Inside e-ployment: Online staffing services put temporary labor within reach of small businesses
Never mind all the stories about unemployment. American businesses are still clamoring for workers. They just may not need them for a full 40-hour week.
”Temps” have long been the go-to solution for businesses that need extra hands during busy production cycles or for special projects. In the old days, when you needed temporary help, you had one real option: The temp agency. Temporary staffing agencies—which are still around, mind you—might specialize in administrative workers (to handle that filing project that no one else wanted to touch) or hook you up with programmers or project managers (for more complicated, but temporary, projects). Either way, the relationship was generally between you (the employer) and the temp agency. You often had limited control over who came to work on Monday morning and even less over how much they got paid. The agency controlled the relationship, taking the employee’s fee and excising a healthy cut before passing the remainder on to the worker as a salary.
This system worked for years. Many temps were happy to bounce from job to job, much like substitute teachers, waiting for the call as to where they’d report the following day for work. And many temp agencies treated their workers as regular employees, withholding taxes and sometimes even offering benefits.
But that model isn’t proving sustainable. The deep cuts temp agencies take—up to half of a worker’s take-home pay—means most temps can’t make much of a living with irregular work. Meanwhile, employers are increasingly on the hunt for deeply qualified individuals with specialized skills. Those individuals may be located anywhere in the world—and willing to work for much less than previously imagined.
Online staffing services are a shortcut to finding these individuals. Offering a database of professionals—sometimes these workers number in the millions—you can now find just about any type of worker with just a few clicks. On most sites, you can either post your project and have contractors bid for it, or search for workers and reach out to the ones you are interested in directly. The sites all handle payment services and often curate the workers (though the degree to which candidates are vetted varies widely); but, typically, you can at least see who you’re dealing with based on the feedback and ratings of prior clients.
That said, as a group these services offer quite a bit of variety, since each has dug into its own niche. So study up on how they differ before you decide to do business with one. Here’s a closer look at seven established and upcoming online staffing services.
With 2.5 million registered freelancers and half a million business users, Elance says it is growing at a 50 percent annual clip, cementing its status as one of the largest online staffing services. The model is fairly typical: Companies can either hire workers directly based on their online credentials or post projects and ask for bids. The latter method is especially common for those in need of Elance’s bread-and-butter users: technology and engineering workers and providers of creative services, such as freelance blog writers. Billing is simple: 8.75 percent is added to all projects or hourly assignments.
Elance has one of the more full-featured escrow systems in the industry, and on complex projects it allows for multiple milestones to be created and agreed upon between the contractor and the employer. Most of these workers are treated as 1099 employees. Typically, it’s up to the business to handle any forms that need to be sent, though Elance can do it for you. The company says it does work with a handful of companies that use Elancers as W2 workers, and it says that it is also VAT-compliant (VAT is a special consumption tax popular in Europe) for clients located in Europe, Australia, and Canada.
With over 8 million registered contractors, Freelancer.com is the largest temp staffing site on the Web. With such a vast user base, Freelancer.com is designed to appeal to the masses, and businesses can either post a project, find freelancers directly, or even post contests (“Design our logo; the one we choose wins the prize money!”). Contests are a major new focus for the company and are something it’s likely to continue to push heavily. Types of workers run the gamut, but the most popular skill sets fall in line with the industry: software and Web development, graphic design, and other creative work.
Freelancer’s fee structure—unique among e-staffing services—is complicated and is based on the type of membership the employer has chosen. Standard ($25 per month) and Premium ($50 per month) employers pay nothing for posts. Basic ($5 per month), Plus ($10 per month), and Free members pay a 3 percent commission or a flat $3 fee for listings, whichever is greater. Freelancers also have to pay a commission on work they undertake, ranging from 3 percent/$3 to 10 percent/$10, along a sliding scale similar to the one for employers. Full-time work isn’t subject to any fees until the value of the contract exceeds $5000. Reflecting its large size and global approach, the site operates in 30 languages and allows transactions in 15 different currencies.
Alongside Elance and Freelancer.com, oDesk is the third leg of the triumvirate of massive online staffing sites. With 4 million workers registered, it has a familiar design and approach, trying to match up thousands of workers in any given field with the right employers. Tech work of all sorts is, of course, a focus, but you’ll also find a larger than usual portion of business services contractors, such as accountants and HR professionals. Employers pay a flat 10 percent fee on top of any projects listed or freelancers hired.
