'Human Cloud' of Skilled Workers Growing in Importance

Online labor by independent “cloud” workers probably represents nearly US$1 billion per year in earnings in the U.S., said Elance President and CEO Fabio Rosati, who expects the federal government to consider gathering statistics about the sector beginning next year.

Elance provides enterprises with online workers to do jobs such as programming from their homes. It is part of what Rosati and CrowdFlower CEO and Founder Lukas Biewald called a rapidly growing “human cloud” of skilled people who work online. They spoke on a panel discussion at the NetWork conference in San Francisco on Thursday.

Services like uTest, Amazon.com’s Amazon Mechanical Turk, and LiveOps draw on this “human cloud” of skilled workers that can be employed on a flexible basis to carry out one-time tasks.

The U.S. Bureau of Labor Statistics (BLS) doesn’t include these people its tally of U.S. workers, even though it does collect statistics on “temporary workers” from traditional employment agencies that supply labor within offices, Rosati said.

He thinks the BLS will examine the sector in 2011 and begin tracking it if “human cloud” employment makes up a large enough piece of the overall labor pie. Other economists and statisticians are likely to start paying attention to it as well, he believes.

While not tracked by BLS, the income of these workers is subject to taxes, and employers have to file tax paperwork to the Internal Revenue Service, Rosati said in an interview at NetWork after the presentation. Hiring human-cloud workers in foreign countries requires another set of steps to comply with federal regulations as well.

Those requirements are one factor Rosati believes is giving rise to a new job category, the “distributed work manager,” who understands how to oversee a workforce that never meets and may not work together for a long period of time.

Also rising out of the new trend will be performance management infrastructure, or sets of tools for determining how well the distributed workers are doing their jobs. One of the ways Elance adds value to its own service is with 18 different measures of performance that it applies to the workers whom it connects with employers, Rosati said.

Customers like human-cloud services because they don’t have to predict their staffing requirements ahead of time and can get a project up and running quickly without having to find contractors or hire workers, CrowdFlower’s Biewald said.

“You can turn on and off people in the same flexible way that cloud computing lets you turn on and off computers,” Biewald said.

For the workers, this style of employment means they don’t get locked in to roles that may become irrelevant. Programmers, for example, can always be looking out for the next hot skill and then learning it, he said.

“You can build recession-proof careers,” Rosati said. “It’s very hard for you not to see what’s in demand.”

Such workers do miss out on stability and other benefits of a traditional job, he said, but a recent survey by Elance of its workers found about 70 percent prefer it to traditional employment.

As for employers, Rosati believes they increasingly will pick certain tasks for internal work and delegate others to the human cloud.

“The vast majority of businesses in the next few years will have a hybrid model,” Rosati said.