This interview originally appeared in BusinessPundit.com.
Move over, Dilbert. You’ve been outsourced. In a single decade, the working world has been transformed from a Dilbertian cubetopia into a 24-hour for-hire metaverse.
Where employers used to fish through reams of resumes, they now drop job bait into a virtual pond to see who bites. Those seeking work can become visible to employers worldwide, armed with nothing but list of achievements and deft typing fingers.
oDesk is one of the companies that makes this kind of remote hiring and collaboration possible. Remote workers have funneled more than 1 million hours of work through oDesk’s platform, which allows you to hire, monitor, and pay workers in all corners of the world. Employees are guaranteed hourly pay. Bosses get to gauge progress via automated screenshots. And oDesk makes life easier on employers by taking care of the legal and tax implications of paying someone abroad.
In short, it’s a sweet system. I caught up with oDesk’s CEO, the contagiously enthusiastic Gary Swart, to talk more about oDesk’s platform, capabilities, and users.
DK: Could you tell me a little bit about what differentiates you guys from other big outsourcing-oriented sites like Elance or Guru?
Sure. The first thing I’ll say is that you said, “other big.” I should point out that oDesk is the largest by a significant margin. We’re also growing three to five times faster than any of those traditional…what I would call “labor marketplaces” or “outsourcing marketplaces.”
Those businesses are built on the premise of a matching platform, where both buyers and providers of services come to match. You post your job. I pay to bid on your job. I have to monetize that match. Once I’m the lowest bid, you accept the work. I throw the work over the wall, you throw the money over the wall.
Those sites traditionally lend themselves to very small, fixed and firm projects. oDesk is more the global employment platform. We enable companies to hire, manage and pay workers more by the hour. oDesk is always focused on off-term, time-based work, giving employers tools to more effectively manage and pay these remote tasks. It’s much more than just a marketplace to post a job and recruit candidates; it’s really about long-term time-based work and what happens after the match.
DK: So are you only hourly?
We’re not. We also offer fixed-price work, but we just started doing that a couple of years ago. The only reason we offer fixed-price is for onboarding. It’s to help a new contractor to work with an employer and then typically they convert to time-based work. As a result, about 90% of the dollars that go through oDesk are time-based.
oDesk now is being increasingly compared with staffing agencies. So if you think about Staffing 1.0 it was on-premise, B-minus talent, very high margin. Those businesses these days can’t afford that. They can’t afford to go to Manpower, Techno or even these traditional boutique staffing firms, so they’re looking for more cost-effective ways to get things done and they’re turning to remotes.
What’s disruptive is remote work. It’s more like staffing. Competitively, we’re finding that customers come to us and they’re telling us, “I want to hire Gary for the long-term, I just want to do it remotely.” What we’ve been able to do with our technology is we’ve replicated what works best in the real world–or in the offline world–into the online world.
DK: Is this technology unique to you guys? It seems like it would have licensing potential.
oDesk developed this technology. We invented it; we have a patent pending on it. We’ve spent a lot of money on infrastructure building. From the very get-go we started with that technology as the backbone.
The marketplace was developed afterward when companies said, “Wow, I love this technology. In addition to these great tools, can you find me talent?” That’s when we added the marketplace.
Going back to your licensing question, what’s happening now is people are looking at it saying, “This is a genius business. We need to copy it.” So some of the companies you mentioned earlier now have a very similar technology that they’ve in fact replicated.
The problem with that, though, is that those companies weren’t built around that technology. They’re introducing it as something new and their community doesn’t like it. The community is there because they like fixed price. They like working on something and throwing it over the wall, and they don’t want to have to account for who behind the scenes is actually doing the work.
Many of our clients now are coming to oDesk to find talent on our platform, but they’re also saying, “I love this manage and pay functionality. I have other contractors that are working for me remotely, can I bring them onto the platform?”
We have one good example of this happening now, a company in Texas with 180 people coming to work every day through oDesk. They show up in their virtual office, all of their time automatically is logged, that client pays us one check, they wire us money directly, and we pay those 180 people legally globally.
DK: How do you protect employers from getting defrauded by employees, if it’s all on an hourly basis?
We guarantee payment to the contractor, and then we guarantee work to the employer. The way that we guarantee payment to contractors is we say, “Listen: if you’re going to go work for Drea who works in Colorado,” and I’m here in Menlo Park, in order to get guaranteed payment I need to log into a team room which we provision.
Our team room is almost a virtual office. It’s where I’m going to show up in a cube environment via the Internet and you’re going to be able to walk by my “cube” at any point of the day and check in on me. The way we do that is we have functionality that takes a screenshot of my desktop six times an hour at random intervals.
The screenshot is in complete control of the contractor. We automate it because we don’t want to say, “Hey, go capture your screen now.” We simply give you a little popup that says, “Hey, we just captured your screen.”
At that point, you can choose to delete that screenshot. You can say, “Oh, you know what? I was typing a personal email,” or “I was checking Youtube.” If there was something on your desk that you didn’t want me to see, we give you the ability to close your door.
