Elance: Small Business Online Contractor Work Heats Up

Monday Feb 7th 2011 by Thor Olavsrud
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Elance, a platform for small businesses to contract talent online, said online contract workers earned more than $27 million via its platform in Q4.

Small businesses are leading the economic recovery in the US, and Elance -- which provides a platform for small businesses to contract talent online -- said Monday that record-setting online hiring on its platform in the fourth quarter indicates small businesses are optimistic about their outlook for 2011.

"Small businesses are embracing online employment as a high-value strategy that allows them to respond quickly to market conditions," said Ellen Pack, vice president of marketing at Elance. "Now small businesses anywhere can build online teams, which include professionals in high demand like Android programmers, HTML5 programmers and social media marketers to fuel growth and innovation."

Elance said businesses posted more than 105,000 contract jobs on its platform in the fourth quarter, a 38 percent year-over-year increase. Additionally, the amount they spent grew 11 percent quarter-over-quarter, with online workers earning more than $27 million via the platform in the fourth quarter.

The firm said online hiring increased across all of its categories in the fourth quarter, though spending on IT was the forerunner, accounting for 59 percent of Q4 earnings through Elance. The creative, marketing and operations sectors also showed substantial growth, representing 24 percent, eight percent and six percent of earnings, respectively.

Pack said the report indicated that small businesses will increasingly adopt a hybrid organization in 2011 -- a mix of staffing models that include both on-site and online workers.

"We see all this as really transforming the way work gets done," she said. "The first adopters of this have been startups and small businesses. It allows them to have incredibly varied skills on their team without having to go and hire those skills full-time. There's just no way you're going to hire one person that can do all those varied things."

"It's just such a different world," she added. "We have all become little businesses."

Elance allows contractors -- providers in the site's parlance -- to post profiles and their skill sets, and also gives employers the capability to post jobs. Providers can bid on jobs, or employers can take a more active approach and seek out providers with the particular skill sets they need.

Once a job has been agreed upon, the site serves as a collaboration platform between the employer and its providers. Elaince holds payment in escrow, which can be released in a lump sum or in portions as agreed-upon milestones are reached. Elance takes an eight percent cut of the payment when the transaction is made.

"Small businesses are lean by necessity," Pack said. "They are always looking for ways to get a lot done with very little. They seek out solutions like Elance. This kind of pay-for-performance model is very appealing to small businesses."

Outsourcing: Skills Small Businesses Seek

Experts in mobile technologies are now among the most sought-after professionals. Demand for iPad programmers grew 15 percent quarter-over-quarter at Elance, and demand for iPhone programmers grew 10 percent. However, demand for Android developers topped them both in the fourth quarter, increasing 20 percent. Pack said Elance expects to see continued growth in demand for iOS and Android skillsets.

WordPress experts are also in high demand. Pack noted that demand for WordPress development skills rose sharply over the course of 2010, and exhibited a 15 percent quarter-over-quarter increase in Q4. Only PHP programmers are more in demand, Pack said. She noted that with WordPress expertise's second-place slot behind PHP programming skills, the fourth quarter marks the first time any content management system has moved into the top three skills in demand by businesses.

While IT skills remain the most in demand, Elance said small businesses are increasingly looking to marketing contractors and consultants to add expertise to their staffs. Elance's Q4 Online Employment Report showed demand for Marketing skills up 74 percent year-over-year.

"Online marketing is by far the fastest growing segment," Pack said. "I think it has a lot to do with how much marketing is driven by online these days. Businesses need people who know how to sell online, know how to make websites convert and understand search engine optimization."

Elance said businesses are making heavy investments in online branding, media and customer acquisition strategies like social media marketing, affiliate marketing and search engine marketing using its platform. Social media marketing, in particular, showed 20 percent growth in the fourth quarter, moving up to number 26 on the top 100 skills list at Elance.

The demand for Facebook programmers is also continuing to increase, shooting up 23 percent in Q4. Elance said businesses are increasingly seeking Facebook experts for Facebook App development, Fan Page creation and Facebook Connect integrations.

Programmers with HTML5 skills are also skyrocketing in demand. Elance said demand for HTML5 programmers grew 48 percent quarter-over-quarter. Meanwhile, demand for Flash skills saw little appreciable growth. However, it remained steady as a sought-after skill.

Elance also tracks the top states and cities for online contractors, based on contractor earnings. According to the company, Texas has become the fastest growing state for online contractors, with more cities in the top 10 for online employment than any other state. Dallas maintained its position at no. 4, Amarillo -- which Elance noted is a hotspot for writing talent -- moved from number 8 to number 7, and Austin jumped from number 17 to number 9. New York, Los Angeles and Portland, Ore. took the top three spots.

Thor Olavsrud is a contributor to SmallBusinessComputing.com and a former senior editor at InternetNews.com. He covers operating systems, standards and security, among other technologies.

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