Neither Fish Nor Fowl: The State of Online Staffing Model Evolution

Since late summer of 2012, we have been researching the phenomenon of what we call “online staffing” platform businesses.  As of this time, we have identified about 65 different individual businesses operating in this “online staffing” space (which EXCLUDES a wide range of “crowdsourcing” platforms, such as 99Design, Lionbridge, Crowdflower, et al).

By now, most of us in the staffing industry are familiar with the big names like oDesk and Elance (and, in fact, these two players—plus a third, the segment in 2012, in terms of work performed and billed through their platforms).  These players have a number of things in common, including:  (1) they are global platforms, (2) they support many different kinds of virtual work categories (from software development to writing to design to legal to accounting, et al), and (3) their process models function more or less the same across country markets and work categories. 

While the analogy only goes so far, I have come to think of these three large players as kind of the Walmarts of “online staffing” businesses:  broad global supply-demand "scope," many product categories "scope," and basically one-size-fits-all business model "scope."  Within the group of 65 or so “online staffing” businesses, a good number are pursuing or aspiring to similar business models—but far from all.  In fact, there is a great deal of diversity of business/service models and approaches among many of these online platform businesses, as suggested in a limited way by this chart which appeared at our Executive Forum in February:   

Some of our future research is going to explore in greater depth and specificity the different dimensions or characteristics of these diverse models.  But in this post, I would just like to touch upon a few of these “online staffing” platform businesses which I talked with recently and which tend to distinguish themselves in matters of (generally speaking) “scope.”

The first such business is called Twago (founded in 2009 and based in Berlin, Germany).  Twago (according to the company website) “stands for ‘Teamwork Across Global Offices’ and is an internet based marketplace for freelancers with multi language strategy created to provide high quality services.” Today it employs 60 people and raised $3M of series A capital in 2012.  I recently had the pleasure of having a conversation with Twago co-founder and CEO Gunnar Berning who clarified Twago’s mission as being decidedly “pan-European,” focused on serving European customers in Europe’s different unique “country markets” (each having their own languages and work cultures and institutions).  Unlike its competitors, Twago has deployed unique “microsites” across a number of European countries (these are complete Twago services localized to each country market).  In addition, while some businesses do in fact source some freelancers from “off-shore” (e.g. India) via Twago, Berning told me that work practices/culture in Europe incline businesses to hire freelancers “in-country,” more locally (perhaps in the same metro area as the business).  Consequently, the large majority of projects being transacted across Twago are “in-country.”  In this respect, Twago is developing its business based on addressing the unique work-arrangement requirements of individual countries that have some things in common, but in very important, subtle ways can be quite different.  More on Twago can be found here.

Besides Twago, I wanted to cover three other “online staffing” platform businesses that distinguish themselves in other ways from the dominating “Walmart model” I highlighted above.  They are Rev, ServiceScape, and  ZipTask

Rev was launched quietly in 2010 and is based in San Francisco; founded by some early employees at oDesk, the company received $4.5M in series A funding in March 2013 and is beginning to rumble.  Rev has its own unique approach to delivering online staffing services.  According the website, “ is a new breed of service provider. Like traditional vendors, we rely on a network of hand-picked freelancers. Unlike traditional vendors, we use technology to offer unbeatable quality, speed, and value.   Rev’s proprietary technology platform is built to create a great work environment for translators and transcriptionists, so we can deliver clients ever increasing speed and quality.”  So what makes Rev unique?  I talked recently to co-founder and CEO Jason Chicola and found out.  First of all, Chicola emphasized, Rev is vertically focused into just two categories:  transcription and translation.  Second, Rev is not an open marketplace in which businesses shop for their own contractors/freelancers to perform individual gigs; Rev is more of a “managed service” or outsourced service provider -- in some ways not dissimilar to traditional translation or transcription agencies. Businesses sign-up with Rev to have some project accomplished, Rev draws on its curated/managed group of freelancers and delivers the final results as a service that Rev bills (flat rate) based on standard units—words, minutes.  So how is Rev not like a traditional translation or transcription agency?  Very simple:  its services are based completely on an online platform—but not simply an exchange, rather a proprietary platform that is specifically designed and being refined to support and optimize transcription and translation work.  Chicola pointed out that besides being very category-focused, Rev is also distinguished by its focus on supporting, enabling “the worker” and optimizing the work.  While Rev has a simple service front-office “front-end” for its clients, most of its “rev” is effectively in its “back-office” platform enabling its virtual freelancer specialists (translator and transcriptionists).  It does this by catering to their work needs and requirements, developing and improving anything that will result in more efficient, higher quality services delivered to end-clients.  Chicola spoke to a range of such developments, including specialized workflows and tools to make the freelancers more effective and productive. More info on Rev can be found here.