For every screenshot that gets captured and that you sort of let it ride–or that gets automatically tracked–you get guaranteed payment for that screenshot, whether or not we collect the money from the employer.
What we’ve done is we’ve replicated what works best in the real world, the offline, 1.0 world, and we’ve built that via the Internet. Now you can trust but verify remotely.
As a buyer of services, if the employer gets billed, they can be sure that every hour paid is an hour worked, and as a contractor every hour worked is an hour paid. If it’s like “well he’s not good,” you can fire me, you can give me bad feedback in ratings and never hire me again, but at least you know that you’re getting an hour’s worth of work.
DK: In terms of your user base, what industries use oDesk the most?
The employers are mostly small-to-medium businesses. However, we are aggressively getting pulled up into larger firms. Bigger companies are coming to us and saying, “Hey, we heard about oDesk. We have thousands of contractors. We’ve been outsourcing to a BPO firm across the pond somewhere and we end up with the same hassles that we have with a local team, so is there a way that we can leverage oDesk?”
If you talk about categories, we’re seeing mostly technical work for our platform. However, over the last year we’ve seen demand influenced by new products in the market. Apple announcements tend to drive interest and demand around updated platforms and technologies. Recently, we’ve seen a massive spike in more complicated work like project management. I think our project management work is up over 70% year over year.
Similarly, there’s a lot of work around knowledge-process outsourcing, so any kind of translation or marketing, social media optimization, SEM, SEO, and additionally we’re more active in creative categories: animation, game development and even voice talent. We’ve seen a pretty significant increase in recent months.
DK: Let’s say I’m a freshly unemployed person looking to start a freelance career and I want to set up shop on oDesk as a contractor. What advice would you give me to get off to a good start?
It’s funny you mention that. We wrote a blog post on it here. The first thing I should point out is that we only get paid if you work an hour, and our business model is to take 10% of that hour worked to hire, to manage and to pay. If you don’t work a minute we make no money, so it’s free to sign up.
You can come and create a profile and add all of your skills. We have free online tests so you can establish and prove that you have the skills you say you have. We recommend that you link to previous work, that you have a great cover letter, that you’re patient and persistent so you come in and recognize that you may not get the first job you apply to. But with 60,000 jobs a month, we think that there’s plenty of opportunity to get started.
I should also point out that a lot of our customers have told us they’re looking for quality more than price, so they say “Look, I want good value but I’m very happy hiring somebody in Boulder, Colorado or Flint, Michigan. I don’t really want to go offshore. I’d love to be able to hire somebody onshore so I don’t have to deal with additional potential communication challenges and the like.” So we’ve seen that a lot of our clients are willing to pay favorable hourly rates and as a result we’ve seen rates in the U.S. for certain skills trend up year over year as much as 20%.
DK: Have you encountered some recurring mistakes that contractors make with employers? Things that people do to just muck up their reputation or their job potential?
Yeah, and it’s funny… I hate to get into this topic. In real estate, the mantra is “Location, location, location.” At oDesk it’s kind of like, “Communication, communication, communication.”
I would say the number one mistake is just poor communication. There’s just a disconnect on some things. You may over-communicate, you’ll under-communicate, you over-promised, you under-delivered, you may not ask enough clarifying questions about the assignment.
I’ve seen issues where the contractor will say “Well, I knew it was going to be a problem” or, “The guy said he wanted to do it this way but I thought it should’ve been done that way” and well, why didn’t you proactively point that out?
Another flaw is accepting work beyond their capability, so if somebody says, “No problem, I can do that” and they can’t really do it but they really wanted to develop that skill and they thought they could learn on the job. That can’t help your reputation or your feedback over the long term.
DK: Is there anything else you’d like to share on this interview?
I think that it’s interesting times, definitely for our business. Our business has more than doubled year-over-year for the last 3 years. We think there’s a lot of tailwind helping to fuel the business. Unemployment at an all-time high while our jobs more than double year over year. In 2010, it’s estimated that 100 million people will work remotely at least one day a month. Four years ago that was like 1/5 of that. There’s this trend that’s emerging where people are demanding this flexibility, and companies are open to it. We’d love to get this message out because we think small businesses should benefit from the fact that there’s a more cost-effective way to get great quality work done.
Official bio: Gary Swart is the CEO of oDesk. Gary brings to oDesk a passion for helping small businesses succeed and more than 17 years of experience in the enterprise software market. Prior to oDesk, as the VP of Worldwide Sales for Intellibank, he was responsible for building the sales organization, but Gary’s enthusiasm for small businesses was born during his tenure as a Business Unit Executive for IBM’s Rational Software Product Group, where he led Small and Medium Business sales for the Americas. Gary came to Rational through its merger with Pure Software, where he held sales, management and leadership positions. Gary holds a Bachelor of Science degree in Business Administration from the University of Maryland.
Here’s another interview with Gary about oDesk: