12/11/2015 – To summarize the last few updates to this post, the biggest freelance marketplaces Elance and oDesk, merged into a new company named Upwork. oDesk already redirects to Upwork, and Elance will soon follow. This post has been updated to include the next biggest competitor, Freelancer.com.
Update 10/28/2015 – Elance has started limiting job posts and will eventually merge into Upwork sometime in 2016. In the comments, Negrua made a few observations on increased fees.
Update: 5/5/2015 – oDesk is rebranding as Upwork effective immediately. See the full details on their first blog post. Post merger, how they’re differentiating from Elance is unclear. Like Elance, Upwork, as they’re now called, has added “connects” and membership plans for freelancers, a feature which use to be exclusive to Elance. I have updated the post below to reflect the name change.
Update 9/9/14 – Question from a reader, “What are your thoughts on the recent oDesk-Elance merger?” While I could only speculate about last years merger of oDesk and Elance, with their rapid growth over the past decade, I see it as move for accelerated growth and scale, as opposed to innovation. Perhaps a reaction to the successful IPO of Freelancer.com. Regardless, the current marketplaces still stuffer from the same problems I outlined nearly two years ago. However, there still is opportunity there as some will attest to in the comments. I personally feel that if you want to bill $100+/hr, as successful consultants should, you should evaluate other options first.
On the surface, Freelancer.com and Upwork look like they’re great places for quality contractors to make money. They also seem like they’re great places for businesses to save money and get the services that they need. Yet there are a lot of horror stories out there about these sites. In many cases, each party is having to accept “good enough” because of business necessity. While there are quality contractors on Freelancer and Upwork, a lot of that is attributed to the fact that they are the biggest players in the freelance market. While comparisons of Upwork vs Elance vs Freelancer vs Guru continue to grow as the online job market has skyrocketed, we’ll delve into a couple of problems of the current freelance model and potential solutions.
Upwork vs Freelancer.com? Is there really a difference?
Here’s how it is supposed to work: A company crafts a highly detailed job description for a specific project. Contractors write highly detailed and attractive cover letters to capture the attention of the company. The company chooses a contractor from the field of highly qualified, well written contractors. The contractor accepts the job and performs up to spec and within the time frame. The company pays the contractor a fair price for the job in a timely manner. Good reviews of each other’s performances are given out. Everyone is happy.
Here’s how it actually works: Companies cobble together a low balled job description which has been cobbled together using previous job descriptions from other companies. Contractors send out equally cobbled together job responses because they have no idea what the company is really wanting – and they are forced to lower their standards because of the competition. The ones who get the jobs are the ones who spent half an hour replying to the job proposal, and even then they might not get noticed because there are so many unqualified applications to sift through. Because the company wanted such a low price, the contractor feels that they don’t have to offer quality – after all, quality costs money. Company and contractor struggle back and forth to produce the product, and hope that neither party will screw the other. Nobody is particularly happy, but they are willing to accept the ‘good enough’ situation as it is because they don’t want to go through the dance of bidding and selection again.
Companies who have never hired an IT professional, web developer, copywriter, or graphic designer have difficulty knowing what they should be asking for in the first place. They have been advised that Freelancer and Upwork are the places to go to find people who can do the job, and so they go there. Being that they don’t entirely know what they’re looking for, they borrow text from the other requests in the hopes that the contractors that they find will hit the nail on the head. Another tactic is to write something as vague as ‘I need a website.’ These companies are pressed for time, so they usually do not put the emphasis on specifying exactly what they want, cobbling together a job description from other companies.
The contractors themselves immediately know and understand that the companies didn’t want to take the time to understand what they were asking for. Being that the contractor doesn’t want to waste their own time explaining and clarifying the company’s needs (both are busy, you see), they use a boilerplate job response which they sincerely hope covers all of the needs that the company is requiring. Being that it’s easy to copy/paste a boilerplate answer, many contractors, some of whom aren’t qualified for the position in the least, will apply for the job.
