Will Work

Outsourced global workforces are no longer the exclusive domain of corporate titans. Companies like oDesk and Elance are making it possible for even the smallest of businesses to improve their personnel efficiency.

Today, Redwood City-based oDesk is announcing Upstarts, a slate of partnerships with more than 20 global startup accelerators aimed at introducing even more high-growth, early-stage companies to the prospect of on-demand labor. Participating companies will get credits to use in hiring online freelancers, as well as additional talent recruiting services, and mentorship from oDesk execs about how to outsource effectively.

The company has announced an initial slate of partnerships in San Francisco (StartX, UpWest Labs), London (EntrepreneursFirst, Seedcamp, Techstars), Berlin (Hub:raum), Paris (TheFamily), Toronto (DMZ), Tel Aviv (Hub:raum), Melbourne (AngelCube), Santiago (Startup Chile), and Sydney (Pollenizer, Startmate). If this list proves anything, it’s that entrepreneurship is happening around the globe. And in each of these markets, companies face the universal challenge is that of finding, affording, hiring, and retaining talent.

“Even if the ideal hire lives within a 50-mile commuting radius, startups will need a plan to actually find, attract, and afford them,” says oDesk CEO Gary Swart in a statement today. “And even after you’ve managed to hire, the war for talent is not over – retaining star employees is often cost-prohibitive for startups.”

The inaugural list of partners is also a reflection of the organizations that oDesk has worked closely with in the past. According to oDesk VP of Business Development & International Matt Cooper, the idea with Upstarts is to add structure and visibility to these existing efforts. The plan is to significantly expand the above partner list such that oDesk gets in front of many of the best startups around the world, without diluting its brand prestige, of course.

“Our goal is that anytime someone starts a company anywhere in the world, we want them to think about using online workforce and oDesk to get their first product out the door,” Cooper says.

We recently reported on oDesk’s efforts to move up the corporate food chain by launching a new enterprise-focused workforce management platform. Today’s announcement is an acknowledgement that early stage businesses have always been the company’s core customer, Cooper says. It’s also a bet that a few of these small spenders will one day grow into behemoths, repaying the early investment in spades.

Beyond direct customer acquisition, oDesk’s Upstarts program stands to have a broader halo effect over the brand as the company is seen as a good steward within the entrepreneur and technology communities. That’s not to downplay or trivialize the program. In the same way corporate social responsibility-inspired volunteer initiatives are good business, oDesk is wise to help a few hundred or more small businesses navigate their most vulnerable period of growth.

“We knew we wanted to add value to the community as a whole, beyond just throwing money at them,” Cooper says. “That’s why we made it as much about training, coaching, and mentorship around best practices as simply offering credits to the platform.”

Startup investors aren’t always thrilled to back companies that outsource core functions of their business – think platform development or sales. To that end, Cooper is quick to state that turning to oDesk is not a replacement for a company building its core team. Rather, it’s a solution for reaching scalability more quickly and doing so in a flexible manner. To that point, it’s not uncommon for accelerators and VCs to help startups outsource accounting and HR functions until they grow large enough to bring these functions in-house. With that in mind, there’s reason to believe a similar attitude could be applied to non-core areas of development and content creation, both oDesk strong suits.

In Upstarts, oDesk acknowledges that nearly every accelerator participant will face challenges hiring full-time talent as quickly and effectively as they would like to – both from a talent availability and a financial resources perspective. Use of oDesk contractors is meant as a bridge over this early growth phase. And companies that see the benefits of outsourcing early would seem more likely to revisit the practice throughout their lifecycle.

Last year, oDesk booked  $360 million dollars in services and processed a total of 35 million hours worked through its platform. The company eats its own dogfood, so to speak, by including 350 freelancers among its global staff of 470 workers (120 full time). ODesk has raised a total of $44 million across four rounds of venture funding from backers including Benchmark, Globespan Capital Partners, Sigma Partners, T. Rowe Price, DAG Ventures, and SV Angel.

Everyone from law firms to large consulting firms to municipal governments is looking to get a foothold in the startup ecosystem at the moment, many of them by offering accelerators free goods and services. Among these eager supporters, oDesk strikes me as one of the more worthwhile partnerships.

It remains to be seen how scalable the model is, particularly the mentorship and coaching that Cooper held out as oDesk’s major differentiation. He says that the company is in the process of building out its internal team of recruiters and concierges in conjunction with the growing Upstarts part of offering.

If the company can get this right, expect a herd of resource-constrained startups everywhere to beat a path toward their door.

[Image via Skreened]

    1. Greg Gretsch
      Employee
    2. Venky Ganesan
      Past Investor