Crowdsourcing … Good for Business?

Here are three reasons why sending your work overseas could come back to bite you. And why when we think about crowdsourcing, we should think about the local talent market first!

Sold to the lowest bidder! Using services like oDesk (which I think is one of the best when it comes to fast access to a contingent workforce) I have literally seen hourly rates bid as low as $1.11 per hour. And there is a certain allure to having someone on the other side of the planet working for 20% of the prevailing “living wage” here in the US.

But think about this for a second: if we keep going at this rate, treating the workforce as a commodity, we will forfeit the investment we are making right here in the US with the billions spent on our education system and continue to transfer our national wealth overseas. And when you have a person in India willing to do the work for $5.01 per hour competing against another person in China who will do it for half that price, what chance does a US worker have in that equation? Probably none.

And if that’s not reason enough for you to reconsider, think about this: the Department of Labor and IRS are looking into these outsourcing arrangements to consider labor and tax implications.

That’s not what I meant! One thing that you will have to learn the hard way if you are using overseas talent is that workers in many Asian cultures will take your project and instructions at face value, even if they know from the beginning that what you are asking for is unreasonable or simply impossible. And in cases where you’ve agreed to pay an hourly rate for the work but you haven’t been clear with your expectations, the provider/contractor will be churning for hours on the clock on a road to nowhere. At the end of 100 hours of work, you will have to sort though the mess and try to figure out if it can be salvaged. Don’t expect “push back” or questions from the overseas contractors, you have to make your intentions and expectations crystal clear or you will be disappointed.

Anyone here? Let’s say that neither of the foregoing reasons were compelling enough for you. How about this: what happens when the “race to the bottom” on commodity labor results in a national economy based solely on services, with all knowledge work and production work sent overseas? If the US workforce is marginalized, guess who won’t be buying from you?

Don’t get me wrong; I am a proponent of crowdsourcing, just not of turning the workforce into a commodity that can be bid lower and lower like corn, oil and pork bellies. It really does come down to people, and as a U.S. small business owner, I think we have to strike the right balance between cost effective labor and sustainable business systems.

Posted on April 16, 2012, in Crowdsourcing, New World of Work. Bookmark the permalink. Leave a comment.

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