Elance Equals Easy Outsourcing for Small Business

By Lauren Simonds | Posted November 04, 2008

Growing your business in a stalled economy requires tenacity, creativity and resourcefulness. Good tools help too, and Elance.com could be one that you want to add to your small business arsenal. Elance is an online workplace where business owners can go to meet and hire the freelance professionals they need to get tasks done.

"We help small businesses find and hire talent on demand: when they need them and for however long they need them," said Fabio Rosati, CEO of Elance. "We help them work with the talent they hire even if they’re located remotely."

The company goes beyond initial matchmaking. It takes a soup-to-nuts approach by assisting with entire process, from hiring to providing communication tools in a secure collaboration space and ensuring payment through escrow accounts.

Businesses looking to hire can publish jobs (RFPs), receive responses quickly, interview candidates in real time using IM, phone, video or synchronous e-mail – all provided by, and contained within, the Elance collaboration platform. "We integrated a full set of tools with everything you need," said Rosati. "It's the Internet equivalent of the workplace."

For each project, you're assigned a workroom that becomes the virtual office. All of the communication between you and the person you hire – and the work he or she produces ‑ resides in the workroom.

The Elance status reporting system lets hires track and document the work they do for you. They can generate weekly reports and document the hours they've worked. Clients can then go in to review and approve the work and post feedback to the hired professional's profile.

Elance provides process management in the form of escrow payment and a 1099 service. Once the client approves the work and signs off on it, Elance releases payment from escrow. "We also handle the 1099 form process," said Rosati. We mail the forms to freelancers on behalf of the small businesses, and we maintain the files. Small businesses don't have to deal with 1099s at all," he said.

Elance makes its money by charging the freelance hires a five percent fee based on what they're paid. "We remind them to add five percent above what they charge when they submit an RFP," said Rosati.

People who are looking for or offering work on Elance can respond to or submit up to three proposals a month at no cost (other than the 5 percent off the top fee). Elance offers a Premium membership for $9.95 per month (for individuals; $19.95/month for small service firms), which buys a profile, a stored portfolio and the ability to submit more proposals – up to 20 per month.

Rosati said the premium membership is helpful as your company's needs fluctuate. "You only pay when you need the service," he said. "As demand increases, you can upgrade, and if it slows, you can downgrade easily and without penalty."

Currently, the majority of job postings fall into two main areas: technology (development and programming) and creative (marketing, design, writing and consulting). According to Rosati, the company posts more than 20,000 new jobs every month.

Both Sides of the Elance Coin

Nick Dalton, a freelance programmer from Evergreen Colo., specializes in developing applications for the iPhone. He first placed his company's profile on Elance last March, and has completed 15 – 20 projects since then.

While he also has profiles on RentaCoder and Guru.com, Dalton said that Elance nets him more work. "It's about a 10-to-one ratio. It's a good place for an iPhone developer," he said.

He added that he uploads code and screen images to the collaboration work place. "It's a private area where I correspond with clients. The audit trail means there's no question about what was delivered and agreed upon."

Overall, Dalton's pleased with his experience, but he suggests approaching work in the global marketplace with open eyes. "In some cases it can make your salary low. I was lucky because iPhone developers are hard to find now. In another year it will be tougher," he said. "The global economy can be ruthless, but there's no downside for anyone looking for someone to develop applications."

David Kaufer, the founder and "chief green officer" of GreenforGood.com, runs a Seattle-based online portal for information about green initiatives, shopping, community sustainability, products and services.

He hired a virtual assistant through Elance to help with research, expanding media contact lists, and to create a business directory. "I stumbled upon Elance accidentally," said Kaufer. "I like the variety of specialist you can find there, and I've used the site four or five times since."

Other pluses Kaufer noted include a well-designed Web site. "It's easy even for a tech novice, and they list examples of the language to use to find the exact kind of person you need." He also appreciates interviewing potential candidates in real-time, the contained workspace with all the e-mail located in one place and a simplified way to communicate.

"I've been in this business for three years, I've got four virtual employees, and Elance is critical to my business," he said. "There's no way we'd be where we are without these resources."

Lauren Simonds is the managing editor of SmallBusinessComputing.com

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