Is January 2014 the Tipping Point of Online Marketplaces for Freelance On-Site/Local Workers?
By Diego Lomanto, VP Marketing
There was quite a bit of buzz last week in regards to Work Market’s announcement of SAP choosing to build and manage an on-demand workforce of pre-sales consultants on our platform. Between this news and a report released by Andrew Karpie of Staffing Industry Analysts last week, we now have two major events occurring within the first ten days of the new year that indicate something big is happening in the online marketplace for freelance onsite, local workers.
First, let’s look at the report. Here’s what Andrew predicts that the total market for online staffing will be in 2020:
In the report he breaks the market down further into 3 sub-segments which are roughly a third each. They are:
- Remote/Virtual Work performed for Small Businesses
- Remote/Virtual Work performed for Larger Businesses
- Onsite/Local Work performed for All-size Businesses
Most people are very familiar with the the first two sub-segments, the remote/virtual work markets. These are the classic web designer, programmer, writer, SEO jobs that Elance, oDesk, Freelancer.com have built their businesses on. Right now, most of the traction in freelance marketplaces is around the remote work for SMBs. That’s because of the 1.5B in spend today, about 80% is remote for SMBs. Remote for enterprise and onsite/local make up the other 20% today combined.
If you wanted any proof that the remote market is already starting to push past early adoption, just look at the buzz around the Elance/oDesk merger announced last month. Chess pieces are being moved.
It makes perfect sense for remote work to be the first market to tip. The ecosystem required to manage this work isn't "simple" but it's far less complex than onsite work. The investments required to build out that ecosystem were less, with lower barriers to entry.
Now, think about making all the pieces come together for someone to show up on-site, with the right skills, right tools, at the right time. And, think about doing this tens of thousands of times a day. To build an online ecosystem to manage that is not easy, and requires a bit of investment.
These systems are just starting to come to fruition. In fact Work Market is only 3 years old and we were in stealth mode for the first 1.5 years building our platform.
In lieu of platforms, many companies traditionally put their onsite workers on W2s. This gives them more control and is easier to manage when they are on staff. And if you want to drive some sort of variability, at the very least you go through a staffing firm and hire people part-time. It’s not ideal but it’s better than hiring full-time W2s for variable work.
But it’s inefficient, and that's where the pent-up demand for online onsite/local freelance marketplaces is coming from. Many onsite projects are variable in nature and could benefit for more dynamic management of resources. That’s what’s so exciting. When you combine the people function with technology for process management you can scale your workforce to meet demand fluidly.
And what’s even more amazing about this is that this is exactly how many people WANT to work. Check out the MBO report: State of Independence in America. By 2020 50% of people will have spent time as self-employed. The benefits are very well known…freedom, flexibility, constant exposure to new types of work, etc. It’s all dovetailing into what looks to be a tremendous new market.
It’s estimated that this market is about ~$200M today. And growing to anywhere between $5.5B to $15.5B in 6 years. That’s incredible growth.
When you combine the release of pent-up demand that is there, with the actions taken this week by SAP I think you may be seeing the tipping point. SAP is taking an extremely complex process and integral component of their business and using our platform to allow partners to freely staff and manage this on-site work. It’s highly complex work. Pre-sales consulting on SAP requires skill. Lots of skill. And now it can be staffed online. This announcement is a nod to the viability of online marketplaces for extended workforces. One of the best software companies in the world looked at Work Market software and decided it can help them build a better workforce - online.
So, between the recent SIA report and this major event the marketplace for an on-site, local extended workforce has seen two major events in less than 7 days. Is this the tipping point? In 2020, if the market reaches $15.5B as predicted we could be looking back at the first week of 2014 and say that’s when the pieces really started moving fast. Work Market is excited to be part of making this transformation happen. More people working the way they want. More companies hiring the way they want. Isn’t that what a marketplace is all about?
To learn more about how Work Market can help you find and manage an freelance onsite workforce please visit www.workmarket.com.
