When Jeff Howe coined the term “crowdsourcing” as a pun on “outsourcing,” he gave us a useful shorthand that helped explain our field: like outsourcing, but with a crowd. Simple. Plus, in the business world, outsourcing was seen as a great success story, making lots of money for lots of companies (including Republican presidential hopeful Mitt Romney’s former employer, Bain Capital). The association was helpful and, for the most part, positive.
But only five years later, as we sift through the financial wreckage left by the commercial excesses of the last decade, attitudes have changed. Mitt Romney’s involvement in outsourcing American jobs to China and Mexico has even become ammunition for Barack Obama’s re-election campaign. Outsourcing abroad is increasingly seen as part of the dark side of globalization.
While outsourcing has been losing friends and alienating the electorate, crowdsourcing has evolved to become much more than just its nerdy little brother. The term now encompasses everything from collaborative fan fiction to open-source weapon design (OK, so maybe it’s still nerdy). So has the time come for crowdsourcing to distance itself from its less-refined ancestor?
Better, faster, cheaper
From a business perspective, enterprise crowdsourcing can seem quite similar to a labor-on-demand outsourcing service: Renting the services of a Mumbai data-entry centre to clear your digitization backlog has a lot in common with using a crowd-based service. But the automation, scalability and flexibility of crowdsourcing platforms means crowdsourcing can be cheaper, more accurate and better tailored to the needs of the customer.
According to the latest research, Governor Romney’s choice of outsourcing may have been bad business as well as bad politics. A report from the Everest Group shows that companies could save up to 70% of operating costs by choosing crowdsourcing over outsourcing. Not only that, but some clever research into large-scale ICT projects by 3T found that the final cost of software development in India is 35% higher than in Finland, even though India’s hourly pay rate is only around 30% of Finland's. Even if you’re not running for president, you can’t resist those kind of numbers.
Anytime, anyplace, anywhere
From the worker’s perspective, the major difference between crowdsourcing and outsourcing is freedom. Crowdsourced workers can pick and choose their hours and their tasks. They can work from wherever they are, whether it is at home looking after kids in Mississippi or in a traffic jam in Mumbai. In this way, crowdsourcing offers wage labor the (virtual) freedom of movement that theorists since Adam Smith have considered essential for the proper functioning of capitalism.
This freedom offers the chance to create a global labor meritocracy, where the best crowdworkers thrive, regardless of their race, religion or location, while those who are inconsistent or erratic have to up their game to compete. By letting workers dictate their hours and working environment, crowdsourcing can foster a more respectful, bilateral relationship between the enterprise and the workforce than outsourcing.
But this does not mean that the crowd is all based in poorer countries. As well as having the largest share of crowd employers, the US also has the highest number of crowd workers.
To be fair, many of the criticisms leveled at outsourcing can also be applied to crowdsourcing. And crowdsourcing has its own issues that must be addressed as the industry matures, such as protecting crowdworkers’ rights and tax collection. But these problems are not insurmountable. The global outsourcing industry is forecast to be at almost half a trillion dollars by 2016. Expect crowdsourcing to take an increasing share of this.