know, I have frequently written about the ambitions, growth and success
and consequently, the mixture of threat and opportunity that faces the
the only game changer that the recruitment industry is confronting.
familiar with Freelancer, Matt Barrie describes his company, and
‘We want to be the eBay
of jobs. There will be a company that will be the size and scale of
eBay, but instead of buying and selling goods you sell services.’
(25 February 2012).
Bearup succinctly put it:
is about to join the internet. They are poor. They are hungry. They are
driven. They are self-skilled. They are self-motivated. They want a job.
connect these poor and self-skilled with the rich and time-poor –
trousering a hefty 20 per cent, in commissions and fees, in the process.
Big business has been at this caper for years, sending call centres and
accounts departments offshore. Barrie’s genius was to realise the huge
potential for individuals and small businesses to do the same.
with start-up funds of just a few million, he has built Freelancer into
one of the world’s leading outsourcing websites, with more than three
million users; it has turned over more than $110 million since its
inception, and last year transactions worth over $35 million passed
through the site, of which Freelancer took $6.5 million. Barrie
estimates that last figure will increase to between $10 million and $13
million this year. It’s been near 100 per cent growth, year on year, and
it doesn’t look like slowing.”
of entrepreneurs that are at the forefront of the ‘digital disruption’.
recently released a fascinating research report on the likely impact on
the Australian economy of this disruption
Digital disruption: Short fuse, big bang?.
Deloitte hypothesise that several factors affect the extent to which
industries are likely to be affected by digital disruption in the future
– both the ‘size of the bang’ (the overall impact of digital disruption)
and the ‘length of the fuse’ (the time it will take for the digital
impact to be fully felt).
and regulation in each industry is very important. In highly competitive
sectors such as retail change is large and rapid (just ask Gerry
Harvey), but in a heavily regulated sector such as health care, the pace
of change may be dampened by lengthy approval processes.
which new technologies can reduce entry barriers and allow small
companies to compete with large existing businesses will also determine
the ‘size of the bang’.
Freelancer is a classic example of this point.
disruption’ map, Deloitte identify the recruitment industry as one that
falls in the ‘long fuse, big bang’ quadrant’ (along with around 33% of
the Australian economy).
borders or changing the skills workers need; it’s about changing the
very nature of consumption, competition and how markets work.
balance of power between organisations and individuals. The explosion in
connectivity and the availability of information is putting today’s
consumers, employees, citizens, patients and other individuals squarely
in the driver’s seat. (page 6)
This is exactly where Freelancer comes in. Freelancer has the business
model, capability and scale to connect demand (work to be done) with
supply (skilled people) all over the world. Of course, Barrie wasn’t the
first into this market,
Guru have both long been big players in this space, but he
certainly seems to have ambition and access to capital to fulfil his
ambition of Freelancer becoming the ‘eBay of services’.
Traditionally the matching of demand and supply in the
job-to-be-done-on-our-premises market has been the primarily the domain
expertise of recruitment agencies. If organisations had work to be done,
the only options were either hiring an employee (temporary or permanent)
to work onsite or outsourcing to specialist local firms (eg accountants,
lawyers, ad agencies etc) who, primarily, worked offsite.
Either way the person who finished up doing the work would be the best
available in the local market for the salary/rate/price. Just as
good but cheaper options were available but the time and cost of
accessing and assessing these skilled people made it prohibitive for
99.9% of businesses.
Matt Barrie changes all that because Freelancer’s functionality enables
verified skill to be matched with availability, no matter the location,
age, socio-economic circumstances or time zone of the person possessing
the skill. Accounting skills that might only be scarcely available in
the local market at $50 per hour become easily available on the global
market at $5 per hour.
As Deloitte put it:
from across the globe to work in virtual teams. Organisations and
operations in remote or less-populated locations that have historically
found it difficult to attract and retain talent are finding some
reprieve in these workforce-model changes. (page 17)
This option for sourcing skills then directly impacts the traditional
business model of the local supplier (recruitment agency or specialist
firm) and creates some three key cost issues identified in the Deloitte
report as; the cost of goods sold through the supply chain; staff costs;
and administrative overheads.
Deloitte then goes onto to suggest the following three primary responses
leaders can implement, both to minimise threats posed by digital
disruption and, to maximise their organisation’s digital potential:
- Recalibrating cost structures – making changes in terms of
people, supply chain and overheads to better control costs and
compete with digitally-powered, low-cost newcomersReplenishing revenue streams – building new sources of
revenue across segments, geographies and business models as legacy
streams dry up in the wake of digital disruptionReshaping corporate strategies – reconsidering assets, risk
and corporate agility to position the organisation for success in
the increasingly digital world.If you are a leader in any recruitment agency
anywhere in the world I’d be suggesting that if you aren’t looking very
closely at your cost structure, potential new revenue streams and the
risk-return ratio on your assets, then you sure-as-hell should be, right
now because Matt Barrie’s coming to get you.