ODesk Charts the Future of Distributed Work

2/15/11Follow @wroush

Consider these five trends, and then ask yourself what kind of Internet business you would create to exploit them.

1. Persistent economic uncertainty, leaving employers unwilling to hire lots of new permanent employees—but needing to get work done nonetheless.

2. The emergence of outsourcing as a mainstream, accepted, even expected corporate practice.

3. A growing number of people with home broadband connections for doing computer-mediated work and easy access to remote collaboration tools like Skype, Box.net, Basecamp, and Github.

4. More workers choosing (not necessarily being forced) to work from home as career contractors.

5. The interconnection of banking and financial systems around the world, making it more practical to transfer payments internationally.

Well, obviously, if you were thinking like an Internet entrepreneur, you’d want to go out create some kind of online service that helps businesses find, manage, and pay remote contractors, whether domestic or foreign, and then take a cut of the action.

But as it turns out, you’d quite possibly be too late: a company called oDesk created just such a service in 2005, and it’s now built up such an impressive lead over rivals such as Guru and Elance that it may be unstoppable. The six-year-old Redwood City, CA, startup has been growing its business at 100 percent per year for the last three years, and is now the world’s largest online employment platform, with more than 1 million contractors and employers signed up in more than 150 countries.

ODesk’s services, which include a hiring marketplace, tools for monitoring contractors’ hourly work, and a backend for handling payments across national borders, have been “a hit from the beginning,” says Gary Swart, the company’s CEO. But the venture-funded startup has also been the beneficiary of some huge and unexpected shifts, especially the global economic meltdown of 2008-2009. “The winds got stronger, fueled by the economy, the Internet, and globalization,” Swart says.

Barring the collapse of the Internet, a drastic drop in unemployment, or a sudden end to globalization, oDesk seems positioned to keep growing for years to come—and perhaps to eventually earn a nice return for investors Sigma Partners, Globespan Capital Partners, Benchmark Capital, and DAG Ventures, who have put $29 million into the company. With 38 full time employees of its own, the startup may or may not be breaking even yet, but … Next Page »

Wade Roush is Xconomy's chief correspondent and editor of Xconomy San Francisco. You can subscribe to his Google Group or e-mail him at wroush@xconomy.com. Follow @wroush

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