When a
Crowd is Company
The public is a fountain of
resources, skills and ideas. More and more companies are tapping this via the
Internet to solve business problems. Crowd sourcing is cheap and efficient, and
is fast gaining scale.
In 2010, when India’s central bank decided to create a symbol for the rupee, instead of asking a design house, it asked, well, everyone. The Reserve Bank of India invited the public to post their designs on its website. It received 3,000 designs, from which it chose the design of Udaya Kumar, an IIT student. While that was a rare outreach by a government arm, it’s a routine exercise for the $82.6 billion Proctor & Gamble (P&G). The US-based consumer goods major has a dedicated website, P&G Connect+Develop, to solicit ideas for products, technologies, businesses and innovation --from one and all. The ideas sought are both general and specific. Currently, P&G has 85 ‘needs’ like ‘new ingredients or products that reduce the severity of common cold’. This open strategy works for P&G. “More than 50% of the ideas for our new products and innovation came from here,” says Raju Konduru, head of P&G’s innovation centre in Bangalore. Like Olay Regenerist, an anti-wrinkle cream, the peptide technology for which came from a small, unknown French firm via Connect+Develop. “It (the site) helps accelerate innovation,” adds Konduru. It’s called ‘crowd-sourcing’, and it involves the outsourcing of a function once performed only by employees to the public. The Internet is expanding the idea of the ‘crowd’ as partner, helping companies and empowering professionals. It is shaping all sorts of business engagements and business models in developed markets, where crowd-sourcing is about six years old. On the one end of the spectrum are large corporations like P&G and Dell, which have dedicated sites to tap ideas relating to their businesses from the public. On the other end are smaller enterprises, which are trying to ride on websites that are in the business of creating a meeting place for crowds and companies. “It (crowd-sourcing) can help businesses keep costs low while getting their work done by qualified people who can deliver good quality,” says Sitashwa Srivastava, CEO of Jade Magnet, a Bangalore-based crowdsourcing platform. Both these templates, though nascent in India, are gathering steam. So, for example, the logo of Ashok Soota’s new IT venture, Happiest Minds, came from Jade Magnet. “We had a specific and well-defined project that didn’t require any serious background research,” says Salil Godika, chief strategy & marketing officer, Happiest Minds. “So, we chose to crowd-source it as a faster way that would give us fresh and diverse thinking.” Besides ideas, it is birthing ventures that would probably be stillborn in a conventional financing scenario. Crowd-funding is helping small and independent film-makers to make the films they want to. And it’s creating a new model in the microfinance sector, with online platforms like Milaap, Rang De and MicroGraam connecting people who want to lend or donate for small, livelihood loans with those who need them.
What’s In It For SMEs…
For small- and medium-sized enterprises (SMEs), lower costs, without a corresponding drop in quality, is a major incentive to crowd-source. The premise: in one-to-one client dealings, overheads pad up costing. In crowd-sourcing, overheads are minimal. For smaller and simpler projects, then, costs come down drastically. Jessie Paul, the former chief marketing officer of Wipro and who now runs a marketing consultancy, has used crowd-sourcing platforms for brochure templates and logos. She is a satisfied client. “Their advantage is that you pay only for what you use. You don’t have to pay for the person’s downtime,” says the CEO of Paul Writer. Godika estimates that for a logo design, crowd-sourcing is cheaper by a minimum 20-30%; this can increase depending on the project brief and stature of the design firm hired in a direct dealing. Paul says the world is shifting towards informal labour networks and India will follow. “As more work can be done remotely and digitally, the need for these digital equivalents of temping firms will only rise.” Already, in India, crowd-sourcing is funding microfinance and films, testing software and websites, doing design jobs, creating advertising and firing innovation, among other things. According to Sandeep Khanna, founder and editor of crowdsourcingindia.com, an online Indian crowd-sourcing publication, over 500 SMEs have used such platforms in the past year. “It is growing fast because of the growing freelance culture,” he says. “Since the model helps SMEs, more people are able to use it and benefit.” Take Jade Magnet, which primarily hosts projects related to logo and website design, brochures, demo animation, and print and banner ads. CEO Srivastava says it has delivered about 1,200 projects in two years and the adoption rate is increasing. “Convincing clients, especially SMEs, is never easy. But when they see the cost advantage, they agree to give crowd-sourcing a shot,” he says. “Also, viral effects and referrals is popularising crowd-sourcing among small companies and start-ups.” One of Jade’s recent clients is Sure Fertility, a fertility clinic in Bangalore. The clinic posted a design brief for a logo on Jade, including its budget and time. It received about 35 designs. It short-listed one. After a few iterations with the designer through Jade’s Magnet messaging application, it arrived at the final design.
