Can Crowdsourcing kill Outsourcing?

March 1, 2009

You know about outsourcing and how companies send work to countries like India, China, Philippians, Russia, etc. Now companies started considering crowdsourcing in which they try to find solutions for everyday business problems from the collective knowledge of the crowd at large, the labor can be found anywhere in the world not associated with a company. Just like how the technology like high speed Internet connection and WWW helped the outsourcing boom in 90’s and created a Flat-World, now it is helping the creation of crowdsourcing phenomena.

Types of Crowdsourcing
The concept of crowdsourcing is not new, for example, Open Source Software is a type of crowdsourcing, and it has been around for several years and created several new and innovative software like Apache, Jboss, Linux, etc. User generated content like Wikipedia, YouTube, blogs, social bookmarking, Yahoo Answers, Amazon Mechanical Turk, etc., are all examples of crowdsourcing. Typically in this type of crowdsourcing, contributors are not paid for their work. They contribute because they like  the work and most of them do it on their leisure time. Of course indirectly their contribution may help to get recognition in online community which they may use it for their career development.

The other type of crowdsorucing exist in which the contributors will get paid for their work. Online marketplace sites like Elance, Odesk, Guru, ScriptLance, 99Designs, Innocentive, etc, falls into this category. In these sites buyers post their projects, providers bid for the projects, buyer select one or more providers to perform the projects, and once the project is completed providers will get paid from buyers.

Yet another type of crowdsourcing comes in the form of Software As A Service, SASS, companies like uTest are using the global crowd to test software applications that are hosted in their servers. Similarly Bzzagent is using global community for Word Of Mouth (WOM) marketing.

Crowdsourcing vs Outsourcing
From high level both crowdsourcing and outsourcing may look similar, but there are several differences exist between these two:

Typically crowdsourcing is performed by the workers not associated with a company, outsourcing is performed by employees of an outsourcing company.

The main challenge in crowdsourcing is splitting the work into smaller units to crowdsource it and then assemble the result. Complex projects are not suitable for crowdsourcing.  With onshore and offshore model any complex projects either big for small can be outsourced to outsource vendors to perform from any where in the world.


Though the quality of the work in crowdsourcing is high, it is not guaranteed. For example Elance has several thousand providers, who can perform work for you, but in the middle if anything goes wrong then you have to find a different provider. Of course this is true for outsourcing vendors, but compared to crowdsorucing failure rate is less in outsourcing.

Generally there is no contract involved in crowdsourcing and even if there is a contract it is difficult to enforce it  but in outsourcing contract Service Level Agreement, SLA is enforceable across the countries.

Crowdsourcing is cheaper than outsourcing, though outsourcing is cheaper than doing it yourself it costlier than crowdsourcing. But in outsourcing you are dealing with a company and they will charge all the expenses in their billing rate to you. In crowdsourcing mostely the work is performed by general public and it is cheaper than the price charged by the outsource vendors

Future of Outsourcing
Coming back to our question Can crowdsourcing kill Outsourcing?

The answer is big “NO”. As I described earlier, crowdsourcing is good for certain types of work. For example take Wikipedia, which is equivalent to Encyclopedia but the difference is entire Wikipedia is assembled by people around the world. Different people have different expertise and based on their skills with the help of Computer and Internet connectivity they can produce “Content”. The “Content” is read and corrected by all the people around the world. So the quality of Wikipedia is improving 24/7. In fact scientific journal Nature compared 42 entries in Wikipedia with Encyclopedia and concluded Wikipedia as 3.9 errors vs 2.9 errors in Encyclopedia. The main reason is more than 50, 000 registered users of Wikipedia constantly improving the quality of the content.  Projects like these are great for crowdsourcing.

Say you want to outsource your call center, can you use crowdsourcing? No, you need an outsource vendor who has the infrastructure, domain expertise, business knowledge etc to handle the calls and work with you on continuous basis to support your business. Like this I can give numerous examples that cannot be performed by crowdsourcing.

See the Open Source software like Linux, MySQL, Firefox, does it killed all the commercial software like Windows, Mac OS, Oralce, UDB, Internet Explorer, etc. The open source definitively made a huge impact on commercial software market and the commercial vendors like IBM (Eclipse), Sun (GlassFish), Oralce strategically adopted the open source model into their portfolio of commercial products and winning customers.

Like software vendors if push comes to shove outsource vendors will adopt crowdsourcing and will thrive in the future.


7 Responses to “Can Crowdsourcing kill Outsourcing?”

  1. Idea Cloud, Crowdsourcing and Product Development 11 March 09 | mobileYouth - youth marketing mobile culture research on March 11th, 2009 4:45 am

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  7. Tatiana on May 13th, 2010 8:03 am

    Hi Mani,

    Thank you so much for such a good and informative article.

    Another great crowdsourcing example is , an automated Global Consulting and Innovation Think Tank.
    Hundreds of well-credentialed consultants and accomplished innovators from around the world and across all required expertise categories simultaneously collaborate with each other and contribute their best ideas, advice and solutions to your problems. Or give you constructive and honest feedback plus access to the sharpest brainstorming partners. And if need be we’ll find you solutions for fair conflict resolution.

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