Carl Esposti Introduces Crowdsourcing

THE INDUSTRY WEBSITE TM

CROWDSOURING AS A STRATEGY FOR ECONOMIC AND SOCIAL

IMPACT IN THE DIGITAL WORLD

28 Jan 2013 Presentation for the Multilateral Investment Fund/Inter-America Development Bank

Carl Esposti, Founder & CEO

© 2013 Crowdsourcing, LLC | [email protected] PAGE 2

INSIGHTS. RESEARCH. ADVISORY. CROWDSOURCING AND CROWDFUNDING STRATEGIES

Industry think tank, massolution specializes in research, design and implementation of crowdsourcing and crowdfunding solutions for private, public, and social enterprises. massolution also operates The Industry Website™ Crowdsourcing.org.

For crowdsourcing, massolution provides research and analysis covering Crowdsourcing Service Providers (CSPs), use cases and the adoption of crowdsourcing by nations, governments, enterprises, and institutions.

For crowdfunding, massolution provides research and analysis covering Crowdfunding models, platforms (CFPs), implementation strategies, entrepreneurs, investors and campaign data and analysis.

massolution’s unique data assets, fact-based research and proprietary intellectual property, drive forward-looking and actionable insights that inform the strategies and operations of business leaders and market stakeholders.


INSIGHTS. RESEARCH. ADVISORY.

Micro-Tasks are short-duration tasks completed by online workers. Micro-Tasks require no specialized knowledge or expertise other than a basic level of comprehension and cognitive judgment.

CROWDSOURCING IS AN ONLINE DISTRIBUTED MODEL FOR

PRODUCTION, PROBLEM SOLVING AND CAPITAL FORMATION.

CROWDSOURCING CATEGORIES

Expertise-based tasks are completed by online workers who are widely recognized as a reliable source of a technique or skill, or are accorded authority and status by their peers, or possess theoretical or practical knowledge of a subject based on a familiarity with someone or something and/or skills acquired through experience or education.

Crowdfunding is a type of capital formation where both funding-needs and funding-purposes are communicated broadly via an open call in a forum where the call can be evaluated by a large group of individuals, the crowdfunders.

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Ideation-based tasks are completed by online workers engaged in the creative process of generating, developing, and communicating new ideas, where an idea is understood as a basic element of thought that can be visual, concrete, or abstract. Ideation is all stages of a thought cycle, from innovation, to development, to actualization.

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FOUR UNDERLYING MODELS FOR ENGAGING THE CROWD

CROWDSOURCING DEFINITION (NEW)

Daren C Brabham, Ph.D. 2010): dbrabham.wordpress.com/crowdsourcing/] Assistant Professor, University of North Carolina at Chapel Hill

Broadcast Search

Distributed Human Intelligence Tasking Managed Asset Discovery

Peer Vetted Creative Process

© 2012 Crowdsourcing, LLC | [email protected] November 2012 PAGE 6


CROWDSOURCING; THE NEXT DISRUPTIVE PARADIGM

OUTSOURCING, OFFSHORING AND CROWDSOURCING

  Reliable and fast technology (broadband and mobile) connecting a potential workforce of 3 billion people who will be online by 2016

  Changes in workforce structure that both enable and demand flexible working patterns driving a shift from “captive labor” to “crowd-based” labor models

  New payment systems and regulatory oversight making the transfer of small payments affordable

  Cloud-based technologies (SaaS, BPaaS, etc.) driving the standardization and externalization of key business activities and processes

  Specialized providers organizing, harnessing and enabling on-demand access to labor and expertise

Enablers:



CROWDSOURCING – THE NEXT DISRUPTIVE PARADIGM

CROWDSOURCING

The outsourcing industry is poised for a disruptive shift that has the potential to be larger than the shifts that drove the outsourcing of work and the distribution of work offshore.

Crowdsourcing is already being leveraged by leading enterprises across many business activities and processes. Starting now, large elements of enterprise models will be moved into crowdsourced models for service delivery will be managed very differently.



Micro Tasks

Defense Advanced Research Projects Agency (DARPA) - Updating machine translation technology by informal language used on social media DARPA was able to translate 1.5MM words in two months, for a cost of around $0.03 per word, one-tenth the cost of using professional translators.

