How the Virtual Workforce Is Changing Everything

In a society far away and long ago, people mostly farmed and ran storefront businesses where they lived. Then came the migration to the cities, where a new generation of workers stuffed into bulgingurban-based factory jobs. Many spent their entire adult lives working for The Man in an upstairs office.

Then more social changes and transportation advancements happened. Those improvements let workers move to a suburban home and travel to city jobs in buses and trains and autos. Sitting in traffic enduring the twice-a-day commute was very bad. But loyalty to The Man and hours commuting to his office building provided workers with long-term benefits that sustained their families. And that was very very good. Or so it seemed.

Now the social workforce is changing once again. This time around, workers with unique talents ply their trade from home offices and send the products of their work efforts to city-based offices. Often, these work-reception centers are located far beyond acceptable commuting distances. Today’s developing virtual workforce routinely telecommutes to work across the country. Some even “go” to other countries.

“Why go to an office when you can do same thing at home? Moving information around can be done on the Internet. Maintaining stores and spending time, energy and building costs all are part of the paradigm from the Industrial Age. Even management styles are based on that model,” Jack Hughes, founder of TopCoder, told TechNewsWorld.

A New View

Hughes should know. He started a company in 2001 that employs workers from around the world who heed the call of enterpreneurial competitiveness. His company, TopCoder, leverages a competitiveworkforce of 175,000 members from over 200 countries to build software for many of the world’s leading enterprises from financial markets (Deutche Bank, UBS, LendingTree) to the top software and Internet companies (Google, AOL, VeriSign) and everything in-between (ESPN, Direct Energy, Geiko, AMD, Borders).

In addressing the British Computing Society recently, Hughes spoke of changes taking place over the next few years. He spoke of a new work world dominated by workers who complete assignments for more than one employer. He described a workforce where workers can be accessed by those willing to pay the most for the submitted work.

He described a workforce where participants do the work they like, not work they have to do. He described a workforce where workers receive more pay, not less, because employers willing to pay more readily sought them out.

Virtual Workers

Hughes’ vision for a virtual workforce based upon specialized talent and online communities already exists at TopCoder, and a growing number of companies are making the transition. The trend is taking shape in many industries.

“More and more workers are leaving the confines of the cubicle and going outside. Corporations are now more amenable [to a virtual workforce], Karim Lakhani, PhD and assistant professor at Harvard Business School, told TechNewsWorld.

The concept is fairly new at most businesses, Lakhani admitted. In fact, many managers still feel the need to have full control over workers.

Platform Companies

Companies that transition into this new workforce paradigm, like TopCoder, are platform companies, Hughes said. They must set up models to allow them to operate more efficiently without waisting time with salaried workers in between periods of work productivity.

“Today’s economy is becoming an impetus for this growing workforce. It is ideal for the knowledge-based information industry, but even other industries will shift to this in the near future. Look at the e-commerce shift that has taken place,” said Hughes.

The concept of a platform company that thrives with a virtual workforce is gaining support within all types of companies. For instance, small businesses are coming on board with the idea. It used to be that only large companies considered it, according to Hughes.

Internet Workers

This shift in work location from physical office to virtual shop is driven by the Internet. The Web allows connections from around the world and thus lets knowledge be widely distributed, Lakhani noted.

Three factors are pushing corporations in this direction. One is the need for an expanded worker pool. Cost factors in as a second driving force. The third is the reality that the work quality is often better, he explained.

While there is currently enough work volume to sustain a growing virtual work force, Lakhani does not think that all workers trained under today’s standards can make a living as remote workers. Right now, they do not have to. Virtual workers will not fully replace on-site workers.

“Actually, both approaches are complementary to each other. Companies still need a resident staff to coordinate the remote workers and put the solutions they contribute in force,” said Lakhani.

Shifting Spaces

What may be going on is that the elite workers are going to this virtual worker model. Those workers who do not may end up still working in-house positions, according to Lakhani.

“We are seeing a change of the economy. Workers are becoming their own entrepreneurs,” he said.

This workforce shift may actually put U.S. workers at a disadvantage, he warned. Workers in other countries already have a national health plan. This offers a cushion with less of a burden on the worker to get this benefit from an employer.

Other U.S. workers may still be tied to a need for security of a regular job and a boss and an office experience, he said.

Not Totally New

In essence, the platform company concept upon which Hughes built TopCoder is the morphing of a work concept some professionals have used for years. Hughes referred to his company’s approach to a virtualworkforce as “the freelance method on steroids.” The only difference is that now customers come to the worker all the time, he said.

