Organizing with on-demand freelancers in the platform economy: Part One

Widjaya Ivan/Flickr. (CC BY-NC-SA 2.0)

In the platform economy, digital technologies enable a wide range of interactions. You’re probably familiar with sharing economy platforms such as Uber and Airbnb. But probably lesser known are the transformative effects that online labour platforms have on contemporary organizations and how work gets done.

As an organization studies scholar, my work furthers understanding of the adoption of online labour platforms by organizations and the new organizational forms, processes and practices that are developed to get work done with external people. In the first part of this two-part blog, I will discuss what kinds of platforms are out there and how organizations are adopting them. In part two, I outline an organizational perspective on online freelancing platforms, to better assess how the future of work is taking shape.

In past decades, we’ve witnessed how organizations opened up their boundaries and how outsourcing and offshoring has changed the very nature of work. We are now observing another wave of transformations with organizations adopting platforms such as Freelancer, Upwork, Peopleperhour, and Amazon Mechanical Turk to outsource their projects online. As measured in the Online Labour Index, platforms connect client organizations with millions of workers around the world. They do this at a speed and scale that was unimaginable just a short while ago. Online labour platforms differ from platforms mediating physical services, such as Uber and Taskrabbit, in that the work is conducted online, requiring no physical interaction between worker and client.

In a recent report, Accenture identified online labour platforms as a key trend shaping the future of work in the next five years, which will significantly transform existing organizational forms and management models by 2022. However, while organizations and their members increasingly hire and work with online freelancers and ‘gig’ workers to get work done, we know surprisingly little about the diversity of platforms that are out there and what types of work can be outsourced through them. Such an understanding is important for obtaining a more realistic understanding of how platforms are shaping the future of work in the online gig economy.

“We know surprisingly little about the diversity of platforms that are out there and what types of work can be outsourced through them.”

A typology of online labour platforms?

As new intermediaries in labour markets, platforms connect client organizations and independent workers to collaborate on various tasks that can be carried out online. In past years, numerous platforms have emerged to cater to different types of online work, ranging from small micro-tasks to complex technical projects and professional services. This makes it relevant to develop a typology that can differentiate different types of online labour platforms and help us understand for what projects they are used. One can distinguish between crowdsourcing platforms on the one hand, and outsourcing platforms, for sourcing microworkers and online freelancers, on the other.

Online crowdsourcing concerns the simultaneous sourcing of work and contributions from a largely undefined group of people, which is often organized through contests. Crowdsourcing platforms, such as Topcoder and Innocentive can best be used for complex problems where problem solutions and skillsets are unknown (as described here by Boudreau and Lakhani). They are most useful in tackling projects that benefit from experimentation and multiple solutions. Online outsourcing differs from crowdsourcing in that organizations source work and contributions independently from individual people. Online outsourcing platforms therefore match buyers and sellers of services one-on-one.

Table 1 below summarizes a common distinction made between platforms that focus on microwork and online freelancing. Examples of microwork platforms are Amazon Mechanical Turk, Samasource, and CrowdFlower. Here, the platform efficiently matches individual workers to small tasks. They are used best for relatively simple, repetitive tasks that require little training and coordination. Similarly, online freelancing platforms such as Freelancer, Upwork, or Peopleperhour source independent work from individual people. Here, however, projects often concern knowledge-intensive projects and tasks. They are used best for finding freelancers on an on-demand basis, for well-established categories of work that have clearly defined deliverables and skill requirements, and are easy to modularize and evaluate. Popular categories of projects posted online are software development, creative and graphic design work, and writing and translation. But in principle any type of work that can be delivered online can be mediated by online freelancing platforms.

Expanding capabilities with online freelancers

I study the motivations of organizations to adopt online freelancing as part of their business models, as well as the new organizational forms, processes and practices they developed to get work done with freelancers. Online freelancing platforms have radically transformed the access that organizations have to freelancers, their talent and services. Today, startups and innovative Fortune 500 enterprises are adopting platforms to augment their internal workforce and capabilities with on-demand workers. There are at least three reasons that online freelancing platforms form an attractive opportunity for organizations:

1. Platforms enable organizations to access a group of freelancers with highly specialized skills and expertise. This allows organizations to complement their internal capabilities with the skills and expertise of online freelancers. As such, platforms make online freelancers an attractive option to quickly and temporarily complement organizational employees.
2. Compared to traditional outsourcing vendors and contracting agencies, platforms substantially lower start-up and transaction costs. This allows organizations to quickly address project needs and respond to changes in market conditions.
3. Platforms eliminate geographical, informational, and administrative barriers in the hiring and onboarding process. This allows their usage for projects of shorter length and scope, and on a more flexible, on-demand basis.

I further argue that the adoption of online freelancing is part of a larger transformation we are witnessing, as organizations move from relatively static hierarchical structures based upon fixed roles towards organizational forms that are based on more fluid and dynamic tasks. People are dynamically teamed together to work on projects, based on their skills, knowledge and staffing needs. Such a task-based form of organizing allows organizations to create the speed, flexibility, and efficiency needed to stay innovative and competitive in today’s global business environment.

In this blog, I’ve argued that while organizations and their members increasingly tap into the knowledge and expertise of external workers hired through online labour platforms, we know surprisingly little about the variety of platforms that are out there and why organizations adopt them for outsourcing work. In Part Two I will discuss new ways of organizing with online freelancers and the questions that organizations should consider when they adopt online labour platforms as part of their business models.