Pennsylvania Department of Revenue - Eliminating the cost and burden of staffing and supervising seasonal workers and improving the accuracy of highly sensitive data and information. Technology to breakdown and distribute sensitive data such as social security numbers and credit card numbers to distribute as unidentifiable packages of work to a crowd which are processed and then re-compiled.

Expertise-based Tasks

Microsoft – Reducing Contingent labor Spend via Enterprise Crowdsourcing - Microsoft was able to achieve a spend reduction across data entry, transcription of audio and video content, translation, data verification and de-duplication, classification and keyword tagging of up to 30% and improved cycle time by up to 200%

Target – Building an on-line product catalogue of 40,000 products - Via traditional methods it would require six years of effort for a single FTE or nine-months dedicated work from the internal content team. Using crowdsourcing to build a team of researchers, editors and content writers, Target was able to complete the task in two months.

Mobiliar – Testing of a Window-based application for pensions and insurance - Crowdtesting was not only more cost effective but does things that companies cannot reproduce in a lab environment,. There were multiple software versions, processors (32 and 64 bit) and 9 languages, including Arabic, Chinese, English, and Russian, resulting in more than 60 different configurations and over 1,000 permutations in just the desktop environment alone.

Ideation-based Tasks

IBM - This multinational computer, technology and IT consulting corporation implemented an ideation platform to power the IBM Data Governance Council online community, providing Council members a means to collaborate and identify solutions on information governance best practices.

Fiat Mio - Brazil’s most popular automotive brand called upon the powers of crowd-sourcing to build a new car. Working with Sao Paulo-based digital agency Agencia Click Isobar, Fiat built a web platform and assembled a group of contributors “that outstripped their expectations.” Fiat‟s website received over 10,000 suggestions from over 160 countries, which were then vetted by the team and presented to Fiat. Suggestions included what people want most from their cars - like size, environmental specifications and entertainment options.

CROWDSOURCING USE CASES



MARKET GROWTH AND REVENUE COMPOSITION BY

SECTOR

Source: Massolution

ENTERPRISE CROWDSOURCING MARKET COMPOSITION

Detailed analysis of crowdsourcing revenues by size of enterprise reveals that the adoption pattern varies for each category of crowdsourcing.

Expertise-based crowdsourcing is the most diversified in terms of target client segments, it exhibits almost equal share of every segment.

Ideation is focused primarily on large and medium size enterprise

clients that have matured to the point that they are looking to innovate and engage constituents in the process of product and service development. They are also using crowdsourcing to create meaningful engagement with customers.

The utilization of crowdsourcing in the form of Micro-tasks are heavily utilized by medium size enterprises companies often experiencing high-growth.

THE ADOPTION OF CROWDSOURCING VARIES

BY SIZE OF ENTERPRISE

Source: massolution Crowdsourcing Industry Report – Enterprise Crowdsourcing: Market, Provider and Worker Trends. http://crowdsourcing.org/l/8346

EXPERTISE-BASED

IDEATION MICRO- TASKS

24% 20%

81%

53% 31%

25%

30%

15%

13% 21%

35%

40%

3%

5%

23% 40% 10% 2%

30%

Start-ups & small businesses (<$10M in Revenues)

Small enterprise ($10M - $100M in Revenues)

Medium enterprise ($100M - $1B in Revenues)

Large enterprise (>$1B in Revenues)

Crowdsourcing Industry revenue growth 2009-11



151.3% 133.1%

90.6% 88.5% 67.0%

1.34 3.10

6.29

2009 2010 2011

Total number of crowdsourcing workers continues growing explosively, in most cases due to new companies entering the market. After posting an impressive 131% increase in 2010 over 2009, the industry continued signing up new workers at a pace of 103% growth in 2011 over 2010.

The fastest growing areas of the crowdsourcing workforce are Software services and Micro-tasks, which posted 151% and 133% growth respectively in 2011 over 2010 numbers.

NUMBER OF CROWDSOURCING WORKERS GROWS FAST, PRIMARILY

IN SOFTWARE SERVICES AND MICRO-TASKS

WORKER TRENDS AND COMPOSITION

Total number of crowdsourcing workers 2009-2011 Number of workers, based on a sample of 26 CSPs

Source: Crowdsourcing.org, 2011

Growth in the total number of crowdsourcing workers in 2010-2011 by crowdsourcing category

Number of workers, based on 26 providers sample

EXPERTISE-BASED

SOFTWARE SERVICES

IDEATION MICRO-TASKS FREELANCE

103%

165%



Overall average salaries of crowdsourcing workers across all categories of crowdsourcing show clear alignment with global labor arbitrage with Western Europe leading at $15.8 per hour, closely followed by the US, with India trailing at $7.2 per hour1.

