The power of crowdsourcing

Crowdsourcing sites allows SMEs to slash their costs on everything from design work to IT jobs by tapping into global online markets of freelance professionals. As JAMES THOMSON explains, it’s quick, easy and oh-so web 2.0.

By James Thomson

Crowdsourcing sites allows SMEs to slash their costs on everything from design work to IT jobs by tapping into global online markets of freelance professionals. It’s quick, easy and oh-so web 2.0.

Big companies have been shifting work to low-cost countries for years. Now smaller and medium companies can slash their costs by outsourcing via a number of websites that act as giant job markets for freelance professionals located all over the world.

The range of services available is incredible – from the most complex IT development job to the creation of a new company logo, a T-shirt design, or even a name for your business. Best of all, everything is available at bargain-basement prices.

A few months ago, financial planner and journalist Bruce Brammall was looking to put a new calculator on a new website he was developing, debtman.com.au.

He looked around at a number of examples on the web, but couldn’t quite find the right thing. So Brammall approached a web developer for a quote on a bespoke solution. He was horrified with the price of $2720.

Brammall’s brother-in-law suggested he try another way of getting his calculator built via one of three websites: oDesk, ScriptLance and Guru. All three sites are essentially auction houses for IT talent. They allow you to post a job or task – from web design and development to animation and simple bits of coding – and then invite the communities of freelance IT professionals on those sites to tender for the work in a reverse auction.

Bammall posted his job on ScriptLance and within 48 hours had 14 quotes back, ranging from $US80 to $US350 from designers in Dubai to Los Angeles. He eventually settled on a designer in Uruguay, who quoted $US150, although this eventually blew out to $US270.

Brammel says the process worked very well and he has been thrilled with the quality of the work, so much so that his developer in Uruguay ended up doing two other jobs for the site.

“It was a completely positive experience. In the end, the job he provided was exactly what I was after,” he says.

“You have to accept the fact you aren’t dealing with someone face-to-face, but he was very good at coming back and asking me questions and responding to feedback.”

The rise of online outsourcing is part of a wider online trend called crowdsourcing. The term was coined by Jeff Howe, contributing editor at tech magazine Wired, in June 2006. While the meaning of the term has mutated over the last two years, Howe’s definition remains fairly simple:

“Crowdsourcing is the act of taking a job traditionally performed by a designated agent (usually an employee) and outsourcing it to an undefined, generally large group of people in the form of an open call.”

That said, a number of different crowdsourcing models have emerged:

The online marketplace

One of the first examples Howe looked at back in 2006 was iStockPhoto, a website where photographers from all over the world have posted their pictures into one of the world’s biggest photography marketplaces.

As iStockphoto’s chief operating officer, Kelly Thompson, explained to SmartCompany in a recent interview, the key to the company is its community of contributors – without the crowd, the site doesn’t work. While the monetary rewards on offer are not huge (photographers receive a small cut of each picture sold), the company works particularly hard on creating a sense of community by ranking photographers according to their success and running forums and other interactive elements.

“It’s interesting because you end up with another sort of stakeholder that doesn’t exist in most companies. So we have our customers that we have to deal with, but we also have our contributors and of course they tend to be vocal and they care deeply about the site, so if they don’t like how things are going, they certainly let us know,” Thompson says.

There are two big benefits for customers. First, customers can tap into pictures from thousands of sources, rather than just one stock company’s archive. Second, the price of a stock photo has dropped from as much as $1000 a shot to as little as $1 a shot.

While iStockPhoto now has a number of competitors – including free photo sites such as Stock.XCHNG – Thompson argues the quantity and quality of the company’s shots (all of which are cleared for potential legal and copywright problems) remain its chief advantages.

The competition model

Perhaps the most common form of crowdsourcing is the competition model, whereby an individual or business posts a brief and then offers the site’s users a prize (usually cash, around $300 to $500) for the best contribution.

Many of the sites using this competition model are based around design briefs, where community members lodge designs for everything from websites and logos to t-shirts.

One of the most popular sites in the world is Melbourne-based 99designs. As general manager Lachlan Donald explains, the site itself was born from crowdsourcing, when the 300,000 members of 99design’s sister site SitePoint began running informal design competitions in SitePoint’s forums.

“It kind of just grew out of that,” Donald says. “It was one of those beautiful things where our users came to us and said ‘build us a site to make this easier’.”

Since the site was established eight months ago, 99designs has run 13,070 competitions, facilitated 873,702 designs and awarded $2,745,374 in prizes.

The model works this way. A client comes to the site, posts a brief and pays 99designs a listing fee of $39. The client then offers a cash prize and the contest runs for seven days before a winner is selected. The client then pays the designers, although 99designs is planning to take this transaction function over to make the whole process smoother.

