home about contact internet marketing book twitter business book archives subscribe

Why Freelancers Should Hate The Merger Of Elance And oDesk

News that Elance and oDesk, the freelance world’s two biggest job markets, are to merge has not gone down well in the freelance community. Worries have been expressed by freelancers on both sites about what the new company means for their ability to find clients, to continue working and to build their freelance businesses. They’re right to be worried.

Fabio Rosati, chief executive of Elance, and Gary Swart, chief executive of oDesk, have been trying to offer reassurance. The companies’ merger, they say, will mean more money to spend on marketing to employers, persuading them to outsource work to freelancers around the world and increasing the pool of jobs. It will also allow them to develop and share the technologies that underpin the sites. A blog post published on Elance predicted that the two companies will be able to produce better hiring and collaboration tools, improve mobile accessibility and offer job skills development. By combining their engineering and data science expertise, the companies believe that they will be able to better match freelancers with clients and improve their job recommendations to freelancers.

“It’s a matter of scale and synergies — we don’t need two escrow systems, we don’t need two hourly billing systems,” Gary Swart told the New York Times.

Perhaps most important of all, by working together the two companies will be better placed to help the job industry shift to outsourcing and telecommuting. This year, the amount of work placed on both sites was valued at $750 million. Rosati and Swart believe that they can increase those revenues faster if they work together.

Race To The Bottom

The biggest criticism has come from users of Elance. Although both oDesk and Elance offer a way for freelancers to find work in categories that range from design and programming to marketing and translating, in practice the jobs and the freelancers on both sites are very different. oDesk is distinguished by a system that monitors what its freelancers are doing. Its team app tracks hours and shows progress in real time. Employers can request that freelancers use it even for fixed-price jobs as well as for work paid by the hour. To many professional freelancers that can feel like too much like a job conducted while the boss peers constantly over their shoulder.

oDesk markets its management tools as allowing employers to feel that their outsourced team is in the office with them. Freelancers like to feel that they’re a long way from the office and running their own business.

Prices on oDesk are also often much lower than those on Elance. Requests for logos on oDesk often come with budgets of around $20 or less. One Elance member noted a design job she found on oDesk: “’Need graphic designer ASAP to create three images in Illustrator.’ Budget $5”

Those kinds of low-paid jobs offered by firms with no money do turn up on Elance as well, but they’re rarer. The company also attracts a higher number of professional firms offering professional fees, which in turn brings in large numbers of professional designers, programmers and writers. As one Elance user put it in the forum thread that discussed the merger:

True professionals won’t go anywhere near ODesk . It has the reputation of a bargain sub-basement for hobbyists and lowballers.

The fear among Elance users is that with the two companies combined, the pool of jobs will be merged too, forcing professionals to sort through ten-dollar design jobs and one-dollar article writing to find the proper jobs that pay the bills. The most common expressed desire among Elance users is for a two-tier freelance market: a high-grade outlet for professionals with first-world bills; and a budget market for poorly trained developers paying Dhaka rents. The worry is that those two levels will be more not less integrated.

Banned From Elance

On oDesk, the reaction has been equally lukewarm but the concerns are different. Comments placed at the bottom of a blog post announcing the merger have come largely from people with South Asian names. Their biggest concern was that having been thrown off Elance they were worried that they’d be banned again if the two companies united.

Freelancers have been assured by both companies that “Both odesk.com and elance.com will for now continue to operate as separate, independent services. Your accounts and profile records will not be impacted.”

That “for now” though, is important. We don’t know what’s going to happen. We don’t know whether Elance will suddenly require its freelancers to automatically send in screenshots of their work every ten minutes to prove that they’re not slacking off. Nor do we know if Elance’s higher prices and more professional jobs are going to be drowned out by a shared pool of budget tasks in a race to the bottom.

And more importantly, we don’t know what this is going to do for the market. The deal hasn’t been signed yet, in part because it still has to pass regulatory approval. But when two largest companies in a field decide to stop competing and start collaborating, you have to wonder how much tougher life is going to get for companies with just one main outlet for finding freelancers and for freelancers with only one main job board. Competition is a good thing (unless you’re bidding for work) and the end of competition in the freelance job market should be worrying for both freelancers and employers.

In practice, little is likely to change in the short term. We might see better collaborative software being offered on Elance, an area in which oDesk has both an advantage and higher demand. And we may see more resources put into promoting freelance work and outsourcing. But it’s also possible that we’ll see downward pressure on job prices on Elance and an increase in fees charged to both companies and freelancers.

And with a bit of luck, we might also see the appearance of a genuine competitor specializing in high-priced jobs for large firms and professional freelancers. That really would be the birth of a two-tier freelance market.

One Comment

  1. Francis Says:

    Thank you for your differentiated and impartial review. As an oDesk user, I don’t know much about how the services differ. But I was quite surprised how superficial the responses from the moderators of both services were, when users voiced their complaints.

    All in all, most users are not happy with the idea of the merger – even before any change was decided. And I think this tells much between the lines.

    It makes sense to look outside of these two big services, now that they will not be direct competitors anymore.

Leave a Comment