Freelancing

What the Elance-ODesk Merger Means for Freelancers


Elance and oDesk, two of the larger online marketplaces for freelance assignments, are merging. Together, they have about 8 million registered workers and did about $750 million in bookings this year, according to reporting on the deal. The two sites, which make money by taking a percentage of what employers pay to freelancers, had about $70 million in revenue last year by one account.

ODesk says the merger will lead to “unprecedented freedom for people to find job opportunities,” but many will merely yawn. There are about 18 million independent workers in the U.S., says one recent study. Most of those workers don’t depend on oDesk or Elance to make a living. The average freelancer on either of the two sites made less than $100 this year, based on the amount made in bookings divided by the number of registered workers—chump change for two companies that plan to “revolutionize the way we work.”

Presumably, that average amount per worker is skewed downward by inactive members, but it’s also an indication that freelancers are using oDesk and Elance for one-off gigs. It’s also worth noting that offshore workers command lower wages per hour than those based in the U.S. This summer, oDesk Chief Executive Officer Gary Swart said the average rate for its workers in India, where the greatest number of the site’s freelancers reside, is $8 an hour.

Many commenting on an Elance blog post expressed displeasure with the deal, though complaints focused on fears that the merger would lead to a single service. Elance CEO Fabio Rosati will helm the new company, which doesn’t yet have a name, but the two sites will continue to operate separately at least for now. An oDesk company blog post says the merger will leverage resources for building better mobile tools and using data to match workers with jobs.

Symbolically, there’s a bit more for freelancers to get excited about. The existence of the merged entity may help attract corporate clients that feel more comfortable doing business with a large company—especially given talk that the tieup could be a prelude to an initial public offering.

Of course, workers can’t eat symbolism. For the deal to make a difference for freelancers, it will have to bring more good-paying work online.

Clark is a reporter for Bloomberg Businessweek covering small business and entrepreneurship.

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