ServiceScape, based in Boston, is another unique “online staffing” platform business that has been around for a number of years with freelancer-based services focused on “editing” (a platform called Edit Avenue) and translation (an extension of the platform called LanguageScape).   The business re-launched in April 2013 based on a completely new platform that has been developed from the ground up.   I recently talked with founder and CEO, David Costello, who described to me some of what makes his business unique.  First of all, ServiceScape grew up as a specialized platform, focused on editing, and then later extended to translation (so like Rev, it too has been category-specialized).  Costello came out of the traditional editorial business and got the company started based on his seeing how an online platform might not only support the management of freelancers, but also how such a platform might be designed and implemented to enable and manage the work of editing.  The company has grown organically serving universities, small book publishers, etc.  Once the process and platform for editing was well established, it became clear that extending the same platform and processes for translation work could be accomplished.  Eventually, Costello synthesized his learnings and saw that his market could be better served across three basic, related categories:  editing, translation, and graphic design.  The result was the building of the new platform and the business relaunch as ServiceScape.  What makes ServiceScape unique (and different from the “Walmart” models) is its specialized focus on certain related work categories that are crucial to a well-defined target market (academic and other specialized publishers) and its use of a specialized engagement and work structure for those specific types of work and types of freelance workers.  In addition to incorporating “real-world, experience-hewed” editing and translation practices and processes as well as the whole different work category of graphics design, the new ServiceScape platform has a fully “multi-language” UI or user interface (now supporting users 14 languages, including Arabic, Chinese, French, German, Greek, Hebrew, Hindi, Italian, Japanese, Korean, Portuguese, Russian and Spanish) as well as a completely redesigned UX (user experience) design and actual UI to achieve superior usability and user experience.  Costello is clear to point out that his platform design and services are always being driven by a very specific group of users (those engaging in the specialized work and certain work products of editing, translation and graphic design)—what he describes as a bottoms-up, not a tops-down, approach.  More info on ServiceScape can be found here.

Like Rev, ServiceScape is certainly focused on sourcing workers globally, but like Rev it also diverges from the “Walmart” model in some key ways.  Like Rev, it is very category focused and work focused.  Unlike Rev’s “agency model,” with ServiceScape a client business chooses and works with their selected contractor/freelancer who will perform the work.  But unlike the “Walmart model,” ServiceScape provides a definite pricing framework (which allows for freelancer discounting) as well as a specific “work structure” specifically designed to support and manage a limited number of specialized kinds of work (editing, translation, graphics design).  And whereas I might describe Rev as a platform-based managed services or outsourcing provider, I would probably describe ServiceScape as more of a platform-based “guided services provider” -- a model which is not completely open and generic (“the Walmart model”), rather one that provides a specialized structure for specialized work consumers and providers.

The last company I am touching upon in this post, ZipTask, has taken a different approach to distinguish its business/service model from the big “Walmart model” players.  Put into motion a couple of years earlier, but launched full-force in April 2013, Irvine, CA-based ZipTask offers a “project manager” service for conducting online work/projects.  ZipTask clients have projects (typically today web/software development projects) that they want to accomplish using online/virtual contractors/freelancers—but they don’t have the project management capabilities or resources to efficiently and successfully manage such a project. Enter ZipTask, whose co-founder and CEO Shawn Livermore I recently had the pleasure of speaking with. ZipTask is not simply a platform that connects businesses with individual online workers (like an Elance or oDesk)—in fact, clients can specify the workers they wants to engage in the project.  ZipTask is really a “managed project delivery” platform/service that provides expert, tested project managers of online work projects and a transparent online environment in which projects can be managed, tracked, completed and billed.  ZipTask brings together the client’s project requirements, a skilled project manager, and the online workers, and it ensures that a project is conducted to meet the client requirements.  Clients are billed for the cost of the completed project, plus an 8% mark-up that funds the platform and the assigned project manager.  Whereas other models may focus on getting certain tasks or activities completed by individual contractors, ZipTask’s model is really organized around delivering “managed projects” which consist of the coordinated efforts of different online workers under the direction of a ZipTask project manager (who, by the way, is also a contractor/ freelancer—but one who is carefully vetted by ZipTask).  At this stage, ZipTask is focused mainly on web/software types of projects, but Livermore says other types of projects are being performed and that the platform can be utilized to support a broader range of project types (work categories).  Despite this possible work category “scope creep,” ZipTask is clearly one of those online staffing platform businesses that can be distinguished from the one-size-fits all “Walmart models” of online staffing.  More information on ZipTask can be found here.

Clearly understanding the diversity of models evolving in the online staffing platform “population” is important for a number of reasons.  First, it allows us to identify and characterize different types and compare how they are performing.  Second, it allows us to better forecast the growth of the online staffing platform segment based on a disaggregated picture.  Finally, it allows us to inform businesses interested in this segment as to what innovations are occurring and may represent future growth opportunities or threats.  For more information on SIA research into this subject, visit the Online Staffing Topic Page.


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