The future of enterprise hiring: Humans are the new cloud

By Carmel DeAmicis , written on September 24, 2013

From The News Desk

The cloud cuts out waste and that's why people love it. Companies and individuals call upon storage space in the magical ether as they need it, without spending a penny more than they use. Gone are the days of servers idling half empty in a building, barely used hard-drives cluttering up desks.  Everything becomes more efficient, organizations get leaner, the fat is trimmed.

But what if the fat that the cloud cuts out isn't machine fat at all? What if it's human fat?

I'm not talking about Fitbit making you fitter or some freaky new plastic surgery in the cloud procedure. I'm talking about applying the principals of the cloud to managing the human workforce. Imagine, instead of just drawing on servers and processing power on an as-needed basis, companies also draw on people that way. A workforce that operates like the cloud, swelling and shrinking at a moment's notice.

It may not be news to you, but that's already happening. The wave of freelancers, which arose during the recession, has not dissipated despite the slow recovery of the economy. Plenty of companies have sprung up to facilitate the ad-hoc, cloud-like network of talent, including Mechanical Turk, oDesk, Launch A Startup, Elance, Fiverr, 99designs, and

Elance, which has focused on serving smaller companies until now, recently commissioned a study from Tower Lane Consulting to see whether there was a freelance demand from bigger organizations. The consulting group queried 250 companies with 50 employees or more. 60 percent of them planned to increase their freelance hiring in 2014.

Enterprise is where it's at, and even companies like TaskRabbit have pivoted to provide on-demand worker bee resources for businesses.

We've applied cloud thinking to the workforce. By only hiring people as needed, for as long as they're needed, we're making things more cost-effective and efficient. There's the whole ethical question of whether a country of freelancers is really the sort of place anyone wants to work in, but whatever.

The first wave of freelance companies -- the Mechanical Turks and Elances of the world -- simply provided a platform for job-seekers and employers to find each other. But there were a lot of pain points for those who used them. It was hard to filter out the good from the bad contract workers. Combing through hundreds of applications was time consuming. Employers were accidentally hiring people who didn't have the skills for the work.

But now, the second wave of freelance has arrived. Companies are learning there's money to be made managing the worker bee cloud. Instead of just serving as the platform, they can charge extra to facilitate the matches and oversee the freelance work. In this way, freelance match-making businesses become like cloud providers, monitoring the machines and updating equipment to guarantee smooth service.

Today Elance announced its Private Talent Cloud service to do just that. Companies can pay to use its online service -- which operates like a social network -- to manage their freelancers. That way all the freelancers are in one place, organized by group, and available to call upon at a moment's notice. No more wondering whether there's any graphic designers hiding somewhere in the folds of the company that could do a one off project on Tuesday afternoon. Employers can simply post on the network in the graphic design freelance group and see if any contractors are around.

Furthermore, for a little extra cash Elance will help you manage your freelancers with -- shocker! -- an Elance freelance project manager. Your project manager will help you hire your freelancers, vet them, get their paperwork completed, and pay them with checks signed by Elance. The whole freelance life cycle, outsourced.

"We had larger companies come to us and say, 'This is great, it's good for one off projects or small projects, but we're Mozilla or Motley Fool. We have hundreds or thousands of contractors we need to get on Elance or hire on Elance," Rich Pearson, CMO of Elance says.

Previously, 90 percent of the people who used Elance to find talent were companies with under 25 employees. But Elance's new Private Talent Cloud is meant to attract the big fishes in the pond. Pearson wouldn't say who was already using it aside from financial services company The Motley Fool. But he hinted that Elance has onboarded Fortune 500 behemoths, one that "makes soft drinks you would know" and another that is "one of the largest pharmaceutical companies in the world."

Elance isn't the only freelance startup that's cottoning on to the fact that companies want someone to manage their contract employees. 99designs, which started as a way to crowdsource logo designs through a contest, launched a similar program. With 1-to-1 Projects, 99designs facilitates freelance designers and companies working together by dealing with the paperwork and the invoices. With its second new venture Swiftly, 99designs vets freelancers so companies only work with people who can get the jobs done fast and right.

Why does this matter? Elance and 99designs' moves signal the creeping solidification of freelance as an industry. It won't be surprising if other platforms like Fiverr or oDesk introduce their own worker-cloud management features. [UPDATE: A few hours after this story ran, oDesk did exactly that, announcing their Private Workspace feature for managing freelancers.]

Freelance is no longer that thing people say they're doing when they're between jobs. It's an actual career, complete with regular paychecks, managers, and health insurance -- oh wait. No, health insurance still isn't part of the deal.

On the one hand, it's great that companies can trim their fat and call upon human resources as needed the way they would call on the cloud. But that's not great for the humans involved, who have to cobble together a living through freelance odds and ends, jobs that don't give them vacation time or health insurance benefits and will disappear when the gig is up.

Proponents of freelance sites like Elance talk up how it gives people the freedom to make their own schedule, to not be beholden to one boss or company, to come and go as they please. And perhaps for a portion of the population that's true. But if the workforce is increasingly treated like the cloud that erodes the stable positions that the rest of us might prefer.

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