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What the Merger of Elance and Odesk Means for American Businesses

Elance and odesk merging, read on how this may affect american businesses.

Elance and odesk merging, read on how this may affect american businesses.

There are millions of Americans who are currently unemployed. As depressing as the real unemployment numbers may seem, there is actually a golden thread in this otherwise gloomy employment landscape. You have to remember, over 90 million Americans have completely, in some way or other, dropped out of the work force. They are not looking for work, at least, work that is traditionally defined. As a result, there are huge numbers of people looking for freelance work in the United States and elsewhere. In many countries where there is a lot of underemployment like India and the Philippines, freelancing opportunities have become a staple for English speaking residence of these countries. As you can well imagine, there is going to be a major collision between the unemployed residents of the United States and other high wage countries and the underemployed residents of developing countries when it comes to the freelance space. This is the underlying subtext behind the recent merger of Elance and Odesk. With this combined company, the overall freelance marketplace has effectively consolidated into two camps. There are really only two flavors in the online freelance market and both of these models have to take stack of the reality that there is a collision between high wage countries and lower wage countries in the freelancing space.

The two business models are as follows

What's interesting with the merger of Odesk and Elance is how the balance of high wage freelancers and low wage freelancers will display.

What’s interesting with the merger of Odesk and Elance is how the balance of high wage freelancers and low wage freelancers will display.

On the one hand you have Elance and Odesk that charge a percentage of the total value of the work contracted. In the other camp are websites, like Fiverr, that take 20% regardless of the value of the work. These two business models actually impact the conflict between high wage freelancers and low wage freelancers. The conflict usually involves the fact that minimum wage in the United States is barely enough to house and feed a typical American with typical expenses. However, that minimum wage is more than enough for the typical Indian or Filipino, for example. As a result, many American freelancers are working to distinguish themselves at least on a quality level from lower wage providers. Well, while the impact of these actions remain to be seen, the traditional method of such distinction focus on picking which platform you chose. Lower wage providers would often get a competitive advantage if they pick platforms like Fiverr. Higher wage providers get an edge and tend to stand out when they pick freelancer Elance.com.

So, it remains to be seen how this will all play out. But the reality is, there is a middle way. The middle way is for the high wage freelancer to subcontract certain parts of the overall package they are providing their clients to lower waged providers at Fiverr and other low paying websites. They can then repackage all this work as their own work and charge a much higher rate. Unfortunately, in the drama brewing regarding high wage freelancer and low wage freelancers, this delusion often falls between the cracks and that is quite unfortunate.

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