Besides the relatively low cost, Donald says there are two big benefits for SMEs wanting to use competition crowdsourcing sites like 99designs.

The first is the size of the crowd. 99designs has 20,331 designers from 134 countries, which means clients can access a far broader range of ideas than they could by briefing a local web developer. Rather than getting a handful of concepts, most competitions attract more than 50 entries.

The second benefit is the opportunity to evolve a design over the course of a competition. As design entries pour in, clients are encouraged to give competitors feedback and suggest changes or improvements. All of the designers in the competition can then use this feedback to refine their designs over the seven days of the contest.

“The contest holder’s idea of what they want kind of gets guided and developed and grows over the course of the contest,” Donald says. “That’s where the crowd element becomes so important.”

Other sites that use the competition model include InnoCentive, which takes contest briefs from large corporations, government departments and not-for-profit organisations looking to solve big-picture problems, such as coming up solutions and ideas for challenges involving renewable energy, cures for diseases and public policy. Prizes can be as high as $US1 million.

The tendering model

Sites such as ScriptLance and Guru run in a slightly different way; clients post a job and then community members lodge bids. A client will select based on price, member reviews of the community member’s past work, and other variables, such as when the community member can start the job and how long they might take.

It’s a similar process used in government tenders, although because community members can usually see other bids, transparency is even greater.

The range of freelance professionals on these sites is impressive. On ScriptLance, you can find programmers to do everything from design an entire new website to write a simple piece of code that might that may take just a few hours.

Guru’s scope is even wider. As well as IT professionals you can look for lawyers, engineers, sales specialists, accountants and translators. And because many of the members of these communities are based in low-cost regions such as Asia and Eastern Europe, prices are always low.

The ideas bank

Perhaps the purest model of crowdsourcing is the model that does not provide monetary incentives to community members. This model is particularly prevalent among sites such as Cambrian House and Global:Ideas:Bank, which encourage users to post an idea and then get feedback from the community.

The ideas range from the serious (online medical consultation business) to the ridiculous (would you be prepared to pay for red traffic lights to turn green?) but when the feedback process works well, ideas are quickly and constructively refined, improved and built upon.

It’s a particularly good way to test how an idea will be received by actual customers – if the community hates it, you’ll know very quickly and can go straight back to the drawing board.

Disadvantages of crowdsourcing

Be prepared for a bit of an adventure if you decide to use a crowdsourcing site – you can never be quite sure what you are going to get back from the community involved.

On design sites such as 99designs, you will need to be prepared to wade through a large number of different designs, some of which will be entirely inappropriate. You might even find that your contest ends without you finding the right design, in which case you’ll still have to pick a winner and pay the prize anyway (it’s considered bad form not to).

The best way to get around problems like this is to be as specific as possible in your brief. Tell the community exactly what you want, provide examples where appropriate (such as your corporate style guide, preferred colours and other designs you like) and keep communicating with the community to refine your idea.

The final word

Crowdsourcing is one of those wonderful concepts that only exists because of the internet. A decade ago it would have been unthinkable that a small company in Brisbane could have tapped into the huge pool of brilliant computer programmers in India or cutting-edge designers in Russia.

But crowdsourcing isn’t just one of those cool web 2.0 ideas – it’s a quick and practical way for SMEs to save thousands on a huge variety of tasks. For a few hundred dollars, it’s well worth giving it a go.

Six great crowdsourcing sites for SMEs:

99designs Australia’s own 99designs is the place to go to get everything from a logo to a website designed by the huge community of professional designers. It’s easy to use and has a strong community, so you are very likely to get the design you want over the course of a seven-day contest.

ScriptLance Don’t get an expensive local computer programmer in – put the job on ScriptLance and outsource your task to the cheapest bidder. Think about it – with armies of underutilised programmers sitting in Asia and Eastern Europe, there’s bound to be someone around the world to prepared to do your job on the cheap.

Guru Guru is a bit of a one-stop crowdsourcing shop, where you can find freelance professionals to help you with everything from legal matters to design to IT to engineering and accounting.

NameThis Need a name for your new product or business? Simply post a description at NameThis, pay $US99 and in 48 hours the community will come up with a selection of three names for you to choose from.

iStockPhoto If you need a cheap image for your corporate brochure, website or presentation, iStockPhoto is the place to go. It also has video files and will soon offer audio files for sale.

Threadless Loved by fashionistas and businesses alike, Threadless is a crowdsourcing design site dedicated to t-shirt design. If you want to get a great t-shirt design and create a bit of buzz about your brand, this is the place to go.