CWS 3.0: August 21, 2013

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Online Staffing Platforms Continue to Evolve

By Andrew Karpie

Online Staffing platforms are less of an emerging phenomenon than they are a maturing one. SIA’s 2013 buyer survey revealed that 41 percent of large buyers in 2013 said they were aware of online staffing, up from 32 percent in 2012. Another recent report identified online staffing as the oldest and largest ($1 billion 2012 worldwide spend) human cloud platform model (alongside “crowdsourcing” and “online services”). But the online staffing platform segment is far from mature — not even close.

Staffing Industry Analysts’ recent Online Staffing Platforms: 2013 industry segment landscape examines the field of platform providers (now exceeding 67 globally, with about half starting up in the last two to three years). It shows they are not a homogenous group of businesses developing or pursuing the same global-spanning platform enabling businesses to establish and complete a limited work arrangement with low cost, off-shore, virtual knowledge workers.

Today, many online staffing businesses do not fit that — albeit successful — model. Even leading companies like oDesk and Elance, whose growth continues to accelerate in 2013, are evolving with their markets and in search of new markets. For example, the number of U.S. freelancers on the Elance platform exceeds that of second-place India. Moreover, companies’ reasons for using these platforms are becoming less about how to get project done “dirt cheap” and more about how to engage and utilize high-caliber, specialized talent as a part of a coherent, ongoing, underlying workforce strategy.

The Online Staffing Landscape report sheds a light on the degree of diversity arising in the online platform segment, including fast-growing platform businesses like Work Market and Skill Galaxy and others that aim to address the contingent workforce needs of larger, more established enterprises. These are businesses that utilize online platform models that enable hiring managers to engage local, onsite contingent workers directly and easily, along with remote, virtual online workers (and do so — as these users report — more easily, more quickly and at lower cost and with better outcomes as compared to the more conventional models they have been using).

The online staffing segment is growing and innovating very rapidly. Established online staffing businesses, as well as a growing number of innovative new entrants, are evolving to meet more requirements around and new demands for how contingent workforce acquisition and management can be executed. While the majority of this activity still consists of small client businesses engaging online freelancers, the segment as a whole is mutating and expanding along many innovative pathways to try to establish new ways for businesses — small and large — to source and consume labor services (whether to arrange to have a worker onsite in a way that is faster, more efficient and more effective than before or to access and consume the fractional labor services, say of specialists, entirely online, having them work seamlessly as a part of an in-enterprise project team). 

SMBs have clearly been the niche where these models have taken root and begun to mutate. But there are “vectors of transmission” into larger enterprises (for example, enterprise managers or workers who want a better way of doing things; platforms that develop and mutate to satisfy enterprise-grade requirements). That said, contingent workforce management professionals should not view Online Staffing platforms as an invasive species or threatening disease, but as open innovation opportunity to coevolve contingent workforce management processes to a higher state of optimization.

Andrew Karpie is an affiliate analyst with Staffing Industry Analysts.

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