“TopCoder embodies the concept of crowdsourcing. It has a community focus. Jack [Hughes] built a community first. Then the structure in a productive capacity was added,” Jeff Howe, contributing editor for Wired Magazine and author of Crowdsourcing: Why the Power of the Crowd Is Driving the Future of Business, told TechNewsWorld.

Howe introduced the term “crowdsourcing” in his book, released in August before the economic downturn. That concept was well established before and is now continuing to gain attention, he said.

Crowdsourcing Basics

Companies should not view this new work style as a cost-saving, short-term measure, as there are start-up costs involved, according to Howe.

Crowdsourcing is a strategy that cuts across all industries. It usually relies on a worker’s spare time. A big distinguishing factor of this model is that it is a call for work. Many people will reply. Many of them may have a full time job doing other things, he explained.

“I don’t know if it will ever become the replacement for an employer and an employee in the traditional sense — but this work style is now a part of the ecosystem. It’s sort of a third way,” he said.

A New Way

The old term for hiring project-by-project workers was “outsourcing“, but that term has negative connotations, said Hughes. Instead, employers using this new workforce model call it “crowdsourcing,” “virtual work” or “community-based work.”

In the past, the problem with the freelance model was getting the freelancer and the company to come to terms quickly. Hughes sees these newer paradigms as better ways to hook up work producers with work consumers.

“Platform companies are working to solve these issues. These will take over. We will see more and more of them. This trend will improve what happens now with the online job sites,” Hughes said. “We are seeing an awful lot of companies getting funded to do this.”

Next Horizon

The nature of jobs is changing so quickly that it will keep changing every few years, maintained Hughes. For instance, industries are already shifting to 401k plans instead of company benefit packages. No longer are workers going to be tied to lifetime employment with the same company.

In the same way, workers will no longer just exist to work, Hughes believes. The lifestyle will come first. The notion that started in the 1950s of the workplace as a fraternal organization that will care for you for life is broken. The new issue is, “How do I watch out for me?”

“Companies no longer can take care of employees for life. What replaces it? The work producers have to leverage their skill sets to provide their own revenue streams. TopCoder has been a pioneer in this,” Hughes explained.

Getting There

This is the next evolution of the Web. Research and e-commerce industries have already established this. The virtual workplace is the next horizon, according to Hughes.

“We are getting very close to the tipping point,” he said. “Enough things are coming together to make this trend a prominent entity.”

At least in the short term, the idea of going out to work is not going away — but it may be more common for workers to hit the road only several days a week, he said.

3 Comments

  • It’s obvious the new generation will get to enjoy a new way of working. Delegating work to virtual assistants can help your business grow steadily or rapidly depending on what your business needs.

  • With a lot of spare time on my hands I recently signed up with Poptent.net, the crowdsource platform which asks users to create commercials for the likes of Annheiser Busch, and others, who are seeking ways to engage their target demo while saving money on creative. Again, this is a great way for Advertisers to select product that is most appealing and useful to them. But for the vast majority of people who spend time, money, and energy creating these "spec" pieces it’s a COMPLETE WASTE OF TIME because odds are they will never receive one penny for their efforts. How is this a sustainable model for service vendors? It isn’t!

    Furthermore, Poptent and their Advertising partners try to strap suppliers with an agreement which forbids the supplier from using the spec material they create in any way outside the "contest." This means even if you spend your time and resources to create something with no guarantee of pay, you have no right of ownership over the thing you create, and are therefore unable to derive ANY benefit from your hard work.

    I don’t believe there is any court which would uphold such an agreement, as there is no exchange of valuable consideration (money) between poptent and the buyer. Nevertheless, this points to the weakness in the whole concept; there’s no such thing as a free lunch. Poptent wants to create and maintain an ecosystem of preferred creators, but I don’t know to many of them (myself included) who can afford to work indefinitely for free.

  • Jack Hughes isn’t on the front line looking for jobs, working the jobs, or getting paid to do them. Recently I signed up with oDesk, the virtual work platform which is "changing the way the world works." And I can tell you from personal experience wages are going down, not up, because now we (American workers) must compete DIRECTLY with workers in the Phillipines and India who charge a fraction of what we would normally charge. Secondly – as of this moment – there are 174,000 people around the world competing for just 4,000 jobs. Lastly, oDesk, holds worker pay and charges workers to transfer it into accounts from which the worker can draw. No doubt oDesk is banking these funds and making money on the interest. Yes the workplace is changing, but as usual it’s the buyers and the entities who manage the relationships between worker and buyer which benefit most. The worker, isolated in his tiny home office with no bargaining leverage, is getting squeezed. So much for the virtual Utopia.

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