What are crowdsourced staffing and recruiting platforms
May 7th, 2019
Crowdsourced Staffing is a generic term to describe companies using mobile phone apps or websites to source workers from the public ('Crowd'). They use these ‘Crowdsourced’ workers instead of traditional full-time employees to do the company's work.
The workers on these platforms work as independent contractors, on-demand in what are called gigs. The workers benefit from the flexibility to choose when and how long they want to work. In exchange they sacrifice guaranteed work hours, benefits like health insurance, paid holidays etc. and worker protections like unemployment insurance, sick leave, overtime, etc.
The best example of a crowdsourced staffing platform is Uber, which offers a taxi like service, but instead of professional full-time drivers, it uses regular people ('crowd') with extra time on their hands. Similarly there is upwork.com, a freelancer marketplace where businesses can get freelancers to do translation, logo design and other knowledge based tasks by crowdsourcing workers from all over the world.
One subset of Crowdsourced Staffing is Crowdsourced Recruiting (or crowdstaffing), where companies hire independent recruiters to recruit for them instead of using full-time recruiters.
Crowdsourced Recruiting
In crowdsourced recruiting (crowd-staffing), the companies benefit because they only pay if they successfully hire through the platform. The freelance recruiters benefit by getting the entire commission, instead of fixed salary. The risk is that if the recruiters work but don't make a placement, they don’t get a salary.
Crowdsourced Recruiting is an example of the new gig-economy where work is fractionalized, optimized for who can do it most efficiently, or fulfilled through a surplus supply of time, and performed on-demand by independent contractors. There are several old and new crowdsourced recruiting marketplaces or crowdstaffing platforms with Indeed Crowd, Bounty Jobs and Recruitloop being the bigger ones.
Difference between Time-based Labor Marketplace and Contingent-on-Success Marketplace
Crowdsourced recruiting platforms work on a contingent basis which makes it a bit riskier than the other crowdstaffing models that pay for time (Uber) for time. In this they are similar to a commission-only sales job.
In Time based marketplaces like ridesharing, Uber dispatches a driver to one client and the driver gets paid for the job. In crowdsourced recruiting, there is no guarantee the client will hire even if the recruiter spends a lot of time sourcing. There could be various reasons why the client doesn't hire- the candidate was not good, the hiring manager didn't like the candidate, the candidate didn't like the company or the job, or the pay was low, or the candidate got a better offer. So even though the recruiter may spend time in sourcing candidates, they may still not get paid for no fault of theirs.
Should you Recruit for a Crowdsourced Staffing Platform?
If you are debating whether you should work on such a platform, here's a basic comparision of the economics of it to keep in mind.Basically you need to compare the payouts vs the risk for each of these options.
- Recruiter in a full-time job
Assuming the recruiter is in a fulltime job at a company or recruiting agency at $40/hr. salary, she makes $6,720/month. The work is low stress and involves searching and recruiting candidates for open positions the company has. The positions were sourced by the company, who have Sales people to get those positions. The recruiter's base pay is not changed if the candidates don’t get the offer or the client decided not to move forward or hire the candidates.
- Independent Recruiter
As an independent recruiter, the main difference is that the recruiter is responsible for sales- to find open positions themselves. If they can convince an HR Manager to assign them a position, their success ratio will be higher. In this case if they place a candidate with a $100K salary, they stand to make a referral fee of around 15-20% or $15-20K. If they make one placement a month, they make twice what their monthly salary would be. If they make one placement in 2 months, they breakeven. If they don’t make a placement in 2 months, they’d be better off in a fulltime recruiter job.
- Recruiter working on Crowdsourced Staffing Platform
In the crowdsourced staffing platform, the platform sources the open requisitions from the clients. This is great if the independent recruiter doesn't want to do sales. The crowdstaffing platforms charge clients 15-25% of the canddiate salary as a referral fee, keep a small portion of it and pass on the rest to recruiters. Typically 5-10% which may be lower, but the recruiters don't have to do sales.
For a $100K placement, the freelance recruiter can now make $5K-$10K. This is similar to their fulltime salary with the upside that they choose their work hours, can work from home and unlike independent recruiting, they don’t need to go out and source open reqs (requisitions) to work on.
- Working part-time on crowdsourced recruiting platforms in the evenings or weekends
If you only work on such platforms for a few hours on evenings and weekends, it poses no downside risk other than some wasted time, but has good upside potential. You can try this to get your foot into independent recruiting and see how good you do. Want to try it out- ping us at info@oncontracting.com with your resume.
Just make sure it doesn't create a conflict of interest with your employer or recruiting agency's moonlighting clause by reading your employment contract. These terms are usually listed under Non-Competitive activities. Some of other terms that might affect your ability to work on these include - you can't use company property (job board subscription, computer, ATS) for your personal benefit, that you will focus exclusively on the company's work, that you won't work on anything that is similar to the company's line of work.
Potential Downsides in Crowdsourced Recruiting platforms
1. Many of these crowdsourced recruiting platforms send requirements to several recruiters to improve the success rate or in case of Indeed Crowd to anyone that is interested. The probability of the recruiters' success is reduced by a factor of how many recruiters are working on it. If there are 3 recruiters, the client's chances of getting a good candidate is 3x, however the probability that the freelance recruiter is going to make the $10K placement is reduced to 33%, and the expected value of that gig is now around $3.3K.
2. To overcome this downside, some platforms (Recruitloop) instead allow companies to book a recruiter for a certain amount of time or on a project basis, instead of making the gig success-based. This is like a long-term contract job but the recruiter doesn't get the benefits of a full-time worker. Instead they get the flexibility to work from home, their own hours, etc.
3. Recruiters often don’t know how many recruiters are working on these positions, so they may be making non-optimum decisions on which positions to work for. Some platforms that work as referral sites trying to get friends to refer friends open their reqs to 1000s of potential referrers/recruiters in which case the freelance recruiter is unlikely to have success.
4. To overcome the hesitation from recruiters that may feel they are working for nothing, some platforms like Indeed Crowd now offer $10 per qualified resume in addition to a potential success fee.
Things are still evolving in this space, so stay tuned and we'll keep updating this list for you as we learn.