oDesk and the inadvertent freelancer
Can you become a great freelancer?
I've written a fair bit lately about the phenomenon where millions of workers have been recently let go from their employers and have been inadvertently thrust into the world of freelancing. In one of the first pieces I did on this subject, I asked companies such as Fieldglass, Elance and oDesk how they would respond to these newfound freelancers. Brian Goler of oDesk was the first to respond.
oDesk background: oDesk lists approximately 40,000 new jobs every month. The assignments are widely distributed in size ranging from a few hours to many, many months. oDesk claims people spend more time working than hunting for new assignments. The company also takes away some of the billing and cash flow issues that may occur in freelance assignments workers book independent of a system like oDesk. Of this subject, I can speak with some authority as some of my clients are very good at paying me on time while a few can hold up a payment for upwards of 90 days. Of the latter, I can sometimes rationalize that delay when it's the first payment and it is taking time for me to be set up in their supplier/procurement system; however, continued delays like that force me to either change the terms of our relationship or end it all together. Cash flow is a top of mind concern for freelancers.
The average project size for an oDesk assignment is around $4268. oDesk provides real-time statistics like this on its website. Freelancers that want to take advantage of the oDesk guaranteed payment program must log in to the oDesk system while they are working on an assignment. Time is automatically tracked and billed to the client. Brian indicated to me that software developers often make approximately $25 per hour, consultants may make $22 an hour while data entry personnel make around eight dollars per hour.
Becoming a better freelancer: Brian and I discussed how someone who used to make, for example, $120,000 per year could replicate that success on a system like oDesk. This was an interesting conversation as Brian showed me profiles of oDesk members who had built quite a sterling reputation for themselves within Odesk and had become very much in demand within 12 to 18 months. While one individual he showed me was making just under $70 per hour, the real back story was that this individual had also developed a cadre of other software developers with which he subcontracted work. In consulting terms, this is called leverage. In this case, a freelancer has hired other freelancers to work for him and he makes a percentage of every dollar billed by these other workers.
The most successful freelancers that Brian showed me were those who took the time to develop their personal brand, delivered quality solutions for their customers and did so in a timely basis. As result, many of these individuals, especially those involved in software programming assignments, found their initial assignments extended from mere days to months or years in length. That scenario turns out to be quite common according to Brian because many perspective users of freelancers will establish a short-term trial assignment with the intent of extending it significantly to workers it learns it can trust.
The long-term freelancer: Brian and I also discussed whether people "graduate" from oDesk. While some individuals do develop a strong following, many individuals continue to acquire new/additional customers via oDesk. The best long-term freelancers though maybe individuals who are able to develop a unique set of skills or capabilities that are hard to replicate or are in scarce demand. Generic skills are being bought and sold on a global basis for a global market rate. Freelancers must differentiate themselves based on being either the lowest cost resource, the most customer attentive resource or the most knowledgeable resource.