Virtual Workforce, A Growing Part of the New Normal?

I was talking to the team from DoNanza the other day about their launch, business model, etc. (more on them below) and it reminded me of one of the top 10 predictions we did for this year around virtual workforce. I had intended to expand on the topic more at some point but I guess that point didn’t come until now. The actual prediction, “In response to a productivity spike, VARs, SIs and ISVs will turn in force to contracting (virtual staffing) and partnering. Vendor programs will adapt to support these new models” was focused on software partners but in our discussions around the prediction we all thought that the trend was bigger than that small focused area. In fact I think that the trend to virtual workforce is showing up across all industries today and is gaining momentum.”

First what do I mean by virtual workforce? A virtual workforce consist of any worker who is not a direct employee and carries out some paid activities for the company, which would include temporary workers as well as contract employees (tracked on a 1099 versus W-2 in the US). Virtual working relationships have become quite common over the last few years, and seems to be moving beyond tech, where it has been fairly common for years.

The economy and the loss of so many jobs over the last two+ years, millions of jobs worldwide and unemployment rate in the US of around 9.5% (or something like 14M unemployed) has created much uncertainty and businesses are reluctant to add headcount that they might not be able to afford. This is one factor in the rise in numbers of virtual workers, but I think there are a few other factors that are feeding this growth as well. One is choice, some unemployed workers established independent businesses, mostly consulting or service related and have realized that the lifestyle suits them better than their old employment relationships. Created out of necessity they continue out of choice. Employers are also looking for creative ways to reduce costs and risks. This contract employment model is a great way to add talent and minimize risk. This model is especially attractive in software development and has gained momentum over the last 2-3 years. From a business model perspectiv,e I have worked with and observed several start ups contract their entire product development process to independents, keeping only a few senior level architects on staff. This model fits well with professional services and value added resellers (VAR’s) as well, creating a virtual bench of talent to use as needed.

Around this growth of virtual workers the need to manage the process of finding, managing, monitoring, paying, etc. these virtual workers has spawned a new type of online recruiting business. I wrote two years ago about one of those, oDesk. DoNanza is another business that is focused on this process of building and maintaining a virtual workforce. Their approach is a bit different and unique to the other vendors I have looked at recently. DoNanza is a marketplace for virtual workers to search across multiple virtual work services in a single web destination. You could think of them as a “Google” style search engine for virtual work focused on aggregating freelance jobs that can be done from home. As a freelancer you can search one site versus 5 or 6 to see what’s available and use DoNanza’s search tools to hone the search to your specific criteria. With 10 or 1000’s of projects listed, they span a wide range of opportunities and add about 4000 new ones each day. They are targeting around 600 sites as data sources and add most data by scraping. Active on Twitter, the DoNanza folks tweet out new projects under a series of handles @dnzXXX (dnzwriting, dnzPHP, dnzSEO, etc.). If you’re looking for freelance work DoNanza is a must use tool.