Typical salary of a crowdsourcing worker is dependent on multiple factors, including skills, crowdsourcing category and type of work performed. For example Micro-task workers earn ~50% less than an average worker in every geography and some workers earn as little as $1.50 per hour.

SALARIES OF CROWDSOURCING WORKERS REFLECT GLOBAL LABOR

ARBITRAGE



Average worker salary per geographical location1

$US per hour

15.8 15.2 13.5

9.0 7.2

WESTERN EUROPE

U.S. EASTERN EUROPE

CHINA INDIA

Average worker salary per location for Micro-Task category only $US per hour

10.2 10.6 8.6

5.2 4.1

WESTERN EUROPE

U.S. EASTERN EUROPE

CHINA INDIA

Notes: 1  Data excludes Ideation category where salary of

workers varies dramatically, based on the specific nature of work.

2  The Eastern European salaries are higher on average as a result of the faster adoption of crowdsourcing in the higher income Central European countries (e.g., Poland, Czech Republic), rather than in their lower income Eastern European counterparts (e.g., Ukraine)

2

2



TARGET SALARIES OF CROWDSOURCING WORKERS VARY

SIGNIFICANTLY



Depending on type of work, number of hours and the workers’ efficiency in performing the work, crowdsourcing workers can earn a broad range of salaries. For example, the top five workers by total earnings, earn on average from $500 per month on Micro-task platforms to an average of more than $8,000 per month on Expertise-based and Software services platforms.

This illustrates clearly one of the most fundamental characteristics of crowdsourcing from the workers’ point of view: flexibility.

Monthly earnings of top five workers by crowdsourcing category $US per month

500

4105

8300

MINIMUM AVERAGE MAXIMUM

Micro-tasks Expertise & Software-based services



THE EVOLUTION OF WORK INTO THE CROWD

MARKET EVOLUTION

OUTSOURCING GLOBALIZATION CLOUD CROWD

Technology

Scope

Pricing Model

Benefits

Savings

IT Infrastructure Applications

Horizontal BPO Vertical BPO

Remote Infrastructure/Applications Support

BPO Specialties (e.g., CRM / F&A)

SaaS BPaaS

Platform BPO

> 68 Use Cases and growing

Sophistication systems monitoring, reporting and

governance tools

Separation of systems from people (e.g., RIM / ERP

Integration)

Highly scalable cloud-based technologies Workflow, adjudication and

worker management

Input Based evolving to output based

FTE/Staff Augmentation evolving to deliverable based (sometimes with performance incentives)

On-demand and usage based

Can reach full variability and up to 100%

performance based

Accountability Flexibility a Myth

Accountability at lower cost Flexibility still a Myth

Scalability and improved efficiency and speed

Changes the paradigm for existing and new scope

15%-20% ( up to ~30% for

transformational OS)

30%-40% (driven by labor arbitrage) ~30%50% ~30%-90%

Processes Defined and

selectively retained and sourced

Improved with shifting end-to-end accountability

Standardized and externalized Further optimized

Crowdsourcing.org: Crowdsourcing and Crowdfunding Resources

ABOUT MASSOLUTION

Industry think tank, massolution specializes in research, design and implementation of crowdsourcing and crowdfunding solutions for private, public, and social enterprises. massolution also operates The Industry Website™ Crowdsourcing.org.

For crowdsourcing, massolution provides research and analysis covering Crowdsourcing Service Providers (CSPs), use cases and the adoption of crowdsourcing by enterprises.

For crowdfunding, massolution provides research and analysis covering Crowdfunding Platforms (CFPs), enterprise implementations, entrepreneur, investor and campaign data and analysis.

Crowdsourcing Inc.

Carl Esposti, Founder and CEO +1 310.948.1258

Email: [email protected] www.massolution.com

Twitter: @Crowdsourcing_ www.crowdsourcing.org

massolution’s unique data assets, fact-based research and proprietary intellectual property, drive forward-looking and actionable insights that inform the strategies and operations of business leaders and market stakeholders.

Carl Esposti Introduces Crowdsourcing

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