The good, the bad and the freelancer

RICHARD MEADOWS
Last updated 05:00 29/06/2013

Relevant offers

Better Business

2degrees section sponsorship
Restructure at Maori TV Election Q&A: Peter Neilson Al Brown: 'Success is about people' Status quo for employment law Sustainable 60 finalists announced Worker unfairly fired over fridge theft Kiwi firms suspended over fees Couple sue estate agent for negligence Old college's honour the cream on the cake Can leopards change their spots?

For a bunch of tiny islands tucked away at the arse-end of the world, globalisation came as quite a shock.

First the multi-national companies arrived. Then the Kiwi dollar was floated. Shortly afterwards, the internet launched us kicking and screaming into the big wide world.

Now web-based companies like Freelancer.com are starting to trample down the last barriers of the global job market.

The world's largest online crowd-sourced marketplace, founded in 2009 by Aussie entrepreneur Matt Barrie, has hit 100 per cent year-on-year growth rates.

Freelancer connects businesses with a workforce of almost 8 million people, who bid for the opportunity to take on micro-projects.

Most jobs average around the $200 mark, and run the gamut from writing to web development, marketing, graphic design, photography, data entry and engineering.

Freelancer's regional director for Australia and New Zealand, Nikki Parker, flew over from Sydney this month to meet with local businesses.

"People are starting to warm up to the idea of going global, and realising that they don't just have to go to their local area," she says.

Fifteen thousand New Zealanders are already on board but Parker wants the company to become as ubiquitous as Trade Me.

In many respects, Freelancer is similar to the popular auction website.

Businesses post a job with a detailed description, timeframe, and target price range.

Interested freelancers then place bids on the 'auction' for the lowest price they will accept to do the job.

The business reviews the bidders' work history, skills and experience and chooses whom to give the job to.

The cash can then be drip-fed from client to freelancer as certain milestones are ticked off.

Just like Trade Me, both parties post feedback on each other's profile once everything's completed.

The Market

Freelancer is aimed squarely at the small to medium enterprise (SME) market, which includes the vast majority of Kiwi businesses.

Most are far too small to afford in-house designers, marketing teams, or IT specialists, and the cost of going to an agency can be prohibitive.

"Sometimes these exorbitant prices we see some providers charge- they're just not going to fly any more," says Parker. "That's the real shift that we're seeing."

The price difference in many instances is mind-boggling.

A quick browse of the site revealed workers from the likes of Pakistan, India and Indonesia willing to do data entry at an hourly rate of US$3.

Meanwhile, a design contest for a company logo had attracted more than 300 entries. Most of them were extremely professional looking- and all were competing fiercely for the princely sum of US$59.

Ad Feedback

Compare that, for example, to Auckland's infamous "frayed A" logo, which somehow cost a staggering $174,000 before being discarded.

Affordable small-scale outsourcing could open all kinds of doors for Kiwi SMEs.

But how will local agenices react to competing with people working for peanuts in developing countries?

The Freelancer

"Some businesses might push back, but what we're typically seeing is that quality over-rides price," says Parker.

She stresses that the winning bid is not always going to be the cheapest - you will get what you pay for.

"That's why we have quite a large number of freelancers from New Zealand."

Charlotte Leslie is among them.

The Christchurch graphic designer started out by picking up the odd contract on top of her fulltime job at an agency.

Now she's looking after her baby daughter, Riley, and freelances from home part-time to bring in a bit of extra income for the family.

Leslie says there's no way she can compete on some jobs, and only bids on those offering more than $100 or so.

"Here in New Zealand, design companies charge heaps for a logo," she says. "But people are only bidding sort of $30."

Leslie says she enjoys being able to choose her own work, and with a young one to look after, it's handy not to have to commit to anything.

But she can't see it working out as a full-time gig.

"I can have a good month, and then I might not get anything for months," she says.

"A couple of my friends tried it, but what they were looking for was more guaranteed income - so they stopped using it."

She's also had problems in the past with not being paid.

These days she sticks to the jobs with milestone payments, and hasn't had any dramas since.

Parker claims the incidence of fraud is very low, and as long as people do their due diligence they can avoid dodgy characters.

All payments go through the website itself, where Freelancer clips the ticket on both ends.

Rates vary depending on membership status, but it takes roughly 6-10 per cent of any given transaction.

Parker insists the company won't pull a Trade Me and hike the fees, if it beats rivals - like Elance and Guru.com - to becoming the dominant player.

"It is very minimal, and we intend to keep it that way."

The Client

Forsyth Thompson is an ex-Google man and has worked in digital for years, so he's seen the writing on the wall.

Most IT firms have a fulltime team of developers sitting around on $100k pay packets chewing up expenses.

Thompson's Digital Hothouse has thrown that model out the window.

"We've built up a network of freelancers literally all over the world - we do development 24 hours a day now," he says.

"What it means is we can develop on pretty much any platform you can think of."

That gives the company massive flexibility in both skillsets and time zones.

"When we've had mission-critical stuff for clients that have gone wrong or whatever, we can just flick from one team to the next and keep going around the clock," says Thompson.

The company only racks up costs when it has projects on the go, which makes it hugely competitive on price.

"Honestly, I don't think there's a development job we've lost on cost, ever," says Thompson.

The Pitfalls

Digital Hothouse has built up long-standing relationships through sites including Freelancer.com, but it wasn't always plain sailing.

"I think there's loads of pitfalls with using freelancers - absolutely heaps," says Thompson.

His company has become a professional freelancer wrangler, so it knows what to look for and has trusted "staff".

But it's not for everyone, says Thompson.

One of the main problems - especially in IT - is that small businesses often don't really know what they want.

"How do you know what questions to ask to get what you need to make sure you're getting the right people?" he says.

"That's something that only comes from experience."

An unclear brief combined with language or cultural differences can be a recipe for disaster.

Freelancer does offer a concierge service to help businesses select the right bidder and explain their job correctly.

That's fine for basic stuff like a company logo, but more technical jobs may be challenging.

The New Model

Have you ever watched an ad which is so obviously produced for Americans that you find it jarring?

There are still plenty of areas where cultural-specific knowledge is crucial. Digital Hothouse, for example, does almost all its design in New Zealand.

It also employs New Zealand developers, copywriters, project managers and digital assistants, some as freelancers.

While some less skilled jobs are almost inevitably going to end up overseas, that's not necessarily a bad thing.

"Why do we want to have a whole lot of guys who are just cutting code?" says Thompson.

"That's like factory-line assembly. What we want to have is more companies like Orion, Xero... where they're doing the IP, the development, the concepts, and taking it to market."

His company is still in the early stages - almost three years old - but has experienced huge growth through its unique staffing model.

"It makes you think a lot more as a business about what are your critical business functions, and what's less important," says Thompson.

"Should people look at it more? Yeah, definitely."

For New Zealand agencies that want to thrive in an increasingly globalised market, the Digital Hothouse model could be the logical next step.

Says Thompson: "We hope lots of people don't figure that out, frankly."

How to make freelancers work for your business:

-Choose the winning bidder carefully and do your due diligence

-Look at their skillsets and recommendations

-Can they speak English? Are you comfortable talking with them?

-Have a clear brief and objective to make sure you're both on the same track

-Use milestone payments

-Think outside the box about which sort of tasks could be outsourced

- BusinessDay

Special offers

Featured Promotions

Sponsored Content