How the Freelance Shift Is Driving the Market for On-Demand Labor

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    Last week, I wrote about the growing shift toward contract labor, and why it makes sense for companies to make labor a variable cost rather than a fixed cost. The shift warrants a closer look at the on-demand labor market, and at how one company that’s championing the shift is helping to drive that market.

    The company is Work Market, a provider of cloud-based contract labor management services in New York. In an interview with Work Market co-founder and COO Jeffrey Wald, I noted that the home page of the company’s website touts its focus on helping organizations to find and manage their “onsite” freelance workers. I asked Wald about that “onsite” reference, and whether it meant that remote workers don’t fit into Work Market’s model. He said they absolutely do, but that the nature of the industry spurred that specificity:

    Online staffing is a $1.5 billion-a-year industry; it’s growing 50 percent a year, and it’s projected to be a $20 billion industry by 2020. Companies in that space that were the pioneers, companies that we have a huge amount of respect for—oDesk, Elance, Freelancer—they are completely focused on remote work. Remote work is mostly for SMBs. There’s a big difference between, “I need to find a person to do a logo for me, and therefore I can have somebody in Pakistan or Belarus or Uruguay do it,” vs. “I need to do 1,000 installs of point-of-sale terminals in every McDonald’s in the Northeast, and I need to do it in the next two weeks.” It’s finding the right people for that flow, checking them in, checking them out, making sure they have the right insurance, making sure they have the right skill set, making sure the parts are there on time, making sure they get the right sign-off and turn those into invoices, and then paying them. So what we focus on are large corporations, and them being able to manage any need for contractors. We are not looking at a random instance, be it an SMB or even a large company, where the need is for someone for one task. That’s not what we do. We build software that allows companies to manage 10,000 people at any one time, where 1,000 of them are in the field on any given day. So we are more focused on onsite. That is not to say people don’t do remote work via Work Market—they certainly do. And that’s not to say that remote work isn’t an important component of the variablization of labor. But our company specifically is focused on providing the software that allows large corporations to manage a large on-demand work force.

    I asked Wald what professions are most dominantly represented among workers on Work Market’s platform. He said IT services is the largest segment, by far:

    There are a lot of other segments that people work in—legal, health care, sales, field marketing, retail merchandising, transportation logistics. But IT services is a little bit more than the majority of the work that goes on, on our platform. A lot of our customers are very large project management firms and integrators, and there are tens of thousands of resources that have up-to-date profiles with insurance information, background checks, and drug checks, that are sitting and are waiting for work every single day on Work Market.

    I noted that with respect to IT skills in particular, we often hear employers complaining that they can’t find the skills they need, and skilled IT workers complaining they can’t find a job. I asked Wald if he had any sense of where the disconnect lies. He said the short answer is, “no”:

    The reason my answer is “no” is because of the tens of thousands of assignments that get sent every week on Work Market, 98 percent of them get picked up in two minutes. So we have a very liquid marketplace of buyers and sellers—we are not seeing people sending assignments, and those assignments not being able to get filled. In addition, we do have a very buoyant marketplace, where almost 70 percent of the people on the site did work last month. So I certainly wouldn’t argue that the disconnect exists in the marketplace as a whole, but when you think about the on-demand work, and this freelance economy, we are just not seeing that.

    I asked Wald to describe the process Work Market follows to vet the workers before they’re entered into the system. He said they don’t do anything:

    Think of this as LinkedIn, with eBay on it. Anyone can go onto Work Market and create a profile. What we do is provide the tools that allow corporations to do this in a scalable way. If Joe Smith comes on and he’s looking for work, and he doesn’t fill out his profile, put his insurance up, run a background check on himself, post his licenses and certifications, then he’s not going to get work. Joe Smith has to invest in his human capital—he has to fill out a robust profile. The reality is, he’s going to work first with the people who invited him on—most people don’t just show up to Work Market and fill out profiles. They get invited by companies that have used them in the past. So Joe Smith will build up his ratings, and people will continue to use him—it’s the marketplace that drives that behavior. It’s up to us to build the tools such that we’re going to verify that he’s a real person, his bank account, insurance—we do those through an automated system of pingings into the IRS, and into various other databases. We use tools to verify certain data points in his profile, and then it’s up to him to get on-boarded to one of the thousands of companies that use Work Market to manage labor. And then over time, his ratings, the amount of work that he’s done—that network effect is the most powerful thing that’s going to drive behavior.

    Finally, I asked Wald to the extent that employers are ever dissatisfied with freelancers they retain through Work Market, what tends to be the most common reason they cite for their dissatisfaction. He said it’s workers failing to close out their assignments on time:

    So a company sends 1,000 assignments out to 1,000 people. There will be 50 of them that just don’t get back to their computers, that don’t use our mobile site to update their assignments and don’t get their deliverables in. So it’s our job to make sure that our mobile products are as user-friendly as possible, so that they can just do all that on their mobile phones. The vast majority do, but you still have 10 percent of the user base that isn’t using a smartphone, and they take time to close out their assignments. People are getting used to things happening in very real time, because everything that we do is mobile-enabled.

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