The Contingent Workforce and Services (CW/S) Insider’s Hot List: April 2019

Welcome to the April 2019 edition of Spend Matters Insider’s Hot List, a monthly look at the contingent workforce and services (CW/S) space that’s available to PLUS and PRO subscribers. For those new to the Hot List, each edition covers the prior month’s important or interesting technology and innovation developments in the CW/S space.

In last month’s Hot List, we examined some noteworthy developments, including a VMS upstart’s Series A funding round as well as one instance of an online freelance marketplace adapting and acquiring to grow and create more value for enterprise customers. We also covered a key merger in the supplier risk management space and the contingent workforce sourcing and management element quietly sitting inside. Lastly, we also brought to light a specialized online marketplace for some 15,000 oil and gas contractors that had raised a $60 million Series C round earlier this year.

In March, a warming trend continued throughout the industry — and particularly in the work intermediation platform space, with new M&A, innovation and solutions appearing and one major player not paying attention and stepping in something (I hate when that happens).

Figure Eight Gets Acquired: Who? When? What ‘Appen’ed

The Australian-based crowd-platform provider Appen announced its acquisition of San Francisco-based Figure Eight (formerly Crowdflower), another platform player in the same line of business. If you’ve never heard of Appen, that could be because you did not read the December 2018 Hot List, which covered the company in some detail.

We noted that Appen is “a global company and leader in high-quality, human-annotated datasets for machine learning and artificial intelligence.” Appen has two business lines: a Language Resources Division that provides datasets (audio, text, image and video) for training AI-based speech recognition engines, and a much larger and faster growing Content Relevance Division that helps clients train AI-driven products (mainly search engines) via human evaluation and feedback. The work is performed, the company states, by 1 million-plus on-demand, online, micro-task crowdworkers covering more than 130 countries and 180 languages.

Appen has said that it provides its training data annotation services to three of the largest tech companies in the world. And we have strong reason to believe that all three are located in the San Francisco Bay Area (so we can probably wager a pretty good guess as to which companies they are).

In February, Appen posted FY 2018 revenue of AUD 364.3 million (U.S. $260.9 million) and underlying EBITDA of $51.1 million. Shortly after the report, the company (which is traded on the Australian stock exchange) had a market cap of $1.75 billion.

In late February, Appen issued 13 million new shares to raise $205 million to fund the acquisition of Figure Eight. TechCrunch described an “all-cash deal that sees Appen paying $175 million upfront, with an additional payment of up to $125 million based on Figure Eight’s performance this year.”

Appen, which acquired U.S.-based Leapfrog in 2017, said the new acquisition “combines the scale, quality and language expertise of Appen’s leading global crowd with Figure Eight’s innovative data annotation platform to create a unique, end-to-end training data offering.”

Appen is often compared to Lionbridge, a one-time traditional translation LSP (language services provider) that delisted from the Nasdaq in 2017 and has been shifting its focus to the same market Appen is addressing. A January article in Slator said, with respect to Lionbridge, that “from an operational point of view, offering machine intelligence support and data training services is a logical step for a large LSP as it plays to existing strengths in managing, scheduling and paying thousands of individual contractors.”

There are probably many morals to this story. But one important one that applies in the contingent workforce space (that is changing in so many ways, including the role of platforms of various kinds) is this. One should start to assume that the crucial developments in the space might not be happening under our noses, rather often in the places we are not looking.

Topcoder Crowd Platform Continues to Expand

On March 20, Topcoder, the crowdsourcing unit of IT outsourcing giant Wipro, announced that “its on-demand, crowdsourced quality as a service (QaaS) offering has powered a three-fold surge in speed, a two-fold increase in the regular work volume, and five-times the risk coverage for 60 client organizations, as compared to those enabled by traditional quality assurance and testing methods.” The press release states that “QaaS is an innovative, on-demand crowdsourced software testing and quality assurance (QA) delivery model that combines Topcoder’s 1.4 million-member community with Wipro’s QA expertise.”

