I have some bad news for both companies trying to hire freelancers online as well as freelance consultants seeking to land assignments online via crowdsourcing sites. While the bad news about freelancing and crowdsourcing is indeed complicated, I will limit my primary bad news observations to two leading issues.
First, the cost of doing business on the internet is rapidly spinning out of control — as a prime example, the over-hyped idea of saving time and money by hiring and working online is being smothered by greedy online companies whose fees now typically range from 20 per cent to 40 per cent (with some sites even higher) of total project costs.
Second, there is little more than a token amount of quality control on the labor crowdsourcing sites — this is a logical outcome whenever a “low bidder” mentality prevails, and there should be little surprise that freelancing and crowdsourcing websites are rarely known for facilitating high-quality results. In addition to unhappy clients, a race to find the lowest bid also places competing consultants in an unhappy place through an involuntary “guilt by association” with thousands of freelancers who are typically lacking any semblance of a professional commitment to high quality standards. What could possibly go wrong?
Crowdsourcing — When Was It Ever a Good Idea?
Well, it must be admitted that crowdsourcing did allow a new group of internet companies to thrive at least temporarily. In the spirit of the first horses to reach the watering hole getting to drink as much as they can handle, many crowdsourcing pioneers have raised millions of dollars from both investors and clients — but were the results positive for hiring companies and freelancers?
The term “crowdsourcing” was created by combining two concepts — crowds and outsourcing. The most anonymous version of the crowdsourcing model is possibly represented by MTurk — or Amazon Mechanical Turk. However, most of the online freelance websites operate under the similar premise of assembling an online network that prospective employers can quickly access for a wide variety of consulting assignments ranging from business writing to web development, engineering, graphics and business training. Popular crowdsourcing sites include Freelancer, Guru and Upwork. Within specialized areas such as business writing, there are also crowdsourcing venues like WriterAccess and TextBroker.
The Upwork Example — Recently Raised Fees from 8.75% to 20%
Upwork was created by the 2014 merger of Elance and oDesk. At the time of the merger, Elance charged 8.75 per cent of each project’s total cost as their standard fee for putting hiring companies and freelancers together for each assignment — while oDesk charged 10 per cent. The new company chose to eliminate both the Elance and oDesk brands and relaunched as Upwork during 2015 and initially adopted the higher oDesk fee of 10 per cent. In an astounding development during early May 2016, Upwork announced that they were doubling the standard fee from 10 per cent to 20 per cent for the first $500 of each new project. While Upwork’s fees above $500 will be “only” 10 per cent until a $10,000 threshold is passed (and then 5 per cent), this 100 per cent increase in fees will immediately double the costs for both small businesses and freelancers using Upwork (since a high percentage of Upwork assignments are for less than $500). Apparently because a doubling of fees would still not produce enough revenues for the newly formed Upwork, the May 2016 announcement also reflected the intention of Upwork to pass along their credit card processing costs to clients (2.75 per cent of each transaction).
This striking development by Upwork should serve as a clear warning sign that everything is not as healthy with crowdsourcing operations as the crowdsource companies would like for everyone to believe. It is truly a “Buyer Beware” moment — can you think of any similar pricing changes for offline enterprises that were actually in the best interest of the company’s clients?
The Good News — Back to Doing Business the “Old-Fashioned” Way?
I consider the good news from recent exorbitant price increases by Upwork and other online crowdsourcing companies to be the solid momentum provided to resuming previous ways of doing business in cases like this. As much as internet entrepreneurs don’t want to hear it, the online environment does not provide a “better solution” for everything imaginable. In the face of ever-increasing fees and low-quality work by crowdsourcing businesses, is it really such a bad idea to revert to “old-fashioned” techniques like one-to-one communication with real people instead of anonymous workers?
In other words, the practical alternative to working with anonymous people on a crowdsourcing site is to actually talk to them first and continue this old-fashioned solution throughout the process of working with them. By the way, I continue to make myself available to individuals and businesses of all sizes without any “hiring fees” or “project fees” — my areas of specialization are business writing, career training and business consulting. However, please don’t expect me to be the “low bidder” when working with me, as I am frequently among the highest bidders for many successful projects.
Please feel free to contact me directly. My contact details are provided in the footer portion of this page — or send me an email via the “Contact” page.