The company is forced to read all of these crappy boilerplate responses, and hopes to find someone who is willing and able to decipher what was asked for in the first place. This takes up more precious time, and is usually found to be fruitless. After all, who wants to pay a contractor who doesn’t care enough to actually pay attention to the job requests in the first place? When the company doesn’t find a qualified applicant, they are forced to go through the process again – made to create another job description, and left to feel frustrated that they cannot get what they want.
Because the company has no idea what they want, they have no idea how much the project is really going to cost. They want to get the lowest price and the highest quality, and read some of the other (what they feel) similar job requests which have low rates, and offer those same low rates because they consider those rates to be normal. The good freelancers become insulted with the low pricing, and the ‘good enough’ freelancers stay but don’t feel that they have to provide quality because the price is so low.
One person asks on Quora, “How does a business person hire a good developer/programmer/engineer on Freelancer or Upwork?“
Many answers echoed the same sentiments, here are a few highlights:
Yishan Wong, CEO of Reddit answers:
You shouldn’t do this; it will probably result in failure.
I have a friend who is a designer (so, closer to technology and implementation than a business guy; about as close as you can be without being outright technical yourself), and he was hiring developers via eLance [now Upwork]. Even with consultation from friends of his (e.g. me) who were real engineers, it was extremely difficult to find decent engineers who could do the things he needed, deliver reliably, and iterate according to ongoing testing/customer feedback. The end product was merely “okay” – kind of slow, with little glitches here and there.
If you have total technical ignorance and no local (friend) resources to help you, hiring from eLance or oDesk [now Upwork] is almost impossible to do correctly. I would recommend trying another route.
Mircea Goia, another Quora power user adds:
I second what Yishan says…my biz partner, being a business guy and having some ideas in mind, took the eLance [now Upwork] route…lost some money, got some bad days…this mostly with Indian developers (he is trying now Russians).
It’s very hard to find competent AND reliable ones (even if they have 5 stars and lots of projects on eLance – maybe those who gave them projects have low standards?). Reliability and work integrity matters a lot when the developer is 10,000 miles away.
And it’s not just Quora. A question with a similar theme was asked on YCombinator’s Hacker News, “Are Freelancer Sites (eg. Upwork vs Freelancer) useless?“
Like Quora, Hacker News members can vote on answers, “jasonkester” owns the honor for the most upvotes with this answer:
As a rule, you can toss every response you get in the first hour. As you’ve noticed, there are tons on people on those sites who send out the same canned proposal to every single listing. That level of attention is a good indicator of how the rest of your project will go if you’re foolish enough to take one of them on.
Wait a few days. If you’ve written a good project description (and if you’re a bit lucky), you’ll start to see a few qualified proposals trickle in.
This is the main problem with freelancing sites. The race to the bottom finished years ago, and the result is that there are simply no good developers or designers left there. It’s actually an opportunity waiting for talented newcomers, since a single person showing up and acting professionally would get the job described by this poster (and everybody else who goes there seriously looking to build something).
Examples like this are repeated from site to site, where the general consensus is that there is a competition over who can give the lowest price rather than who can do the job with the highest standards of quality at a competitive price. As the competition continues, both contractors and companies feel that they cannot get what they need and turn to other sources for their work.
This leads us to our final thoughts and recommendations, note that this post isn’t designed to dissuade you from using Freelancer, Upwork or any of the other popular freelancing services (Guru, Fiverr, etc.), rather I wanted to give you a clear expectation of what to expect from both sides of the table. It’s not like they started with the sole intention of attracting subpar freelancers. But that’s what tends to happen when the marketplace is often driven by price, instead of value. The problems don’t lie within the platforms per se, but rather within the freelancers and businesses, and how they choose to use the platform. For businesses, if you know how to sift through the majority of unqualified applicants you could uncover the goldmine of talented freelancers at competitive prices. Our guide on How to Hire Online Freelancers without Losing Your Sanity goes into more detail. For freelancers, realize that Freelancer.com and Upwork are just one source of leads. Think about referrals, SEO, PPC, social media or even other platforms.