According to the company’s website, Topcoder emerged in 2001 as “a transparent rating system for developers” and eventually started “producing customer deliverables through crowdsourced development challenges.” When Wipro acquired it (as a part of Appirio) in 2016, Topcoder was essentially a software coding crowd (contest/challenge) platform by companies for the development of software applications and algorithms.

Since 2016, Topcoder has apparently been thriving and has expanded offerings on its platform as well as the number of clients, many of which are large enterprise clients (such as IBM, Honeywell, ebay, United Technologies, GE, et al). Additional offerings include subscription-based Enterprise Programs, including Digital Factory, Innovation Programs, Hybrid Crowd and Analytics/Data Science.

In February, CEO Mike Morris officially announced the launch of Topcoder TaaS (talent as a service) in his “2019 State of the Community” proclamation. Morris said “TaaS offers the benefits of crowdsourcing with the ease of contractor procurement — and delivers outcomes rather than hours.” He noted that there was an increasing demand from customers to supplement their workforce with the crowd, rather than hiring FTEs and work with specific members 1:1. He said “TaaS provides a measurable process for working in a task-based model that gives more (crowd community) members the opportunity to increase earnings and work on larger streams of work with a virtual community team.” And it “gives customers a way to work with members that need specific credentials, licenses, certifications, skill sets, etc.

Morris was also quoted as saying: “Topcoder has been built on a triumvirate of the 3Ds: Design, Development and Data Science. Look this year for Topcoder to add an additional focus on Quality Assurance work. We refer to this as quality as a service (QaaS) and, as it turns out, we’re really good at it! Quality has always been integrated across the 3Ds, and it’ll be a foundation principle for QA in 2019.”

That brings us back to Topcoder QaaS, which according to the recent press release, includes:

• Real World Testing
• Performance Testing
• Mobility Testing
• Automated Testing
• Salesforce Testing

In the press release, Topcoder’s Morris said: “Our quality-as-a-service offering is unique: It’s a scalable, on-demand way for companies to quickly integrate the highest quality testing and QA competencies from a global community of elite engineers and developers, as needed, into any aspect of the software development lifecycle.”

While Topcoder QaaS may be unique (something to be determined), the market for platform-based testing is rapidly expanding. The press release notes research findings estimating that “by 2022, automated and crowdsourced security testing platform products and services will be employed by over 50% of enterprises, up from less than 5% in 2018.” Indeed, platform-based QA of various kinds is now provided by a broad range of growing companies, including:

• QA InfoTech
• Applause
• Test Yantra
• Revolution IT
• Crowdsprint
• Flatworld Solutions
• QualiTest
• Infosys
• Capita ITPS
• Accenture
• Bugs Detective
• Outsource2india
• BugFinders
• QA Mentor
• qa on request
• Crowd4Test
• Global App Testing
• Rainforest QA
• Ubertesters
• TechArcis
• Qualitrix

That’s a long list that did not exist 10 years ago, and there is probably an equally long list of crowd challenge/contest platforms for software and algorithm coding and data science today.

In any event, Topcoder appears to be thriving and expanding within Wipro and in a growing market. For more on this subject see our 2018 briefings: What You Don’t Know Can’t Help You: Why Crowdsourcing Is Alive Growing and Crowdsourcing: New Trends and Developments (Part 1) and (Part 2)

Freelancer.com Gets A Sweet Gig With Arrow Electronics

What do online freelance platform Freelancer.com and Arrow Electronics, a $30 billion electronics distribution and engineering services company founded in 1935, have in common? Apart from an innovative streak, it’s probably the gig economy.

In a March press release titled “Freelancer.com Launch World’s Largest Electronics & Electrical Engineering Services Marketplace, Revolutionizing How Hardware Products Get Designed & Manufactured.” It announced the launch of ArrowPlus, powered by Freelancer.com, as a new platform that “allows Fortune 500 companies and innovative technology creators to design and build hardware products through access to over half a million skilled electronic and electrical engineers.”