While oDesk looks a lot like its two bigger competitors, it takes a longer-term approach to work than the other big sites. The company notes that it aims to “replicate traditional work relationships,” with the average project undertaken on the site lasting nine full weeks. That’s a stark contrast to the work most online staffing sites handle, which can frequently be completed in a matter of days.
With just over 66,000 workers listed, Staff.com may look like a tiny operation, and in many respects it is. In fact, you can think of this service as more of a virtual headhunter operation. Recruiters find and review potential contractors, and in many cases Staff.com calls a contractor personally to discuss whether a potential job is right for them. This is a far cry from the all-too-frequent bidding “race to the bottom” that you see on larger sites, with contractors undercutting one another in the hopes of landing a gig. The company’s cut is 10 percent.
In keeping with this approach, Staff.com focuses not project-based jobs but rather on long-term staffing—though all work is done off-site. (Most of Staff.com’s workers reside in Southeast Asia.) Worker profiles are very detailed and often include personal introductory videos. Looking for a steady bookkeeper or Web developer that you can count on week after week? Staff.com may be just the ticket.
TaskRabbit for Business
If you’ve ever hired a TaskRabbit contractor to help you move some furniture or to build an Ikea bookcase for you, you know how invaluable this very short-term labor service can be for personal needs. Recently, TaskRabbit expanded into business services too, taking much the same approach as it does to more consumer-oriented jobs.
In contrast to the vast majority of other online staffing sites, TaskRabbit for Business jobs mostly take place on-site, at the employer’s workplace, as opposed to off-site and online. (TaskRabbit does, however, support both types of work.) Listed jobs are generally fairly low-end: Reception work, light clerical duties like faxing and filing, and shelf stocking are the most common jobs listed on the site. The employer pays a 20 percent surcharge for 1099 workers and 26 percent for W-2 workers, making it one of the more expensive staffing options on the Web.
TaskRabbit for Business says it is proud of its screening process—which includes five different background checks, more than you probably ran on your last receptionist—and touts its workers’ impressive credentials: The vast majority of TaskRabbits have a college degree, and a full 5 percent have doctorates. Be sure to ask your new file clerk about their thesis!
Toptal is careful to distinguish itself from the bulk of e-staffing sites, describing itself as a new “McKinsey meets Elance model,” according to Toptal’s CEO. Here, the focus is on quality, with a rigorous screening of applicants submit to an in-depth interview process and must complete a small test project on deadline. As a result, Toptal works with only about 1000 registered contractors, all in the high-tech world—either in software engineering and design or high-end IT support, such as database administration.
Toptal’s fees vary and are not disclosed. The service can take anywhere from a 2 to 40 percent cut of a contract, depending on a wide array of factors. Toptal can also help employers build teams of developers. And companies that want to hire a Toptal contractor full-time can do so by paying a contract buyout fee—typically about $30,000 per engineer. This may sound very expensive, but remember that Toptal is not the place to go to have someone design the icon for your new app. Rather, like a headhunter, the service is more akin to the place you go to find the talent to get your new startup up and running (and hopefully stay with you for the long haul).
Ziptask is a very small and very new staffing site, with only about 500 beta employers and a few thousand freelancers at present. The company describes itself as a “fully managed outsourcing platform,” and the difference here is in the way Ziptask manages the contractor relationship. Ziptask employs project managers that oversee any freelancers you hire: Interviewing, managing, reviewing work, and so on. This forces projects into a more structured arrangement: Using the site is more like working with a project management tool like Basecamp than like using job site like Elance. There’s not even a way to search for contractors; Ziptask deals with all of that itself to find the best workers for you.
It’s surprising that, given all the added value Ziptask provides, it takes only a 3 percent cut of each payment. However, you also have less control over how much your project will actually cost: In addition to handling the hiring, Ziptask also handles the work of estimating the job’s cost and duration. For truly hands-off employment, though, the approach is enticing.
The Bottom Line
If you need a job done quickly, and cost is your greatest concern, one of the big e-ployment services like Elance, Freelancer, and oDesk are all good bets. If you’re looking for a longer-term relationship with a worker, but aren’t ready to hire someone full time, one of the smaller firms, like Staff.com or Toptal, may be more compelling. Finally, TaskRabbit’s heavy background checking make it an ideal pick when you need someone on-site at your place of business, and you want to be sure they’re going to show up come Monday.