There are new companies aiming to disrupt the freelance marketplace, Fiverr is one example, recently allowing services up to $500 (up from $5). Fiverr differentiates by allowing freelancers to post their services as a “gig” (eg. 100 word article for $5, Illustration for $5, etc.) and let businesses come to them, albeit at a higher fee (20%). Fiverr does boast over 2,000,000 services, and they’ve raised over $20M to date (Update (1/2016): $116M Funding), but a quick glance at their home page, and you’ll see that most offerings aren’t related to business services. And the business services you do find, are often not what you would expect. This Fiverr review expands a bit more on that topic. There are, however, a few business gigs worth checking out.
For design related projects, there’s the crowdsourced model and leading the forefront in that category is 99Designs and DesignCrowd (reviews below). Where you can submit a project, such as a logo or a website, and dozens of designers submit designs and the winner is selected by you. This is a win/win for businesses and talented designers. Keep in mind that only the selected winner is paid, thus freelancers considering this platform should make sure they have the skills necessary to win enough contests to generate a respectable hourly rate. We’ve tested and went in-depth on both companies, see our 99Designs review here and DesignCrowd review here. Overall, if you have a design related project this is by far the best option. For freelancers, the best ones are getting paid. For businesses, you’re getting the best designs – or your money back.
Unfortunately, you can’t crowdsource web development. Thus you’re going to have to find a talented developer that you can trust. That’s where it gets interesting. I believe that the majority of complaints towards Upwork are from businesses who are trying to hire for under $10/hr. Seriously, what are you expecting when software developers average a salary of over $100k? It tech savvy cities like Silicon Valley, $150k-$250k isn’t atypical. Most people look for development are non-technical, thus you don’t understand code… and now you’re looking overseas where you’re introducing another language barrier. Most of the time, it’s disaster waiting to happen. If you go the Upwork route, start your search for developers within the $20-50/hr range… or breakdown tasks into milestones (refer to the aforementioned guide). Another route you can take is to use TopTal, a marketplace of designers and developers featuring “the top 3% of freelance talent.” Similar to the reason why top developers head to Silicon Valley, the best head to TopTal. Why? Because your clientele is thinking about value over price.
As a digital marketing consultant (SorianoMedia) based in the United States, we have a higher cost of living than developing countries – I tend to stay away from Freelancer and Upwork as a contractor. The only time I use them is to locate companies who are posting jobs out of my region (Las Vegas), businesses tend to appreciate a local contractor and are more apt to hire if I can explain to them in a local setting why I’m better than the other applicants who are offering services as low as $2/hr. And when it comes to marketing and SEO, you should really be thinking about value, not price. Whether it’s $100/hr, or $5/hr, you don’t want to pay someone to twiddle their thumbs. Marketing and SEO is an investment, which should have a ROI. When looking for a marketing or SEO consultant, look for one who can convey their thoughts on how they’re going to help achieve a ROI versus someone who’s selling selling their services for their time.
Lastly, another option is to hire a project manager. This is for companies with a bigger budget, because there is a middle man per se, but it could save you a lot of time and money in the long run. You can do this on both Freelancer and Upwork, or locally. Startups are also entering this space, once such company is Ziptask, whom focuses on helping people find developers. They’re a Techstars company I noticed covered by TechCrunch, they are a “fully managed outsourcing platform” that allows you to capitalize on the lower cost of labor in developing countries, while leaving issues commonly found in freelance marketplaces (communication, negotiation, management, etc.) up to a project manager. This is intriguing because I think anyone who has used outsourcing websites (even successfully) can agree, there’s a process of trial and error. And it isn’t until you’ve wasted a lot of time and money, that you realize that you could have used a project manager. This, on paper, should eliminate language barriers and ambiguity in assignments. The project manager model is best if you’re a non-tech entrepreneur looking to outsource development, another option is to checkout our post on How to Outsource Web Development. (Update: Ziptask no longer offers project management.)
What are your experiences in with Freelancer, Upwork, et. al? Let me know in the comments below!