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Increasing online labour exchanges

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In 2007 just four categories of work accounted for 90% of the dollars billed on oDesk; in 2012, that 90% was made up of 35 sorts of work, with project management, translation and copywriting among the fastest-growing.

ODesk and Elance claim similar numbers of firms posting jobs, just over half a million each, and of signed-up contractors—3m on oDesk versus 2.5m Elancers. The fiercest of rivals, each claims to be the market leader, even though the monetary value of work done via oDesk is almost twice as great.

There are other differences in the business models of the market leaders. oDesk simply takes a cut of all completed jobs; Elance also charges freelancers optional fees for extra services. Both have been trying to improve the quality of the reputation-rating system, and to ensure that work is being done by the person who accepted it rather than passed on to someone potentially less competent (

Online exchanges are increasingly important even for jobs—such as household repairs and errand-running—that cannot be contracted out to distant workers.This is good news for both hirers and those looking for work, though it is not yet clear how attractive a business it will be for the exchanges themselves.

Work that brings the employee into the hirer’s home clearly presents greater risks than when it is entirely virtual.

Critics of the online exchanges claim they are all about undercutting wages in rich countries by shifting work to poor ones. But both Elance and oDesk insist that the flow of work is not all in one direction. For instance, there are around 716,000 registered Elancers in America, double the number in India. Whereas last year America was the biggest-spending country on oDesk, with India the main recipient (thereby fitting the stereotype), the third-biggest earners of dollars on oDesk were freelancers not in some developing country but in America itself.

Moreover, workers who start cheap tend not to stay that way: helped by the rating system, workers on oDesk increase their hourly rate by almost 60% on average in their first year, and by around 190% in three years.

As Accenture points out in its report, employers should henceforth think of their workforce as made up not just of current full-time employees but also of the vast army of potential workers that are a click away. This applies just as much to big, established firms as to thrusting young start-ups.

Source: The Economist

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