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Inside e-ployment: Online staffing services put temporary labor within reach of small businesses

Christopher Null | July 24, 2013
Never mind all the stories about unemployment. American businesses are still clamoring for workers. They just may not need them for a full 40-hour week.

With 2.5 million registered freelancers and half a million business users, Elancesays it is growing at a 50 percent annual clip, cementing its status as one of the largest online staffing services. The model is fairly typical: Companies can either hire workers directly based on their online credentials or post projects and ask for bids. The latter method is especially common for those in need of Elance's bread-and-butter users: technology and engineering workers and providers of creative services, such as freelance blog writers. Billing is simple: 8.75 percent is added to all projects or hourly assignments.

Elance has one of the more full-featured escrow systems in the industry, and on complex projects it allows for multiple milestones to be created and agreed upon between the contractor and the employer. Most of these workers are treated as 1099 employees. Typically, it's up to the business to handle any forms that need to be sent, though Elance can do it for you. The company says it does work with a handful of companies that use Elancers as W2 workers, and it says that it is also VAT-compliant (VAT is a special consumption tax popular in Europe) for clients located in Europe, Australia, and Canada.
With over 8 million registered contractors, Freelancer.comis the largest temp staffing site on the Web. With such a vast user base, is designed to appeal to the masses, and businesses can either post a project, find freelancers directly, or even post contests ("Design our logo; the one we choose wins the prize money!"). Contests are a major new focus for the company and are something it's likely to continue to push heavily. Types of workers run the gamut, but the most popular skill sets fall in line with the industry: software and Web development, graphic design, and other creative work.

Freelancer's fee structure--unique among e-staffing services--is complicated and is based on the type of membership the employer has chosen. Standard ($25 per month) and Premium ($50 per month) employers pay nothing for posts. Basic ($5 per month), Plus ($10 per month), and Free members pay a 3 percent commission or a flat $3 fee for listings, whichever is greater. Freelancers also have to pay a commission on work they undertake, ranging from 3 percent/$3 to 10 percent/$10, along a sliding scale similar to the one for employers. Full-time work isn't subject to any fees until the value of the contract exceeds $5000. Reflecting its large size and global approach, the site operates in 30 languages and allows transactions in 15 different currencies.

Alongside Elance and, oDesk is the third leg of the triumvirate of massive online staffing sites. With 4 million workers registered, it has a familiar design and approach, trying to match up thousands of workers in any given field with the right employers. Tech work of all sorts is, of course, a focus, but you'll also find a larger than usual portion of business services contractors, such as accountants and HR professionals. Employers pay a flat 10 percent fee on top of any projects listed or freelancers hired.


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