Crowdsourcing vs Outsourcing

Freelancing, Crowdsourcing vs Outsourcing

What to do, what to do. Freelancing? Crowdsourcing? In-house? Outsourcing? Which one is the best fit for what I need to get done?

What is crowdsourcing?

Crowdsourcing: This represents the combination of two options (online service websites and freelancing individuals). It is a term that originated in 2006. The working definition of the term is: “Crowdsourcing is the process of getting work, usually online, from a crowd of people. The word is a combination of the words ‘crowd’ and ‘outsourcing’. The idea is to take work and outsource it to a crowd of workers.” So basically a marketplace of individuals offering their services.

Crowdsourcing Market Leaders

Two of today’s leading crowdsourcing websites include Upwork and Freelancer

Upwork — This crowdsourcing company was formed by the 2013 merger between Elance and oDesk. It is based in the United States (Mountain View, California) and encompasses 4 million clients and 9 million freelancers (numbers are according to Upwork, a privately held company).

Freelancer — The other major crowdsourcing platform was formed in 2009. Based in Australia (Sydney), Freelancer has almost 19 million users (based on a March 2016 report).

For Freelancer and Upwork (as well as most other crowdsourcing sites), the service companies operate on a global basis — with both clients and freelancers located throughout the world. The crowdsourcing platforms earn revenues by charging fees to freelancers, client companies or both.

One major negative for these sites is the quality control aspect. Client companies are responsible for monitoring the quality of work being delivered by freelancers.

Looking at these sites and the job contained it is clear that the majority of projects are under $500 USD while tech-related jobs may range in the more $700 – 1500 USD mark.

These Crowdsourcing platforms also create an atmosphere that tends to encourage unusually low bids in order for freelancers to get work on smaller projects. The potential of “cheaper than cheap” services available on crowdsourcing websites can be especially appealing to self-employed individuals and very small businesses that are widely believed to constitute the bulk of crowdsourcing users.

The full identity of the bidding freelancer is rarely revealed and can create a sense of not being completely sure of “what they are getting for their money.”

What are the differences between Crowdsourcing and Outsourcing

Differences like the following often act as major factors in organisations ultimately choosing outsourcing companies rather than crowdsourcing freelancers:

Cost-Effective Pricing — outsourcing companies will rarely be the “low bidder” in comparison with crowdsourcing price proposals, they do however provide the “most cost-effective price” (always important whenever “quality matters”).

Consistent Talent —Outsourcing companies usually provide benefit from having a stable workforce that they have invested in ensuring can actually do the job.

Quality Control — Most outsourcing companies guarantee quality while crowdsourcing platforms leave the quality control up to clients.

Management of External Resources — When it comes to HR any reputable outsource company will “taking care of everything” in many outsourcing assignments. This often encompasses managing all resources. In comparison, crowdsourcing operates more like a “self-service operation” in which hiring companies still need to pay attention to everything from hiring to training to being on the alert for costly mistakes.

Specialised Training — Ongoing training of their an outsource companies team members means that unlike crowdsourcing platforms businesses will not have to train freelancers along the way.

Outsourcing considerably ahead of Crowdsourcing

While crowdsourcing has made some inroads into the overall outsourcing market the traditional outsourcing model reigns supreme. The “sweet spot” for crowdsourcing appears to be seen in less technical projects under $500. In addition to cost factors, a business must decide what matters most to them.Cost-effective prices,  the stability of talent, control of quality, managing resources and training requirements are all factors, the decision to emphasize a long-term Tandem NZ can result in a more successful outcome.

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