The Difference Between Online Freelancer Marketplaces and Freelancer Management Systems


As a recent McKinsey report convincingly documented, the world has entered a digital age in which work arrangements are becoming increasingly intermediated by information and communications technology. Long gone are the days of newspaper ads and faxing resumes. Even job boards, which allowed forlorn hirers and workers to find one another through digitized resumes and keyword searches, are starting to seem like columbaria. Today hundreds of online platforms, which Spend Matters calls work intermediation platforms (WIPs), support 100% technology-enabled, end-to-end work arrangements – effectively source-to-pay (S2P) solutions.

Free Research: A how-to guide to improving your services procurement and contingent workforce program

These new technology-enabled ways of arranging work have created enormous new opportunities, McKinsey suggests. But they also bring new problems, as witnessed in the past several months in a cluster of lawsuits involving Uber, Instacart, Shyp and others. Now public policy discussions are raging about whether platform-engaged workers should be classified as independent contractors or employees. (But this is a subject for another post.)

The other issue is technology-driven changes can also lead to the creation and use of new terms. Mix that with marketing and media hype, and the meaning of such terms can become confused – something not helpful to professionals trying to understand these new developments.

I have noted over the past several months pervasive confusion in the usage of 2 terms that really mean 2 different things: online freelancer marketplace (OFM) and freelancer management system (FMS). The differences are important, so I’d like to set the record straight.

The Open Market

An online freelancer marketplace is an online platform where someone who needs work to be done can find someone to do and complete the work arrangement through to payment. Workers, on the other hand, leverage the platform to find offers for work they can perform and then enter into a work arrangement, complete the work and get paid.

Marketplaces are exchanges where a virtually unlimited number of people and different businesses needing work performed can interact and transact with a virtually unlimited number of people who are seeking to perform work. Examples of online freelancer marketplaces include Upwork,, Guru, HourlyNerd, PeoplePerHour and Fiverr.

It should be noted that a freelancer marketplace can be relatively free, meaning they provide information transparency, let the potential buyers and sellers interact and let the market work uninterrupted. But some marketplaces are, to lesser or greater degree, regulated by the platform owner.

For example, data and algorithms may be used to determine which workers should be more visible than others or even which should be assigned to a limited set of options the buyer may choose from. (Task Rabbit and Gigwalk's Crowdsourcing offering are 2 examples.) All the same, these are online freelancer marketplaces – it’s just that some marketplaces are regulated.

The Technology Solution

A freelancer management system is a different animal altogether. An FMS is a specific technology solution offering provisioned, via a multi-tenant software platform, to individual enterprises.

Each individual enterprise’s business users – hiring managers – can directly source, manage the engagement of and pay non-employee workers, who have been sourced into a private talent pool hosted on the FMS. To be included in the enterprise’s talent pool, these workers must be qualified in different ways, by skills vetting, background checking, on-platform performance ratings and other criteria established by the enterprise. Solution providers that routinely represent themselves as FMSs include Field Nation, MBO Partners, OnForce, Work Market and Upwork. (Note: Upwork has a very large online freelancer marketplace business as well as an FMS offering called Upwork Enterprise, and Gigwalk also introduced an Enterprise offering in the last year.)

Further information on FMS can found in a recent Spend Matters article on the subject.

New technology applications can stir up a lot of dust. This is certainly true of those making their entrance into the world of work, in particular the world of the contingent workforce. The distinction between online freelancer marketplaces and freelancer management systems is a crucial one – and one that is very often misunderstood. With the record set straight here, I can now move on to untangle other conundrums in the new, fast-developing digital work platform space.

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