Outsource websites like eLance, Freelancer and oDesk make hiring freelancers a cost effective and convenient option for businesses of all sizes. While similar, there are some distinctions between the different websites. While the process, interface, tracking system and fees are similar, the major distinction happens to be what sort of contractors each of these tend to attract.
I’ve always been a big proponent of outsourcing small jobs. It’s cost effective, easily tracked, and once you find a good specialist contractor, it can save you a LOT of time. We had quite a bit of positive feedback on our last post on outsourcing, so I thought I would elaborate on some of our favourite ‘contractor marketplaces’, and how they stack up against one another in terms of costs, talent and features.
Small and medium businesses in particular tend to have many recurring small jobs they require done, without justifying bringing in a permanent and dedicated staff member. Even if someone on your team has the skills required for the task, it is simply not an effective use of their time. For this reason, the growth of outsourced business processes has seen dramatic growth over the past few years, with research think-tank Gartner estimating that up to $9.5 billion will be spent by 2016 just across the Pacific and Asian regions. In Australia alone the market for BPO amounted to $4.6 billion in 2011.
Another major reason to outsource is cost efficiency– we know it is important to manage your cash flow, especially early on in your business. While hiring a graphic designer in Australia may set you back close to $100 per hour, these online market places allow you to shop around, finding highly skilled contractors in places like Russia or the Philippines who generally work for $9-$15 per hour. Just like outsourcing your IT Support, there are huge performance and quality gains to be made whilst benefiting from specialised talent and infrastructure, as well as improved cost efficiency.
Wondering how to get started?
Getting started is easy, and you can even post a job on many of these websites without sharing your credit card information. Generally speaking, the way it works is:
- Post a job – many of these sites even give you suggestions on the post description, to point you in the right direction. If your job type does not have any suggested information, I strongly recommend a quick search along the lines of ‘how to hire a graphic designer’ — there are hundreds of great articles written giving you advice on how to engage the right contractor. My advice is to be selective with the criteria (part of the posting process) to specify that only applicants with a certain level of feedback, training, dollars earned, or English proficiency are able to apply. This will ensure quality over quantity when it comes to applicants, as it can be quite time consuming to manually go through 60+ applications.
- Invite contractors – this is optional. Once you post a job, you are almost guaranteed a flood of applications from around the world. Often there are recommendations on the top performing candidates to invite, which is helpful.
- Compare applicants – hopefully you will have limited the number of applications to ensure the contractors meet a certain number of criteria. The selection process can be time consuming, but there are a host of filtering options to separate the wheat from the chaff, so to speak. There is a trade-off between the number of barriers you put in place (questions they have to answer by email or in forms, for example) and the number of applications you will receive. Experiment with these and see what works for you. I always like to hide at least one question in any job post, to make sure that applicants read the project description in its entirety.
- Hiring – Once you have shortlisted a number of finalists, I strongly recommend organising a Skype conversation with each of them. This will allow you to gauge their level of English, as well as their understanding of your project requirements. It is also much harder to exaggerate (or mislead) if you are in a live video chat with somebody. Go with your instincts– you will be able to pick up on cues such as changes in body language and tone of voice, which you would otherwise not be able to via emails.
1. Elance – “Get jobs done fast. Get the work done right.”
How it works – Elance gives you the options to hire by the hour, or by the project. You are able to track the progress of any given project under ‘Manage my Team’, where you can share relevant documents and message one or more members of your team.
Payments – You are given the safety net of being able to approve work before making any payments, which does offer some peace of mind. You are able to place project deposits in escrow, with Elance handling the money transfer. If you elect to pay by the hour, Elance have a WorkView feature which lets you view regular screenshots of work prior to approving payment for the set number of hours.
Fees – Elance charge an 8.75% transaction fee at the time of writing this article. Considering that hourly rates for contractors can range greatly, this can impact on your budget. It really depends on who you hire, and for how much.
Our opinion – Elance is perhaps one of my favourite sites for finding quality contractors. It is generally more expensive than the alternatives, and is my go-to platform for finding contractors with strong technical backgrounds, particularly around application and web development, and graphic designers.
2. Freelancer – “The World’s Largest Outsourcing Marketplace”
How It Works – Freelancer gives you the option to assign a fixed payment for a project, or to assign hourly budgets which you can stretch out over days or weeks.
Payments – Payment is made based on ‘milestones’ which are agreed upon prior to commencing any tasks.
Fees – The fees are split between the hiring party (3%) and the ‘freelancer’ (10%), and there are a number of upsells you can opt for which improve the visibility of your project, hide it from search engines, and so forth.
Our opinion – One of the main reasons I don’t use Freelancer as often is the range of upsells it ‘offers’. ‘Features’ like hiding your posts from search engines or posting a full time job incur their own separate fees, which may or may not suit your budget.
3. oDesk – “Get the right freelancer. Get the job done.”
How It Works – oDesk is for the hands-on recruiter. One of its core offerings is the ability to track mouse and keyboard activity, feedback and screenshots. If you are just starting out outsourcing, you may find this level of visibility reasurring. oDesk also offer the guarantee that you will only pay for work done (and tracked) via this method.
Payments – Hourly and fixed price projects are both options, and payment is released at your discretion.
Fees – The rates for contractors that you see in the marketplace already include a 10% fee which goes to oDesk.
Our opinion – oDesk is a great alternative to Elance, particularly for less technical and more labour-driven jobs. I’ve used it often for data entry and basic editing work.
Okay, so which site is best?
The natural follow up question to any comparison post. And of course, there is no ‘best’ — each platform has its own merits and caveats, and hopefully the insight we’ve given will allow you to know which website to use for what type of contractors you’re looking to hire.
Contractors will often have accounts across multiple websites, but a strong piece of advice is that if you find a contractor you ‘gel with’, stick with them. Many contractors love ongoing projects with a good client, and many clients are very hesitant in sharing a good contractor with their business acquaintances.
As you know, good talent can be hard to find. If their work is doing good things for your business, make sure you reward them accordingly. All of these sites allow you to give bonuses and rewards. Use them sparingly but to good effect.
Project based or hourly rate?
Use your best judgment when deciding on project based or hourly rate payment options. Generally, hourly rates are a good option for ongoing work, and when you are unsure how long a contractor will take to complete a project– I particularly like to do this for projects with an ‘untested’ contractor, as while I risk losing a few dollars, I can find out whether they’re wasting their time very early on. With research based projects for example, hourly rates will allow you to gauge progress early on in the project, which makes a lot of people more comfortable.
With graphic design projects, project based rates are a good way to ‘set and forget’, and to keep your costs to a minimum. Having a rough idea of the amount of time a project is very important, so make sure you work that out prior to committing to hiring a contractor. With that established, you can decide on a fair project based rate based on their normal fees, or the amount you have managed to negotiate.
Tips for Project Based Agreements
Because this is a more hands-off approach to outsourcing, it is extremely important to fully outline requirements, milestones and deadlines to your contractor. The more information you provide in the project outline, the more likely you are to attract contractors who have experience in projects with similar levels of complexity. Unfortunately, one of the common scenarios on these websites is that you will get an influx of generic applications from contractors with no portfolios or experience– which is why the filtering criteria is so important.
Hiring an individual vs. an agency
There are a number of contractors who actually manage their own subcontractors. These websites refer to them as ‘agencies’ but this should be taken with a grain of salt. During the hiring process, make sure to ask for complete transparency in terms of who will be doing what aspects of your project. While your interview may be held with someone who looks promising, there are occasions where that person will then delegate to their less competent staff, essentially making them a project manager. See what works for you, but bear in mind this potential caveat.