In this jointly delivered service offering, Freelancer.com will be providing its online platform technology and its online platform management expertise, while Arrow will bring its large, global, proprietary network of certified third-party engineering partners to enable “companies and innovative technology creators to design and build hardware products.” According to the press release, “businesses that need technology help from concept to scale can leverage ArrowPlus powered by Freelancer to find highly qualified experts, utilize Arrow technology concierge services that ensure project success, and go to market faster and more cost-effectively.”

Arrow said it had built a proprietary Certified Engineering network that has been “a key differentiator in helping Arrow customers win with technology.” And ArrowPlus is “designed to solve sophisticated technology problems spanning consumer electronics, transportation, healthcare, industrial, internet of things (IoT), telecommunications, biomedical, cloud security, firmware, hardware and connected products in every industry.”

“ArrowPlus powered by Freelancer.com,” the press release notes, provides clients with a full lifecycle solution for hardware product development through a range of platform capabilities and available services including:

• Ideation & prototyping
• Analog & digital design
• Printed circuit board design
• Bill of materials (BOM) part selection
• Custom requirements to product delivery
• Component consolidation and cost reduction
• Redesign for smaller size
• Documentation & translation
• Development of firmware, drivers and middleware
• Real-time embedded software development
• Integrated circuit design
• Manufacturing

The ArrowPlus webpage refers to “ArrowPlus: Engineers On-Demand” and promises that clients using “ArrowPlus powered by Freelancer.com” will be able to “post a technology project or task and get matched with an expert engineer within 24 hours.” The webpage also promises clients:

• Protected Intellectual Property (IP): All engineers must sign non-disclosure agreements (NDAs) with your team and Arrow before they can see any private details of your project. Your IP, ideas and designs are protected.
• Arrow Pre-Vetted Engineers: Now you have access to our trusted community of knowledgeable and experienced engineers.
• Arrow Assigns a Project Manager: Every project gets an Arrow Technology Concierge who ensures your project success from finding the right talent to execute the work.
• More Features Coming Soon: Idea to Bill-of-Materials (BOM) Generator, Custom NDAs, Competitive Bidding by Engineers for Jobs, Arrow Credit and Terms, Dedicated Technology Concierge, BOM Manufacturability Scan and Grading

The aim of the new partnership is big. The press release states that ArrowPlus powered by Freelancer.com will “transform the way products will be designed, manufactured and delivered to market.” “On-demand engineering from ArrowPlus and Freelancer,” it continues, “will catalyze a step change in research and development, cutting times from years to months through access to a global network of highly diverse technical skills and reduce cost to market.”

This whole concept is interesting and important at a number of levels: The idea of a partnership that allows a very large organization to leverage an online platform to further serve clients and increase the utilization its own vetted network of experts by slotting them into gigs is at the very least novel. And for Freelancer.com — that has long labored as an online freelancer marketplace and crowdsourcing business based on a population of workers it has integrated — this represents a novel go-to-market strategy that has likely not been implemented elsewhere on any remotely similar scale.

It is certainly another example that demonstrates the power and flexibility of digital platforms in the evolving world of work and services, and it should give us pause to think about the unimagined, innovative use cases that may lie ahead.

EY launches the GigNow platform in Romania!

That’s right, we said Romania. But that really means EY’s GigNow platform is just now getting to one of the EU’s fastest growing economies — Romania — reports the Business Review (that touts the tag line, “Where Romania Talks Business”). EY’s GigNow is the story of how a Big 4 professional services company that operates globally can leverage a platform (in this case, presumably “home grown”) to extend, augment and blend its workforce of experts, provide additional services to clients and garner additional revenues.

According to the March article, “The GigNow Platform is open to anyone interested in working on projects developed by EY or its customers either in the project country or at a distance, having the opportunity to contract a project, to cover a specific competence or to join the company in a period of seasonal increase in workload. The duration of projects may vary from 3 to 12 months, with the possibility of hiring an independent specialist for a longer period.”

