Apr 01, 2014

Crowdsourcing: An Innovative Temp Paradigm

In a recent report on global workforce trends by the Society for Human Resource Professional Foundation (SHRM), an interesting topic was how technology is transforming temporary hiring practices. An example of this is the growing model of crowdsourcing talent.

Globally, temporary employment models are becoming a normal and permanent method of talent acquisition and workforce management. As Work-as-a-Service (WaaS) becomes the norm, talent exchanges like oDesk, Amazon Mechanical Turk, Create.it, TaskRabbit, Gigwalk and more are gaining importance as an alternative staffing model. Crowdsourcing platforms are giving employers the opportunity to access an on-demand and scalable workforce at a cost savings to traditional recruiting channels. This ability to discover untapped talent often provides companies the ability to control project costs and hours, while uncovering highly skilled talent outside of geographic boundaries and standard demographics. Additionally, having the flexibility to split large transactional workloads across remote workforces not only lowers costs but also speeds up the task.

Product R&D, in particular, has seen much activity in crowdsourcing, with open inventive campaigns by large companies such as BMS, General Mills, and 3M.  For example, Lego is embracing the idea of open innovation – the idea that companies benefit by bringing in external stimuli – by using crowdsourcing campaigns to co-create with their customers.

Platforms for crowdsourcing temporary talent for specialized tasks also exist, such as Gaggle, crowdSPRING, or Tongal. The ‘crowd’ for these projects is typically comprised of diverse, qualified workers, including software engineers, artists, designers, management consultants, and individuals with advanced academic degrees or industry experience. And more companies are reframing their organizational structures to enable sourcing from within their own existing talent pool.

Crowdsourcing and online talent exchanges are being used outside of the traditional business world as well. The U.S. ski team used a crowdsourcing platform to find members for its Olympic aerial skiing team, even encouraging those outside its normal demographic, like gymnasts and tumblers, to apply.

Many top companies are embracing crowdsourcing as a solution to reach temporary talent capable of executing tasks faster and more cost effectively than employees.

Who is the Crowd?

Segmentation in Crowdsourcing

As crowdsourcing picks up steam, more and more providers are entering the market promising to deliver high-quality work more efficiently and affordably than full-time workers. Each uses different approaches to recruiting workers, distributing the tasks, conducting work, verifying results, and ensuring quality. While industry standards remain largely undefined, three primary models of crowdsourcing are emerging:

Platforms: These crowdsourcing providers provide an online platform that gives companies access to an unvetted pool of talent. They have limited customization, and the company has to design their own crowd-based workflow and monitor project quality.

Managed Service Partners: These providers differentiate themselves by partnering with the company to design and adapt task workflow for a crowd. Most provide a qualified, vetted crowd to deliver results. While this approach is closer to Business Process Outsourcing, it does offer more flexibility and less overhead costs.

Freelance Matching: These providers offer to match companies with a handful or single individuals with specialized skills, rather than bringing the power of a huge crowd of workers. This model is particularly useful for complex or specialized tasks and creative-based projects.

Crowdsourcing.org, a group that tracks financials and trends in the crowdsourcing market, said that by 2012, venture capital firms had invested more than $300 million in crowdsourcing companies. And in January 2013, the organization’s research found that there were more than 6.3 million workers in the crowdsourcing market.

Crowdsourcing Revenue Growth

Source: MassSolutions

Regulating Crowdsourcing

Crowdsourcing is blurring the line between employees and independent contractors. Employment regulations have not been defined or established yet to guide the employer-worker relationship through crowdsourcing. In fact, how to define the ‘worker’ is still a question. For example, in crowdsourcing platforms with an open innovation campaign, where the crowd is asked to submit ideas towards a product/service, under what conditions are the participants considered ‘workers’? And while minimum wage is being debated on a federal level (see the article in this edition of TrendLine on the impact of a minimum wage increase), the average pay for a worker on Amazon Mechanical Turk in the United States is $2.30 per hour, way below minimum wage.

The question of intellectual property risk also arises, where a crowd worker might be able to obtain knowledge of a piece of intellectual property by completing even a small task. And in the open innovation campaign platform when ideas are crowdsourced, ownership is often unclear.

Legal intervention in crowdsourcing is starting to emerge, and recent lawsuits should help set precedent on how labor laws apply to crowdsourcing activities. In 2012, CrowdFlower, Inc., a crowdsourcing provider, was sued by a worker for violating U.S. Fair Labor Standards Act by paying less than the federal minimum wage. The company was also sued by workers who claimed that they were improperly classified as independent contractors. And in October 2013, a group of Yelp reviewers filed a class-action lawsuit against the site, claiming that they were unpaid writers whose contributions created the database necessary to the company’s commercialized services.

Since most crowdsourcing is conducted over the Internet, it’s unclear how rules, when they’re developed, would be enforced. While crowdsourcing temp talent is becoming a key strategy in talent acquisition, employers should be aware of the complexities and risks associated with the model.

"Crowdsourcing is the practice of obtaining needed services, ideas, or content by soliciting contributions from a large group of people, and especially from an online community, rather than from traditional employees or suppliers." ~Wikipedia