Extra Virgin: Exploring the Growing Trend of Digital Work Platforms
This is a guest post by Panagiotis Semitekolos
Nicholas Musson is scanning through a long list of bidders for a recent logo design job he posted on PeoplePerHour. His business, Kouzini, is an online shop for gourmet extra virgin olive oil which launched earlier this year, and has been gaining plenty of traction. With success has come an increased workload, and relatively straightforward design tasks like this now need to be outsourced quickly so that he can focus on more vital areas of his venture.
“It makes working a lot easier for me,” Nicholas explains. “Before I started looking online for freelancers I had to micromanage almost everything about the business. I’m not in a position to hire a full-time employee yet so sites like PPH are a good alternative.”
His story is far from unique — it’s one that thousands of new entrepreneurs will recognise, and many of these have, like Nicholas, turned to digital work platforms as an outlet for task delegation.
A recent McKinsey & Company report estimated that this growing industry could add up to $2.7 trillion to global GDP by 2025
This so-called ‘gig economy’ seems like it’s here to stay. A recent McKinsey & Company report estimated that this growing industry could add up to $2.7 trillion to global GDP by 2025, with the potential to increase total business output by up to 9 percent in the same timeframe. The reason for the trend is straightforward enough: In cash-strapped startups or micro-ventures, which are often led by one person or a small team, there is a need to efficiently direct financial resources in a way that allows the venture to grow without incurring unnecessary costs.
Risk-Free and Cost-Friendly
Instead of hiring full time employees at a company whose future is by no means certain, connecting with individual freelancers for fixed term tasks is usually a more risk-free and cost-friendly mechanism for getting work done.
It’s the reason why, in spite of the digital work market becoming full of competing freelance hubs, demand for such platforms continues to be on the rise. In fact, recent trends shed light on a field which is quickly evolving.
The first wave of digital work sites typically followed a similar model of ‘post and bid’, where a buyer (i.e. the employer) would create a job, and subsequently receive proposals from interested freelancers around the world. From the received bids, the buyer would then select the one which best fit their needs. But in a market where speed is everything, ‘on-demand’ has taken on a new meaning and offshoots of traditional freelance hubs are starting to sprout up across the Internet.
Sites like TaskRabbit, Fiverr and SuperTasker (the latter being part of the PeoplePerHour organisation) focus on quicker allocation of work to ready made tasks. In essence, the buyer forgoes the entire job posting process and simply selects a relevant, fixed-term job from an a-la-carte menu. They then proceed to enter the relevant details, and the job is sent to a curated freelancer who completes the work in a few hours. It’s the next step in an industry which relies on speed to compete, and the goal is to allow fledgling businesses to get work done quicker than ever before.
A New Generation of Freelancers
Much has been made of the individuals on the other side of the spectrum. Freelancers have seen their livelihoods significantly altered through the advent of digital work platforms. While these sites have been vital in allowing startups to operate in a leaner fashion, they have also generated criticism from both labour organisations and the sellers (i.e. freelancers) themselves.
One of the primary complaints is that the globalised nature of such platforms eventually leads to substantial undercutting of prices for services by freelancers in the developing world.
One high-earning freelancer, Faryad, operates a joint account with his wife on PeoplePerHour and tells a story of two sides.
“I’ve seen numerous cases in which a buyer assigns $200 [€177] for a specific job and after 20 minutes of reviewing bids he reduces the budget to $50 [as a result of underbidding]. This is drastic.”
As Faryad sees it, such price dropping tactics don’t just have negative consequences for the freelancers, either. “Ultimately,” he adds, “such low bidders severely damage the reputation of the freelancing platform itself. They make the platform completely insecure for both freelancers and the buyers.”
In spite of the baggage which comes with work on such sites, Faryad has been relatively successful, and is keen to emphasize that his experience has been positive overall.
“As graphic designers, PPH has helped us meet new people from around the world. Our business isn’t local anymore, and we have customers in more than 20 countries.”
Their earning potential has been a key component to the couple remaining on the site as well. “Even though we’ve been on the platform for only a year, we’ve been able to double our income. We earn globally and spend locally. This is great for us.”
Tomorrow’s Employment Market
The drastic decrease in the cost of starting a business has been a major reason behind the wave of new startups, and encouraging people to become micropreneurs. Given the continued reliance on online operations to drive revenue, along with the importance of new startups adequately managing costs, a continued shift to digital work platforms in the future seems to be a given.
As with most new industries, there are of course downsides, and it will be up to both platform operators and possibly state regulators to mitigate them when and where they appear. Whatever the case, however, the path to the future is clear — and the gig economy is poised to continue growing at a faster rate than ever before.
All in all, the labour market we have become accustomed to might be on the brink of changing forever.