SmallBizResource Blog -- Freelancing

Elance: 79,000+ Freelancers Await Your Work

Posted by Gayle Kesten Wednesday, Feb 25, 2009, 10:12 AM ET

Rome wasn't built in a day, but maybe the process would have gone quicker if its citizens knew about outsourcing. I mean, just how much could Socrates and Plato realistically contribute?

And, yes, I know, they're from Greece, but you get my drift. And hopefully the parallel to building a business is clear, too.

Fast forward to modern day and meet Elance, an AI (after Internet) company based in Mountain View, Calif., that is all about connecting employers looking to freelance projects they don't have the time or expertise to do themselves with skilled contractors who can meet those needs. Recognize yourself -- on either end?

I first met Brad Porteus, Elance's chief marketing officer, earlier this month at the Small Business Summit. I had heard of Elance but didn't realize (and was impressed by) how far it goes to identify quality "service providers," i.e., people looking for work. That includes the passing of an admissions test to first join the site, plus free skills tests that assess workers' expertise in their chosen fields -- tests that aren't mandatory to take, but as a business looking to hire, wouldn't you take a more serious look at those who have proved their smarts? Likewise, as a freelancer looking for work, scoring well on these tests can give you a leg up on the competition.

"Like the real world, people have to demonstrate their expertise to command fees that are commensurate with the value they deliver," Porteus told me in a subsequent conversation, during which he gave me a site tour.

From the perspective of a business ("client") using a new contractor, Elance helps minimize the risk by managing the payment process via an escrow system that can pay out based on interim milestones. Say, for example, you want to outsource the design and implementation of your Web site. After you choose your service provider, the first milestone might be the completion of five possible site mockups. Upon receipt -- and assuming by deadline -- perhaps one-quarter of the project's total cost is then paid to the service provider. The next step of the project may be refinement of the chosen design, which when done means another quarter of the project is paid. You get the idea.

"This builds trust between both parties," Porteus explained. "The person doing the hiring is able to demonstrate to the provider that they're for real and have the money because the provider can see it. In reverse, it's good for the employer that they can have a service provider start to do real work without sending a deposit up-front."

A business with projects to outsource can post them all on Elance for free. You indicate the scope of the project, the required skill set, how much you can pay, and related details, plus you have the ability to search Elance's directory of providers and contact anyone you deem a potential fit. An added convenience: Elance will take care of your 1099 paperwork. For a $15 fee, you can have your project highlighted in search results -- "a signal to service providers that you have strong intentions to fill the job," Porteus said -- and a $50 fee enables only paying Elance members to see your postings. Also to note: Elance charges, but then refunds, a $10 deposit once it ensures your ability to pay. "This filters out those who don't have pure intentions," Porteus said.

About those paying members: A service provider who wants to join Elance chooses from among four membership packages, ranging from free to $9.95, $19.95, and $39.95 per month; you can change plans each month or opt out altogether. The higher the membership level, the more proposals you're permitted to submit and the more keywords you're allowed to use, boosting the chances of appearing high up in what Elance calls a buyer search. (According to the site, those aforementioned free skills tests don't apply to the Basic membership, but Porteus told me it now does.) Elance helps you set up your profile with prepopulated outlines you can tailor to describe yourself, plus you can specify the types of projects/positions you're looking for, salary range, preferred working location, and more.

What's in it for Elance? In addition to the membership fee is collects, Elance also charges a service fee, in the range of 4% to 6% of a project's total value, plus a 2.75% payment processing fee. That money is deduced each time a service provider receives payment.

With unemployment rates expected to remain high through 2010, Elance represents a well-vetted database of both opportunities for job seekers and a skilled pool of freelancers for small businesses. But even beyond the economy, Porteus said the comfort level people now feel when posting online profiles has boosted Elance's business, too.

"The appetite and familiarity of this type of activity is a lot more normal than it used to be," he said. "The idea of putting up a personal profile is relatively common. The notion of working with someone who is a stranger and paying them for important work to get done doesn't sound as far-fetched as a few years ago."

Freelancing