, said his clientele was shifting from an earlier wave of technology-oriented companies toward more traditional small businesses, which now represent about 80 percent of his clients, including mom-and-pop retail stores, manufacturing companies, real estate agencies and physicians. “We’re shifting from early adopters to mainstream,” he said.

These platforms are diversifying beyond mainstay tasks like Web and software development and graphics. Freelancers increasingly are taking on assignments like customer service, data entry, writing, accounting, human resources, marketing, payroll, accounting — and virtually any “knowledge process” that can be performed remotely. Some businesses even are hiring freelancers to set up and manage their corporate profiles on social networking sites like Facebook or Twitter. Using these platforms does not necessarily mean going overseas. In many cases, they are used for “homeshoring” to freelancers in the United States for services like graphic design, writing, sales or customer service. The research firm IDC says homeshoring is growing by 18 percent a year.

In some cases, the cost savings can be substantial: the hourly rates of programmers in Russia, India or Pakistan are a fraction of those in the United States. These freelance marketplaces also allow companies to assemble teams quickly, find specialized expertise, begin new initiatives and drop everything when it’s no longer needed. Organizations can remain flat and focus on their core missions.

When John Wilde, chief executive of Tailor Made Products, a manufacturing firm in Oconomowoc, Wis., wanted to build a Web site for a new line of children’s kitchen gadgets called the Curious Chef, he turned to oDesk and hired a firm in India. He paid about $20,000, which he estimates is roughly half what he would have paid in the United States.

“This has given our company a chance to play really, good, solid Internet ball at an affordable price,” Mr. Wilde said. “Our little company can afford to have a really top-notch Internet play with this new product line.”