According to the EY GigNow website, Romania is the 11th country in which the platform has opened for business, following (in alphabetical order): Australia, Canada, China, India, Ireland, Netherlands, New Zealand, Singapore, the United States and the United Kingdom. The website also states that the multi-country platform posts 400+ positions daily. Projects average a six-month duration, and clients are said to experience 60% faster on-boarding relative to incumbent models.

EY first publicly discussed GigNow late in 2017, when it announced “a series of new global talent programs designed to prepare its workforce and its business for the future of work.” The purpose of GigNow was “to tap into the gig economy and people seeking more flexibility or short-term assignments.” The press release also stated that EY developed GigNow as what it calls “an advanced technology platform that sources and matches qualified contractors with projects at EY and on-boards them quickly.”

Nancy Altobello, EY Global Vice Chair of Talent, was quoted as saying: “Building a workforce for the future means recognizing that the employer and employee model itself is changing; people are looking for more flexibility in the workplace and the pool of contractor workers around the world continues to expand.”

According to the press release, “the number of people working as contractors on short-term assignments at EY is expected to grow significantly over the next several years to supplement EY teams.” Jeff Wong, EY Global Chief Innovation Officer, was quoted as saying: “The trend of contract professionals demanding more flexibility to support new types of career paths is upending the way we find and engage talent. At EY, we see this as a strategic imperative to transform the way we attract the best talent for short-term assignments, especially during bursts of business activity. The launch of GigNow enables us to systematically engage the right talent for the right opportunities at the right time.”

It turns out that EY is not the only large consulting firm to take this approach.

PwC’s Talent Exchange and Deloitte’s Open Talent Community are two examples that emerged in 2016.

So EY appears to be playing catch-up. But it also indicates the increasing trend for professional services firm and other firms (like Arrow Electronics) to leverage platforms as a way to adjust to changing or entirely new clients and the realities of the modern workforce. To learn more about this phenomenon and where it is headed, check out our research briefing titled Technology, Platforms, Disruption and the Transformation of the Consulting Industry.

Will Nodal Labs Be the Blockchain Disrupter?

It’s been a big several weeks for London-based Nodal Labs, which calls itself “the world’s first blockchain-powered freelance marketplace.” Included in a flurry of announcements — preceding a prospective “new launch” this spring — was news of a Series A funding round, the signing of a major UK recruiting firm as a client and the hiring of a well-known PR agency. Whether Nodal is precisely the first of its kind may be splitting hairs. But it was, back in 2017, certainly one of the first, and it may now be the first to have gotten so far.

Nodal describes itself as “a fully automated talent platform that aims to dramatically reduce the amount of time and money spent on recruitment, on-boarding, payroll and management for both freelancers and employers.”

The company says that the Nodal platform “uses a custom-built blockchain to record and verify all transactions. Using blockchain, the platform will seamlessly automate timesheets, the on-boarding of freelancers and compliance, while guaranteeing that the skills and experience quoted matches those of the candidate — with data kept securely on a decentralised ledger.”

On Feb. 12, PR Week reported that Nodal had awarded a £500k (US $650,000) contract to M&C Saatchi Public Relations. According to the report, “the agency has been hired in a long-term retained capacity in the UK for support across media relations, events, social and community management, and content and website development. It will also provide strategic counsel ahead of a planned ICO, which is a form of public flotation involving the issuing of cryptocurrency coins as tokens.”

On March 13, Nodal announced a £250m (US $330 million) five-year partnership deal with Minstrell Recruitment. According to the announcement, Minstrell is one of the UK’s leading recruitment companies specializing the provisioning of temporary and permanent employees across the construction, facility management and building services sectors. Minstrell, it is noted, it will use “Nodal’s fully automated talent platform to expedite the recruitment and employee on-boarding process for some of the company’s biggest clients.”

On March 15, Nodal announced its Series A round of an undisclosed amount funded by ABH Management LLP. According to the announcement, the funds will be used “for the further development of its platform — with an official launch in spring 2019 — as well as expanding the organisation’s mergers and acquisitions strategy.”

