Let the Games Begin: oDesk Takes Aim at the Medium to Large Enterprise Market

oDesk, currently (by some measures) the world’s largest “online staffing platform,” has announced that it is expanding its market focus with new premium service offerings (along with a dedicated team within oDesk) that will enable enterprises of any size to scale and more effectively and efficiently use oDesk online labor services.  oDesk’s recent press release notes the large, untapped market potential related to online work, mentioning that “most enterprises are just learning of online work as a complement to traditional staffing models.”

According to my recent discussion with Paul Sibley, Director of Enterprise Sales, oDesk is introducing two tiers of service offerings designed for enterprises (businesses that use these enhanced tiers of service will pay additional fees for the additional services delivered).  According to Sibley, the lower tier is being termed an “unmanaged enterprise service,” and it consists of some special platform features and tools (i.e., comprehensive enterprise billing) and best practices/advisory content (online) to support the development, scaling, and management of online/virtual work resources via the oDesk platform. The upper tier, termed a “managed service,” will actually entail oDesk personnel developing, scaling, and managing the online/virtual work resources sourced and executing work through the oDesk platform.  In upper tier, part of the workforce management function is being outsourced to ODesk, which in effect acts as a kind of “managed services provider.”

To date, oDesk service offerings have been directed toward delivering a global, virtual workforce to “individual buyers” in small businesses (including start-ups) and in larger businesses.  So while larger businesses, in effect, have been consuming labor services through oDesk, they also have been doing so mainly on an “individual buyer” basis, with individual managers and professionals in those businesses hiring and paying for work through their own individual oDesk user accounts. 

In smaller businesses, this “individual consumer” model fits “smaller business ways of doing things,” but some of the young, innovative, small, often fast growing companies have started architecting and building their businesses based on using a large percentage of remote/virtual work resources delivered through the oDesk platform (see my earlier blog post, Eureka!! The New Potential for Scaling a Business with “Contingent Workforce”

By contrast, in larger businesses, the use of “online staffing” services has been growing, but the “structures” and scale of larger businesses have tended to ensure that this service consumption remains fragmented (across isolated, individual managers and professionals). In addition, in these larger business workplace settings, the capabilities and processes to scale the use of online work (for example, into larger, more persistent online project teams) are under-developed. 

The new oDesk services are intended to address this gap and enable more and more enterprises to utilize “online workers” as a complement to traditional staffing services. 

Sibley suggested that this offering has been in the works for a while now and oDesk has been piloting these new services with a number of companies ranging from some fast growing startups to a number of very large corporations (some of the companies that are already “on board” include DropBox, OpenTable, AOL, and Unilever).  A number of other less known companies were also mentioned, and Sibley said that, in addition, there are some other very large companies that he could not name..

In its press release, oDesk stated the following:  “Monthly revenue from enterprise customers increased more than 500% between January 2011 and January 2013. This rapid growth points to the expansion of online work from beyond early adoption into the staffing mainstream.”

Staffing Industry Analysts recently forecasted that global market size of online staffing platform services would grow 40% annually over the next two years, with gross service revenues billed on these platforms doubling from an estimated $1B in 2012 to a forecasted $2B in 2014.   With respect to that forecast, I noted:

Growth is being fueled by a number of fundamental labor demand and supply-side factors. In addition, established players (like oDesk and Elance) are expected to continue to grow not only based on these labor market fundamentals, but also based on innovative changes and extensions to their platforms to address adjacent market segments. On top of that, even without counting crowdsourcing firms, a considerable number of newer online staffing platform players are also experimenting with and introducing other innovative models that promise to capture and expand labor services markets.Our current forecast also takes into account dampening factors such as regulatory friction and institutional inertia in enterprises.

Clearly, while enterprises are increasingly trying to access and make use of talent and labor more efficiently and in more flexible, high-velocity, service-like models, online staffing players (whether market leaders like oDesk or Elance, a segment specialist like OnForce, or younger players (like NextCrew, Work Market or Rev) are developing and launching innovative models to deliver just-in-time-talent (JITT) or talent-as-a-service (TaaS) to larger enterprises.

More of this is going to be happening. 

As noted earlier, enterprises are now just in an early stage of learning how to take advantage of online labor/online staffing. And online staffing platform players have really just started ramping up with innovative service offerings designed to enable enterprises of all sizes to incorporate and capitalize on online work/staffing options as a part of their overall talent/workforce management portfolio.

Ludi incipiant!  Let the games begin! 

                                                                                   Click here to read full press release.

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