Crowdsourcing is the idea that the wisdom of crowds can solve complex and expensive problems, with the rise of the Internet it’s become possible for groups to coalesce around a problem and resolve it.
Some good examples of crowdsourcing are The Guardian’s investigation into British MPs expense claims where dozens of the newspapers readers examined the mass of paperwork for irregularities, a task beyond the resources of the paper itself, and Wikipedia where thousands of volunteers work to compile an online encyclopaedia.
The Future of Crowdsourcing Summit recently looked at the issues and opportunities this offers for businesses. IT industry journal Computer Reseller News has an excellent summary of the day, although the emphasis on massive cost savings is probably misguided.
What sticks out in CRN’s account is many businesses are confusing crowdsourcing with outsourcing — online bidding sites such as Freelancer.com and competition sites like 99Designs are not crowdsourcers, they are outsourcing services.
Sites like Freelancer and 99 Designs are making outsourcing, which was until recently the province of large corporations, accessible to small and start up businesses. They’re revolutionising business by reducing entry barriers to entry for new enterprises and industries by allowing entrepreneurs to access skilled workers with little more than a credit card and Internet connection.
That emphasis on cost needs to be treated carefully as well. As I’ve argued about cloud computing, it’s risky to overstate savings in a new industry as there’s a risk of commoditising the market prematurely.
Larger outsourcers found in the previous decade that assuming labour rates at 10% of home market wages equate to 90% cost savings is usually flawed as there’s a number of hidden costs that come to surface when you take services off shore. Almost certainly the users of bidding sites will have the same experience.
Probably the biggest barrier to smaller businesses adopting outsourcing or crowdsourcing is that both processes require project management skills which are often undervalued in business.
We need to acknowledge the changes outsourcing and bidding services mean to our industries and society, but we shouldn’t confuse the concepts. Both are too valuable to business to be misunderstood and devalued.