Tuesday, July 24, 2012

Outsourcing To Crowdsourcing

Crowdsourcing
Outsourcing is defined as the process of contracting an existing business process which an organization previously performed internally to an independent organization, where the process is purchased as a service (link).
 
The word 'Outsourcing' is highly emotive in the pubic domain. Loved by consultants as a means to cut costs, it is loathed by those whose industries and livelihoods have been "off-shored". More recently the term Crowdsourcing has entered the mainstream vernacular even though early Crowdsourcing articles appeared some six year ago (2006)

Interestingly the term Crowdsourcing does not appear to attract the negativity of Outsourcing even though the definition is almost identical. Crowdsourcing is a process that involves outsourcing tasks to a distributed group of people.

The difference between crowdsourcing and typical outsourcing is that a task or problem is outsourced to an undefined public rather than a specific entity, i.e. an external organisation (link).

Like Outsourcing, Crowdsourcing can generate significant cost savings. However a key benefit of Crowdsourcing over Outsourcing is scale. Using a hypothetical example, lets assume I wanted a new Logo or Website designed for my business. Due to various reasons the Marketing department has seen a reduction in employee numbers as a decision was made to outsource various previously helped in-house roles i.e. a Designer. Under the Outsourcing model, the decision would lead to preferred supplier arrangements established with Design agencies who would produce the work on an as needs basis. However using the Crowdsourcing model the business could turn to a site such as 99 Designs. Rather than a couple of preferred suppliers you have, potentially 10, 20, 30 designers bidding for the work. Rather than a handful of options the business will be faced with potentially hundreds of designs to choose from. And finally, rather than paying a design firm thousands in fees the business may incur a total cost in the low hundreds.

Just as Outsourcing is not limited to Manufacturing, Crowdsourcing is not limited to design. Crowdsourcing website examples including:

Sector
Company Name (link to website)
Description
Domain Names Let the crowd help you choose a great url for your business.
Contracting (multiple services) Post your job / project description to thousands of potential hires.
Funding Have an idea that needs funding, then let the crowd at Kickstarter help you.
Funding Similar to Kickstarter.
Product Development We serve as a platform for everyday people who have a product idea that they don't know how to bring to market. We help develop them into commercial ideas with big market potential and Genius Crowd creators share in the profits.”
Product design and development Allows amateur inventors to put their designs into production, releases new products at a breakneck speed.
Data "Instantly hire millions of people to collect, filter, and enhance your data"
Content creation and data enhancement (charity) Large tech companies outsource small piecework that Samasource calls ‘microwork’ to people across the developed world.
Video Production Crowdsourced video production
Contracting (multiple services) "The Mechanical Turk service gives businesses access to a diverse, on-demand, scalable workforce and gives Workers a selection of thousands of tasks to complete whenever it's convenient."
Food The U.S. specific  site seeks to document the entire food system. The aim is to provide a reference tool that will tell you where the food on your dinner table comes from.
Software and usability testing The world's largest marketplace for software testing services

And do not just think Crowdsourcing is the domain of small businesses, contractors and entrepreneurs. Have a look at the Crowdsourcing effort www.kfcollaborationkitchen.com by Kraft Foods, a company that generates over US$50Bil in revenue (source).

Crowdsourcing is not going to replace all Outsourcing. For example in large scale manufacturing where the Outsource provider is required to make long-term capital intensive commitments with a requirement for ongoing / continuous production.

However there is no disputing the fact that Crowdsourcing is changing the face, or a significant part thereof, of Outsourcing. Small businesses have access to design capabilities of large corporations. New products can be development and sold with unprecedented time savings. Software entrepreneurs can have their code tested by an army of testers. When you think about it the opportunities that Crowdsourcing offers are amazing. Imagine a world where you could Crowdsource your business plan, marketing plan, logo and brand identification, new product concepts, product development,online sales platform etc. Whether you are a small business, mid-sized division fighting for attention in a large corporate or a sole entrepreneur the opportunities become equally available.

Like Outsourcing, Crowdsourcing provides the flexibility to save significant amounts of time and money. However unlike Outsourcing, Crowdsourcing can offer significantly more options when supplied by potentially thousands of service providers. Whilst detractors may point to the quality over quantity argument I prefer to turn to the French writer, Jules Renard who said, "Talent is a matter of quantity. Talent does not write one page, it writes three hundred."


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Additional info:

A) Feel free to add other Crowdsourcing websites in the comments section

B) Other links you may find interesting:
http://www.crowdsourcing.org/
http://www.topcoder.com/blog/2011/09/6-important-ways-crowdsourcing-is-different-than-outsourcing/
http://business.tonyrobbins.com/220/the-evolution-of-outsourcing%E2%80%A6-crowdsourcing/
http://www.smh.com.au/small-business/managing/blogs/enterprise/need-some-help-the-world-is-waiting-20110602-1fh0j.html

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