Crowdsourcing, along with the closely related practice of online outsourcing (also known as micro-tasking), is opening up the world’s labour market and enabling workers from everywhere to bid for work on offer anywhere.

Crowdsourcing

In its simplest sense, crowdsourcing involves posting a task out to a crowd of people to find the best solution. For instance:

• A client might need a new corporate logo.
• They post a request to a crowdsourcing site, where graphic designers are encouraged to respond with their own ideas of what that logo should look like.
• Once the client sees a design they are happy with they declare that designer the winner and an agreed cash prize is awarded.

Online outsourcing

Online outsourcing is similar:

• Although respondents simply nominate the fee that they would propose charging to complete the task.
• The client selects a winning supplier based on that cost and how that bidder has been rated for work already completed for other clients.

According to social media strategist Laurel Papworth, some aspects of crowdsourcing are no different to what many HR managers have been doing for years, such as when they put word of a job vacancy out to a
community. That call out to the crowd can now be picked up and passed along using tools such as Twitter, hopefully unearthing applicants without spending a cent on advertising.

But a much bigger impact is being felt as organisations turn to crowdsourcing services for a broader range of tasks, as they enable organisations to select and engage with a wide variety of service providers in a very transparent manner.

Advantages of crowdsourcing

Using internet-based crowdsourcing can have numerous advantages over traditional means of procuring services:

• Suppliers can bid for work from anywhere in the world.
• Many are based in markets where these services are much cheaper to provide than those in the client’s domestic market, work can be completed at a significantly reduced cost.
• Client ratings of each supplier when the work is completed allows new clients to quickly ascertain the quality of the supplier they are considering engaging.
• Clients, depending on agreements, are also not required to pay the supplier until the work is completed.
• Crowdsourcing services generally have clear policies for resolving disputes.
• The Australian online outsourcing service Freelancer.com has placed more than 1.4 million freelance projects, with only 4 per cent of that business coming out of Australia.
• Design service 99designs received $35 million in funding from the Silicon Valley-based venture capital firm Accel Partners, which was also an investor in Facebook and Groupon.

Crowdsourcing and online sourcing is big business

Almost any service imaginable has been booked through these platforms, from the transcription of audio interviews to the development of mobile applications — even designs for a house.

Business using crowdsourcing and outsourcing

Mostly it is small businesses using crowdsourcing services, but larger companies are becoming interested.

According to the chief executive of Freelancer.com, Matt Barrie, there are many global companies using his service. Work has been commissioned by large organisations including:

• US-based Wells Fargo bank, who commissioned a brochure.
• BBC television program Top Gear, which sourced a Facebook fan page.

But he suspects most of the work is coming in under the radar of corporate procurement and HR departments. “I’m pretty sure that these were not part of corporate strategy,” Barrie says. “When we search the database for email addresses from big companies, they are all in there — it’s just that they are individuals making their lives easier and avoiding bottlenecks.”

Case study: Virtual Elves

When Kristy Smith started her online personal assistant business Virtual Elves two years ago she knew that she would be asked to perform certain tasks where she lacked the skills her clients needed, such as graphic design. So Smith turned to online outsourcing services to fill in the gaps.

“I really wanted to sit down and focus on my business, but because I was working full time I couldn’t learn those skills,” she says.

Now she uses crowdsourcing services extensively to provide skills to clients such as marketing support and telemarketing, with Smith acting as the quality and project manager of freelancers she sources across a range of online crowdsourcing services.

Smith says her clients range in size from solo entrepreneurs to businesses with 100 employees. While she says she has been very happy with the quality of work procured, she cautions that anyone who outsources online should use the same processes that they would use when hiring someone face to face.

“You interview them, you ask for samples of their work, and you qualify them before you give them that task,” Smith says