Online Labour Platforms – A Growing Category for Procurement

A multidisciplinary research and teaching department of the University of Oxford, the Oxford Internet Institute, is dedicated to the social science of the Internet. It conducts research into individual and collective behaviour online to understand social, economic and political issues through analysing digital connections.

One of its areas of focus is the use of online labour platforms, where temporary work is bought and sold digitally, by occupation and by region. The contingent labour market is a category of which our US colleague, Andrew Karpie, has deep knowledge. As our dedicated research analyst for services and labour, he predicted in 2015 that the ecosystem of work intermediation platforms, or WIPs, and the online freelance marketplace, was in transition and growing. It was an estimated $10 billion industry, which when including temporary workers not on those platforms, rises to $100 billion. He anticipates a trend that is moving towards work as a service (WAS) which is based on the increasing availability of independent workers. Different categories for this type of work have developed, not just in effect for hiring part-time workers but procuring and consuming work as services through online freelance marketplaces, crowdsourcing platforms and other kinds of work intermediation platforms.

The Oxford Internet Institute recently highlighted a sharp rise in its Online Labour Index, which “measures the utilization of online labor across countries and occupations by tracking the number of projects and tasks in real time,” and Andrew has begun a series of posts following the trends. Most recently he analyses the online gig economy is up 26% over last year, but notes that the aggregate global spend on these platforms is still small (probably less than $5 billion, compared with the total global staffing industry spend of about $400 billion). However, Staffing Industry Analysts has reported that spend in a similarly defined online work category increased 20% in 2016, while total global staffing industry growth was in the low single digits. Quite a comparison.

So we took a look at the Online Labour Index to see how the international division of digital gig work is disseminated. Different countries bring different skills to the market. For instance, it says, “the top occupational category in the United States is writing and translation, while in the Indian subcontinent it is software development and technology. Europe’s various regions focus on different specialisms.” The largest overall supplier of online labour according to the data is the traditional outsourcing destination India, which is home to 24% of the workers observed. Next is Bangladesh (16%) and the United States (12 %). Then each specialises in certain types of work.

Europe’s regions show a distinct geographic skill pattern. In Latin Europe the leading online work category is writing and translation, while North Europe provides creative and multimedia work as well as sales and marketing support. Large Eastern European countries are strongest in software development and technology, which is consistent with the fact that they are also significant destinations for traditional technology outsourcing. The professional services category, which consists of services such as accounting, legal services, and business consulting, is led by UK-based workers with a 22% market share.

The overall online gig economy grew 26% over the past year, it reports, so where is the growth coming from?  The site assesses the data saying that while the US (understandably as the majority of platforms are based there) has the position of dominant employer (although its market share has dropped from 52% to 46% indicating the rest of world is catching up) the ‘fastest growth’ came from Europe. But – it says – excluding UK. We wonder why – maybe this means that the rest of Europe is growing more rapidly than the UK which already has seen more rapid uptake than some other European countries. Since the site states that after the US a smaller market share is owned by “the United Kingdom (6.3%), India (5.9%), Australia (5.7%) and Canada (5%). The largest European country besides the UK is Germany. Non-UK European employers together account for approximately 10% of the market, so that Europe’s total market share is about 16%.”

Our resident expert offers that the ‘growth’ rates are probably closer to equal than very different. He noticed that the Index peaked at the end of May, for example, showing UK growth exceeding the rest of Europe. As well as this he found it interesting that the UK actually dwarfed some other European countries, like Germany, France, Spain, Italy, implying that adoption of online work in the UK over the years has far exceeded that of other EU countries.  Possibly down to more liberal attitudes about change, economics and labour.

It’s an interesting trend and one that is easily followed by consulting the Online Labour Index. “The iLabour Index is an important new measure of the growth in this category of online work,” states Andrew, “... In effect, online/remote, digital platform-intermediated work will likely have a future, based on the observed trends and the inherent logic and benefits of the model. Over time, it will become more mainstream in the enterprise and could very well be the next challenge (or opportunity) beyond SOW for procurement over the next few years.” You can read his full insight here.

 

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