Why Elance failed? Serious business can’t depend on freelancers for outsourcing.
The following article is one of the best analysis of why Elance failed. You can read the original post here.
“Several important factors involved with their failure include: Too much competition, little service provider differentiation besides price, high service provider fees, no locality of services, ambiguous project descriptions, cheap Indians, as well as cheap Indians, and last but not least, cheap Indians.
Lets start from the buyer’s perspective. I think I made a pretty decent example. I’m a company CEO (or to dumb me down, startup founder) and I needed a business plan made and my website programmed from the ground up. I go to Elance.com, I submit a project that says I need these things done and I want to work directly with the service provider to make it happen. 50 Indians bid on my project, each going cheaper than the one before him, and I realize that they all suck. They don’t know what I’m looking for, so how can they adequately do my project? I want them in front of me so that we can plan the process out easier, but they’re in India and have a language barrier. Great. Now that I’m frustrated, I leave Elance and wasted over $200 in bidding fees for the service providers who bid on my project.”
Good point! Since post a project on elance is free. There are too many fake or dummy projects out there. Some buyers post projects simply to get an idea of the cost or to try to find free work. But bid on project is not free. Service providers will soon find it is waste of time to use Elance.
“From the service provider’s perspective, let’s say that I’m an Indian. I know that I’m good at programming, I know that I’m good at business, and I know that I speak perfect English. Mr. American goes ahead to post his business plan and programming project request for a really stupid idea. I look at it, nod, and make my bid. 49 other Indians bid with me. Mr. American is thinking, where the hell do I even start? How do I know that Mr. Indian can speak perfect english when I have to interview all 50 of these guys to know which one is right. Too many choices isn’t a good thing. Mr. American doesn’t buy from me, I wasted a lot of time and some money on a lost lead.
Of course, all of this is a problem for both the buyer and seller. The lack of quality service providers steers away the quality leads and buyers. Few buyers means fewer qualified service providers. At this point, the marketplace has failed. Elance has been treading water for the past 7 years and haven’t changed their model at all. They went into enterprise software for a few years, but that didn’t go very far.”
Very good point. The lack of quality service providers steers away the quality leads and buyers. Since most of the bidders on those sites are typically freelancers, self employed and work at home. The reliability and quality of service are highly unpredictable. Elance is just middleman or marketplace so they have no control about the bidders at all. More and more dispute happened on elance. Serious business can’t depend on freelancers for outsourcing.
Some real life experience about elance users:
http://highfade.com/2008/09/27/elancecomterribleexperience/
http://www.complaintsboard.com/complaints/elancecom-c55889.html
http://www.lawguru.com/cgi/bbs/message.php?i=265026830
Popularity: 10% [?]
Interesting. Check out the feedback from Tim Ferriss’ poll on http://www.fourhourworkweek.com: 79% of respondents voted that Elance was the service “you have been most satisfied with for personal outsourcing”. Not bad.
Full survey here: http://www.surveymonkey.com/sr.aspx?sm=4FKlrmsvWR0CfvHAy6s5p_2feONMYAIYK5w6O1Reo2Qlk_3d
I know Elance as I used to use it almost everyday…
Here are a few fakes:
a) “never give money in advance” – if you know what you’re doing, why not beign confident… (confidence is earned when reviewing bids, paying upfront means a confirmation of that…); after all if you’ve done a bad choice, at least you’ll know that very fast and you can move on, and not waste 6months of your life until the “provider” learns how to make your project.
b) “working from home” – if you’re the type of person not believing in such things then simply don’t access the internet to post jobs… unless you’re at work; (if you digg a bit further you’ll be surprised to find out people working from home win more $ in avg. then then ones in office)
c) “most of the bidders on those sites are typically freelancers, self employed” – the concentration of freelancers on Elance is a lot lower then on any other such website; oDesk has leads of a few hundred $… when my avg job on Elance within the last year is around 20k (username connects, if you want to check it)
d) “Serous business can’t depend on freelancers for outsourcing.” – how do you know that? if you failed in that doesn’t assure everybody will do the same.
e) “cheap indians” – I(a Romanian) like Indians for development because they’re good and above all Fair; if a buyer takes someone because of the price is the lowest… no problem, 90% of the software done through Elance is never used (no joking), so he will be contributing to the global outsourcing marketplace by paying taxes to Elance indirectly.
Now some things which are true:
“buyers looking for free work/benefits” – yes, there are a lot of (stupid) consultants posting their jobs to get a plan done (I say stupid because if they can’t plan it then they won’t be able to manage it anyway); like there is also a huge amount of advertising within some of the bids… (most of the ones telling you to visit a website that they want to be cloned)
Very True:
“Elance has been treading water for the past 7 years and haven’t changed their model at all. They went into enterprise software for a few years, but that didn’t go very far ”
- you cannot blame them for being profit oriented(90% businesses do the same) :) the problem is to get to the next level and start using their service providers… some of them of a really good quality, if you know how to get commercial projects launched…
I am very sorry that your experience on Elance was not a positive. I have been a provider for over 10 years and a buyer for over 5 and I honestly have had mostly good experiences with providers. In fact, only 10% of my posted projects were not positive. However, when I look back, I realize that it was mostly my fault for not being specific about what I needed and what I expected of my provider and not taking my time to choose wisely.
To me, Elance is more than a simple sweatshop. It is the leading marketplace for online talent. It is full of qualified professionals who take much pride in their work. Although I have seen some of the lowballing on the site, I find that the majority of providers don’t lowball and truly value their work because they’re good at their advertised skill.For those buyers who are really descriptive about what they’re looking for, they’re often flooded with requests from quality providers who submit competitive proposal.
Again, I think you should give ELance another try – you just may be pleasantly surprised with the results!
Kristi Patrice Carter