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The Rise of Crowdsourcing

Photo Credit: Ѕolo via Compfight cc
Photo Credit: Ѕolo via Compfight cc

As I’ve worked over the last six months to launch my personal finance brand as well as a few other side-projects, I have had to go through a major paradigm shift when it comes to outsourcing projects. Growing up, we’re generally told that outsourcing is a bad thing – it takes jobs away from domestic workers and gives them to workers in other countries. Since it seems like such a straightforward concept, you don’t hear about people arguing against it very much. Especially since my father works in a manufacturing environment, the concept of outsourcing was just always accepted as evil in my household.

In general, I still feel that way. I hate to see factories in America closing while China and India are getting so much capital investment in factories and call centers simply because they’ll do it for cheaper. However, due to my recent experiences with crowdsourcing, I have a little bit different perspective.

Crowdsourcing

Have you ever heard of the concept of crowdsourcing? I’m sure you’ve all heard of crowdsourcing’s cousin, crowdfunding, where someone will post a charitable cause or even a business idea and the public chips in the money (usually hundreds or thousands of people) to help fund the cause. Crowdsourcing works just like that, but instead of announcing a need for funds, you’re announcing a need for services.

A great example is the logo on this very website. I posted a “job” on a website called 99Designs.com and described what type of logo I was looking for. Over the next few days I had received more than a hundred logo designs from 50+ different designers. I chose a winner, and that designer was paid about $500 as a pre-set reward.

Currently, I’m working through a website called ODesk.com trying to get connected with a mobile developer to write a mobile app for me. As it turns out, there’s a developer out there who has programmed an app that’s almost identical to what I’m wanting. I’ll save a ton of money going this route since he will be able to take his previous project and simply modify it for my needs.

The thing that I wasn’t sure how to feel about (at first) was that these sites are heavily dominated by freelance workers from other countries – India actually seems to be the most common location. While we call it crowdsourcing, it really is a form of outsourcing.

Why Crowdsourcing is the Good Kind of Outsourcing

Wait, shouldn’t I be slammed by the masses for this? Well, my first line of defense here is that Americans are perfectly within their rights to sign up to be a freelancer on these sites, and there are many who actually do. In the case of my logo, if the best design where made by an American designer, he or she would have been rewarded with the $500. I didn’t really pay any attention to where the designers were from, but now when I look back at my logo campaign, I actually received very few designs from American designers. The designer who won the campaign was actually from Singapore.

In the case of Odesk, I received a few bids for my mobile app project by American developers, but they were asking for upwards of $30 per hour for potentially as much as 100 hours. This is just simply more than I could afford – if that were the bottom line, the project simply wouldn’t get done.

My second line of defense on this issue is that what I’m doing is a net gain for myself, and thus a net gain from the perspective of the American economy. The mobile app I am having developed will cost me about $250, and that money will go to a developer in India. Once the app goes live, however, it is going to boost my mobile revenue which will equal more profits that can be reinvested in my projects (or spent by me, of course).

Sites such as 99Designs and Odesk have given small businesses the ability to afford projects such as the ones I am working on by introducing supply and demand into the equation. If there are many developers willing to help you with your project, that project will typically be cheaper. If there are only a few, then you can expect to pay more. It’s almost always more cost-effective, however, than seeking out an existing business to do the work for you.

The other thing I love about crowdsourcing in concept is that it opens up these foreign workers to higher wages and, in turn, could actually be the movement that slows down the exporting of jobs by major corporations. If these workers are able to make a decent living doing ad hoc projects for small businesses, this drives the wage demand up in those countries and makes it more difficult for major corporations like Microsoft to find quality workers at the price they’re paying them today.

Now That We’ve Got the Politics Out of the Way…

The possibilities for crowdsourcing are endless. You can get a mobile app for your restaurant that will allow you to take orders online, you can have an entire website designed and coded for you, marketing, bookkeeping, virtual assistants. You can use crowdsourcing to help you grow your small business to the point where you can begin hiring American workers to handle some of these duties. I view it as almost like an business-incubator type of service, where small businesses (particularly internet businesses like mine) can leverage cheap, quality work to create revenue growth.

My favorite part: crowdsourcing matches innovators who have a plan with people who have the knowledge and abilities to help execute that plan. Mark Zuckerberg didn’t invent the concept of social networking. The framework for that idea had been laid out in millions of dating websites, internet forums and chatrooms, as well as social networks that already exist. Zuckerberg was simply the guy with the knowledge to put it all together. There are a lot of innovators out there, but not all of them are computer programmers or engineers or marketing experts – they just have ideas. Crowdsourcing provides an outlet for these people to get their ideas off the ground.

Got an idea and don’t know how to get started? Consider crowdsourcing it. You might be sitting on an idea right now that just needs $1,000 worth of crowdsourced labor to get started, and there might be millions of people out there who want to purchase this product from you!

 

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June 9, 2014   By: admin
  • http://debtdebs.com debt debs

    Interesting read including your political commentary ;-). The world is so small that now these things are possible. Technology and innovation coming together. We had the car, then the internet, I wonder what the next big thing will be. I think it will be in energy, environment or health care.

    • http://www.moneyjournal.com Zac Fields

      Thank you for your comment!

      It’s funny, because I’ve known about crowdsourcing for a long time but I was against it because (to me) it seemed no different than when a company shuts down an American factory and opens up a new one in a different country. As a small business with limited means, however, crowdsourcing turns out to be the only way for me to get anything done. My projects just simply wouldn’t exist if it weren’t for this way of sourcing them.

      I agree with you on energy, environment, or health care. I think it will be a mix of all three, really. I work in the energy industry, so I know there are some major changes coming down the pike, most of which are very exciting even though they’re sometimes scary!

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