Pros and Cons of Crowdsourcing Business

Crowdsourcing is a portmanteau of the words, crowd and outsourcing. The word came into being when Jeff Howe, an editor with Wired magazine wrote an article about the emerging trend of a large number of freelancers working on the projects of major businesses.

Crowdsourcing can be thought of as a business model where a large number of users submit their work or ideas to a company. Those users whose work is in accordance with the requirements of the company are selected for completing a project in the stipulated time and a predecided budget. Companies use crowdsourcing for getting feedback about their products.

Although some experts believe that crowdsourcing is a subdomain of outsourcing, the two differ on various counts. While a business is generally outsourced to a single or few vendors, crowdsourcing includes thousands of independent vendors. Take a look at the following example to understand this.

Suppose a graphic designing company ABC Ltd. is looking to cut down on its costs. It gets in touch with an Indian graphic designing company XYZ Ltd., which employs around 100 graphic designers. Both the companies reach an agreement, and the work of ABC Ltd. is 'outsourced' to XYZ Ltd.

On the other hand, if ABC Ltd. publishes their requirements on their project on the Internet and allows thousands of independent graphic designers from all over the world to work on their project to submit their ideas, it would be engaging in crowdsourcing.

Experts consider crowdsourcing to be in its infancy and are optimistic about more companies using it in the future. Companies who have crowdsourced their projects in the past are pretty much satisfied with what it has been able to achieve for them.

However, there is an agreement on the fact that there are certain challenges with crowdsourcing that need to be tackled if it is to become the next big thing after outsourcing. If you are pondering over crowdsourcing your business, the following points might be of extreme importance to you.

As the name signifies, crowdsourcing gives a business the opportunity to connect with a multitude of people and get an insight into their opinion and ideas. A lot of companies today are facing the challenge of dealing with a lack of new ideas and innovations.

Their in-house teams, which consist of a limited number of people, sometimes fail to come up with the solutions that the company is looking for. In these scenarios, crowdsourcing may help a business in choosing from thousands of submissions by users, and the possibility of a relevant idea also increases.

For example, if a company has a team of ten copywriters, and all of them brainstorm on creating a new punch line for a product, they can, at the max, come up with 100 or 200 ideas. However, if the company crowdsources the work, and one thousand users contribute one idea each, the company will have more options to choose from.

The reason why crowdsourcing is becoming a buzzword in the international business sector is because it is an economical way of doing business. We know how demand and supply are inversely related to each other, and it works with crowdsourcing as well.

When you crowdsource a project, thousands of users compete with each other, and it often means that people lower their charges to raise their stakes in getting selected for the assignment.

The fierce competition in the crowdsourcing market works to the advantage of a business, as often, there are people who are even ready to work at below-par rates. Also, crowdsourcing doesn't give users a permanent employment, so a business doesn't have to worry about taking care of their insurance and 401(k).

Well, if you've got a number of people working for you, it is given that your assignment will be completed in lesser time. Various projects do not require as much brainstorming as the physical effort to complete them. Let us take the example of Bob, who heads an online book-selling website.

Bob wants to categorize the book titles into different genres, such as almanac, fantasy, science fiction, etc. While Bob can take the help of his in-house team for doing this tedious work by paying them for working overtime, the whole process will certainly take a lot of time to complete.

Instead, if Bob decides to crowdsource the work, he can have several people working simultaneously for him, and the work will be done far more quickly.

Crowdsourcing creates a buzz about a business as a lot of people are engaged with the brand. When an interesting assignment is put on the Internet, such creating a funny caption for an image, a large user participation is guaranteed. This users can further promote your brand by telling their friends about it, making more people know about your brand.

As it generates a lot of buzz and allows a lot of people to become participants, a business is able to engage with its existing and potential customers in a better way. When existing customers see that their opinion is being taken seriously by a company, their connect with the brand increases, and they are more likely to take their business elsewhere.

The quality of crowdsourced work often leaves a lot to be desired. When you are working with professionals who have made a name for themselves through their work, you can bank upon the fact that the quality of work will be top-notch.

However, as is seen with crowdsourcing, the lowest bidder often gets the assignment, which creates a situation where a business organization has no control over the quality of work. This is one of the reasons why a majority of companies are hesitant in implementing crowdsourcing in their business.

When you have someone working in-house for you, there is an awareness about his professional qualifications and relevant skills - factors that are not given much importance in crowdsourcing.

Also, an in-house employee is expected to follow the rules and regulations of the company, otherwise disciplinary action can be taken against him. Crowdsourcing, on the other hand, lacks the scrutiny of these rules, as a result of which there can be legal issues, such as copyright violation and plagiarism.

As we mentioned before, one of the biggest strengths of crowdsourcing is that a business can get thousands of ideas from people all around the world. However, this strength can easily become a limitation if there is a shortage of manpower or unavailability of required software/tools to evaluate the work of such a large number of people.

Skeptics of crowdsourcing have often raised their concerns about the poor quality checks of crowdsourced work.

When an idea is brainstormed in-house, there is a level of collaboration between the people working on the project.

For example, in a publishing firm, fellow writers can provide creative inputs to each other while dealing with assignments, editors can put the work to scrutiny to ensure that there are no errors in the final draft, and most importantly, the business head can have some sort of understanding about which way the project is going.

Simply put, crowdsourcing lacks all of these features. To fine-tune a project, some sort of in-person contact is required, and crowdsourcing provides none of this. Lack of collaboration can mean that a crowdsourced work has to be reviewed repeatedly, leading to loss of time for a business.

If you have come up with a novel idea, you should definitely think twice before crowdsourcing your work. Crowdsourcing may put some of your confidential information in the public domain, and if your competitors come to know about it, you may lose the advantage that you would have otherwise had.

Crowdsourcing can often cause your business to be get misleading reviews about your products. A lot of companies which offer surveying jobs to people, often run the risk that their products may be poorly reviewed. You cannot expect honest and accurate information from people who are working for you because they have got bills to pay.

Although crowdsourcing is known to promote ideas and opinions of people from all walks of life, it is not necessary that a select group is a representative of the whole population. This is one of the prime reasons why crowdsourced work comes under a lot of flak.