What are On-Demand Staffing Platforms

Apr 28th, 2016
What are On-Demand Staffing Platforms

On-Demand staffing platforms are online labor marketplaces that match people that need work with those willing to pay for it. These platforms increase labor liquidity and remove friction by instantly matching buyers and sellers like Craigslist on Steroids. Different platforms focus on different skills from translation services to event staffing, use different levels of engagement from self-service to full-service and are good for different use cases.

On-demand staffing can be segmented into On-demand Services and On-demand Platforms.

 

1. On-Demand Services


In an On-demand Service, the customer doesn’t care who performs the service, just that the job is done. For example- with Uber, you order a ride and a car shows up and you don't really pick the driver. This is an on-demand service. You can imagine how crappy it would be if Uber was not a service. That was the case with ridesharing among students on college campuses in the old days. You would log onto a website, look for available drivers, exchange messages with them to check if they are available and then decide to hire them. No wonder it didn't catch on.

On-Demand services face the customer and are responsible for delivering a service. They may use fulltime employees or 1099 contractors to do the job, but the customer doesn’t really care about the backend operations. This kind of model works great for standardized tasks like rides in a car, groceries being delivered, etc. Uber is the best example of successful on-demand service. The drawback of services is that it is limited in scope as these are much harder services to build. There have been lots of attempts at 'Uber for x' for various services like laundry, food, homecleaning, etc and most have fizzled out for lack of demand, supply or liquidity.


 
2. On-Demand Staffing Platforms


So when its hard to match buyers and doers because the jobs are not standardized or the customer cares about the freelancer doing the job, the jobs move to on-demand marketplaces. These marketplaces, like a Craigslist classified site become the central hub for various categories of work. They differ from a posting service like Craigslist because they enable the transaction (by being a broker) and let the buyer and seller build their reputation, offer reviews and provide some trust based on that and resolve disputes. There are 3 types of such platforms differentiated based on the type and location of work.  
 

Remote Staffing Platforms

eLance and guru.com were the pioneers of on-demand staffing platforms 10-15 years ago. They allowed companies in the US to hire contractors anywhere in the world to work for them. These platforms offer small or short term gigs in the range of $5 to a few thousand dollars. The largest remote freelancer platforms like Upwork do about $1B in projects every year and host around 4M freelancers. While these platforms are great for small businesses to get work done cheaply, they also can be problematic if you are not careful. The major problem with these platforms are disputes between customers and freelancers over mismatched expectations and whether the quality of work is good and who might be at fault if a project doesn’t work out. For freelancers in the US, these platforms represent a ‘Race to the bottom’ as new contractors in developing countries often undercut prices to levels that are not feasible in the US.
 
Local Gig Staffing Platforms

In recent years, companies like TaskRabbit took this model and applied it to local tasks that normal user might need done. This gave rise to a category of on-demand staffing platform for local gigs. For example families have chores like assembling furniture, dropping off stuff to the Post Office, Cleaning the garage, etc. While these platforms offer a lot of breadth, their con is that because of the lack of depth they often get beaten by more specialized SERVICES PLATFORMS for niche categories. For example if youa re looking for a someone to take your laundry and get it done you might be better off with Wash.io- an on-demand service vs looking for a tasker on TaskRabbit. However if you are looking for someone to hang a painting on your wall and there is no app or service for that you would need a general gig marketplace.
 
Onsite Staffing Platform

Online Onsite Staffing Platforms target companies that hire temp workers to come onsite and work on projects through staffing agencies. This category has over $130B in Staffing Spend per year and most of the innovation in this space has been in the customer facing side though the Vendor Management Systems and Managed Service Providers and Freelancer Management Systems. By creating a curated platform of the best contractors and clients, onsite staffing platforms like OnContracting reduce the frustration of clients in finding good contractors and the frustration of contractors in not having to deal with flaky staffing agencies and recruiters. With this model, approved customers and hiring managers will be able to self-browse the list of available contractors, engage them and decide to hire them directly. OnContracting would take a transaction fee out of the bill rate that would be far less than a staffing agency because there won’t be any sales or Recruiter costs.
 

 

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