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Small Firms, Start-Ups Drive Crowdsourcing Growth

Wall Street Journal Online (02/28/12) Angus Loten

An increasing number of start-ups and small firms are turning to the strategy of crowdsourcing for a variety of one-off jobs such as simple data entry, software testing, Web site design, advertising, and marketing. Crowdsourced labor usually involves breaking a project into smaller component tasks and outsourcing those tasks out to the general public by posting the requests on a Web site.

Crowdsourcing providers reported a 75% increase in revenue last year to $376 million, up from $215 million in 2010 and $141 million in 2009, according to a report by Start-ups and small firms accounted for more than 60% of the sector’s total revenue last year. The number of crowdsourcing workers has grown by more 100% each year, reaching 6.3 million last year, according to the report.

Crowdsourcing can cost companies less than half as much as more traditional outsourcing firms. However, a major concern is that crowdsourced labor risks creating what Harvard Law School professor Jonathan Zittrain has called “digital sweatshops,” where workers who may be underage work long hours on mind-numbing tasks for very little or even no money. Another drawback is that in some cases, crowdsourced workers assigned to short tasks are not likely to feel any real engagement with a business, says Michael Alter, the president of small-business payroll firm SurePayroll.