Based on PR Week’s report, it sounds like the Series A provides funding to get the company ready for an ICO (initial coin offering), unless it turns out that Nodal has decided to go down a traditional private equity funding path instead of an ICO. It is noteworthy that the Series A announcement made no mention of an ICO (including a typical pre-ICO “white paper”), but did speak to funding platform development and M&A activities. This may very well be the case, given the uncertainty around cryptocurrencies. And it may be a very positive sign.

Nodal seems to have ticked off some of the boxes that other ICO-funded blockchain-based freelancer platforms have not: a traditional Series A round, a sizeable client that is a traditional recruitment firm (interesting in itself for a number of reasons) and, lastly, significant dollars being spent on a mainstream PR firm. It will be interesting to see if Nodal will be not just “world’s first blockchain-powered freelance marketplace,” but also the world’s first blockchain-powered freelance marketplace to enter the mainstream.

Contently Arouses Its Freelancers Discontent

On Contently’s website Overview page, the online freelancer content and marketing platform bills itself as “The Industry’s Smartest Content Company.” But, as we shall see, even the best and the brightest make mistakes.

According to Contently’s Crunchbase page, the company was founded in 2010 and has grown and evolved while raising only $7 million in private equity; it also describes itself as follows:

Before Contently became more corporate- and technology-focused, the business mission may have seemed more skewed toward “building a better world — for creatives.” But recently, Contently made a misstep, you could say.

I know that Contently had “stepped in it” by coming across a pair of articles, the first of which was titled “Contently Shoots Itself in the Foot with a Charge for Freelancers to Get Paid: Adding a 4.75% fee for freelancers to get paid is a bad brand look.” Quite coincidentally, it turned out that the article’s author, Erik Sherman, was a Facebook connection of mine through an expat American journalist living in the south of France who, in turn, was connected to an intermediate person (I do not know) who was the connection with the root Facebook Friend, a person I knew locally, but is now sadly deceased. But that is a very long story, and I digress.

In his late February article, Sherman wrote: “Since its early days, (Contently) took a 15% cut of what the freelancer received (still the case) and then added subscription fees for corporations that used its platform.” But in February, Sherman and all the other freelancers registered on Contently, received the following email:

Needless to say, this did not go over well with Sherman or a lot of other members of the Contently freelance community. Sherman got in touch with Contently with a number of questions, to which he received some responses without much delay (see Sherman’s article for the responses).

That brings us to Sherman’s second article, “Contently Reverses Course, Says ‘Sorry,’ and Tries to Rebuild Bridges with Freelancer: When you make a blatant mistake, the best thing to do is apologize and change course.” In this article, published about a week after the first article, Sherman writes: “Today — just minutes ago — came another email from CEO Joe Coleman. The first words: “I’m sorry. It was the smartest two words Coleman and the company could have sent. And the entire letter was a model of how you use emotional intelligence to realize where you went wrong, address it, and figure out how to make things right going forward.”

Sherman also included the first few paragraphs of the letter, which read:

Sherman also notes that on the same day, Contently issued a “new freelance contract — really a set of promises because this isn’t a contract that governs how the work itself is actually done.” Here is a screenshot from the Contently website:

Source: https://contently.com/2019/03/05/contract-with-freelance-community/

Sherman concluded with congratulations to the freelancers who demanded a fair shake: “It’s a good lesson for anyone running their own business. Be a path so your customers or clients can get to where they need to go without letting yourself become a doormat.” And he also praised Contently: “This is how you start moving back to where you need to be and where you’d like to go. Congratulations on some intelligent business.”

But I come back to the important lesson: The most intelligent and smartest can also make mistakes, and there is an age-old prescription that applies universally (in particular to platform owners with freelancers who work by the sweat of their brow at this dawning of the age of digital platforms and AI). And that is: Don’t s— where you eat — at least until freelancers (like Uber drivers) can be replaced with AIs (AVs).

So that brings the April 2019 installment of the Contingent Workforce Insider’s Hot List to a close. We plan to be back with more in May. In the meantime, remember: When you’re hot you’re hot, when you’re not you’re not.