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Is Crowdsourcing an Opportunity or Threat?

Companies use contests, prizes to draw talent from online communities

By PEGGY ALBRIGHT

Crowdsourcing has become a practical way for companies to find outside talent to perform task-based projects or contribute ideas for new products and services. Computing and software professionals can often benefit from the crowdsourcing trend because their skills are often well-suited to independent projects that can be performed remotely. But the use of crowJob Trendsd-based talent for corporate projects can also take jobs away from internal staff, which isn’t a good thing.

Whether crowdsourcing represents an opportunity or threat for computing professionals, the trend is already established and will only gain more traction in years to come. For those who haven’t contributed to a crowdsourced project or been affected by it, it’s time to pay attention to the trend and, perhaps, prepare a strategy for dealing with it.

“Recognize that it is happening,” advised Carl Esposti, founder of crowdsourcing.org, which tracks the industry. “It’s happening and an absolute inevitability that a new market for work is being created on both the supply and demand sides. An individual may not like this and may not want to participate, but they have no choice.”

Not a new ideaCompanies are turning to crowdsourcing for projects.

Crowdsourcing isn’t a new concept. In fact, the practice goes back hundreds of years. In 1714, for example, the British government created contests with lucrative prizes to inspire scientists to help discover a way to find a ship’s longitude while at sea.

In our times, crowdsourcing often combines contests and the Internet to obtain talent and expertise via online communities. It has some similarity to open-source software projects, which rely on community members to develop and improve code. However, the commercial philosophies driving crowdsourcing and open-source projects are quite different.

Crowdsourcing possibly evolved from outsourcing and offshoring, where businesses use third-party firms to supply external personnel to perform specific functions at a cost savings. However, unlike with outsourcing and offshoring, crowdsourcing directly recruits individual workers for discrete tasks.

With task-based crowdsourcing, a company usually hires a vendor that has access to a network of skilled professionals. The vendor is then responsible for recruiting people who can help with the work. The community can represent different categories of professionals, such as IT experts, software developers, or CAD specialists, for example. Those selected to perform the work are compensated with cash prizes, other rewards, or incentives.

InnoCentive uses financial incentives and contests to connect businesses with a global network of 250,000 “problem solvers. That makes it possible for companies to find talent for individual projects or to engage with expert groups on a regular basis. The company was formed in 2001 at Ely Lilly and then spun off into a separate company in 2005.InnoCentive has awarded $34 million in prizes that range from $5,000 to $1 million, depending on the complexity of the project. Several lucrative contests are underway, including some with Life Technologies, which develops silicon chips and processors that are used in human genome analyses.

It also recently managed a competition for the Cleveland Clinic to find experts to develop a computer program that can improve the accuracy of a cancer-survival-prediction algorithm. One recent InnoCentive contest, offered for The Economist magazine, led to the development of a new software program that can be used to distribute educational lessons to cell phones used by children in developing countries.

TopCoder, well-known for its programming tournaments, has a community of nearly 400,000 software engineers, computer scientists, and digital media developers working from more than 200 countries to help companies and government agencies build software through a competitive, rigorous, standards based methodology. Prizes can reach into the thousands of dollars.

TopCoder is an approved US government vendor for agencies seeking to procure software development expertise. Its other customers and partners have included ESPN, Facebook, Google, Harvard Business School, and IEEE-USA.

While there may be some real money and prestige associated with InnoCentive and TopCoder challenges, there’s another side of the crowdsourcing trend that’s driving a very high-volume market for micro tasks that are performed by the general public. Some of these projects don’t pay much at all because the organizations believe that target participants enjoy performing the tasks in their spare time and the tasks are not time consuming.

CrowdFlower, formed in 2007, specializes in breaking large, information-heavy projects into small tasks and distributing them to more than a million on-demand workers worldwide. While its members have completed 300 million tasks for clients like AT&T, eBay, Microsoft, and Twitter, a large and increasing proportion of its micro tasks are being performed by gamers on Facebook, who earn Facebook credits by completing individual projects. Next page

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