In 2010, when India’s central bank decided to create a symbol for the rupee, instead of asking a design house, it asked, well, everyone. The Reserve Bank of India invited the public to post their designs on its website. It received 3,000 designs, from which it chose the design of Udaya Kumar, an IIT student. While that was a rare outreach by a government arm, it’s a routine exercise for the $82.6 billion Proctor & Gamble (P&G). The US-based consumer goods major has a dedicated website, P&G Connect+Develop, to solicit ideas for products, technologies, businesses and innovation --from one and all. The ideas sought are both general and specific. Currently, P&G has 85 ‘needs’ like ‘new ingredients or products that reduce the severity of common cold’. This open strategy works for P&G. “More than 50% of the ideas for our new products and innovation came from here,” says Raju Konduru, head of P&G’s innovation centre in Bangalore. Like Olay Regenerist, an anti-wrinkle cream, the peptide technology for which came from a small, unknown French firm via Connect+Develop. “It (the site) helps accelerate innovation,” adds Konduru. It’s called ‘crowd-sourcing’, and it involves the outsourcing of a function once performed only by employees to the public. The Internet is expanding the idea of the ‘crowd’ as partner, helping companies and empowering professionals. It is shaping all sorts of business engagements and business models in developed markets, where crowd-sourcing is about six years old. On the one end of the spectrum are large corporations like P&G and Dell, which have dedicated sites to tap ideas relating to their businesses from the public. On the other end are smaller enterprises, which are trying to ride on websites that are in the business of creating a meeting place for crowds and companies. “It (crowd-sourcing) can help businesses keep costs low while getting their work done by qualified people who can deliver good quality,” says Sitashwa Srivastava, CEO of Jade Magnet, a Bangalore-based crowdsourcing platform. Both these templates, though nascent in India, are gathering steam. So, for example, the logo of Ashok Soota’s new IT venture, Happiest Minds, came from Jade Magnet. “We had a specific and well-defined project that didn’t require any serious background research,” says Salil Godika, chief strategy & marketing officer, Happiest Minds. “So, we chose to crowd-source it as a faster way that would give us fresh and diverse thinking.” Besides ideas, it is birthing ventures that would probably be stillborn in a conventional financing scenario. Crowd-funding is helping small and independent film-makers to make the films they want to. And it’s creating a new model in the microfinance sector, with online platforms like Milaap, Rang De and MicroGraam connecting people who want to lend or donate for small, livelihood loans with those who need them.
What’s In It For SMEs…
For small- and medium-sized enterprises (SMEs), lower costs, without a corresponding drop in quality, is a major incentive to crowd-source. The premise: in one-to-one client dealings, overheads pad up costing. In crowd-sourcing, overheads are minimal. For smaller and simpler projects, then, costs come down drastically. Jessie Paul, the former chief marketing officer of Wipro and who now runs a marketing consultancy, has used crowd-sourcing platforms for brochure templates and logos. She is a satisfied client. “Their advantage is that you pay only for what you use. You don’t have to pay for the person’s downtime,” says the CEO of Paul Writer. Godika estimates that for a logo design, crowd-sourcing is cheaper by a minimum 20-30%; this can increase depending on the project brief and stature of the design firm hired in a direct dealing. Paul says the world is shifting towards informal labour networks and India will follow. “As more work can be done remotely and digitally, the need for these digital equivalents of temping firms will only rise.” Already, in India, crowd-sourcing is funding microfinance and films, testing software and websites, doing design jobs, creating advertising and firing innovation, among other things. According to Sandeep Khanna, founder and editor of crowdsourcingindia.com, an online Indian crowd-sourcing publication, over 500 SMEs have used such platforms in the past year. “It is growing fast because of the growing freelance culture,” he says. “Since the model helps SMEs, more people are able to use it and benefit.” Take Jade Magnet, which primarily hosts projects related to logo and website design, brochures, demo animation, and print and banner ads. CEO Srivastava says it has delivered about 1,200 projects in two years and the adoption rate is increasing. “Convincing clients, especially SMEs, is never easy. But when they see the cost advantage, they agree to give crowd-sourcing a shot,” he says. “Also, viral effects and referrals is popularising crowd-sourcing among small companies and start-ups.” One of Jade’s recent clients is Sure Fertility, a fertility clinic in Bangalore. The clinic posted a design brief for a logo on Jade, including its budget and time. It received about 35 designs. It short-listed one. After a few iterations with the designer through Jade’s Magnet messaging application, it arrived at the final design.
…For
Working Professionals…
As more enterprises take some of their work online, it’s opening up freelance opportunities for certain skill sets: visual artists, software testers, web and marketing professionals, copywriters and actors, among others. Deepti Goel, for instance, has earned about $7,000 (about 3.5 lakh) by designing logos and doing animation work on Jade Magnet for about 15 clients from the UK and India. The 29-year-old graphic designer is currently designing a website for a client in the Middle-East. “It has provided lot of freelancers, individuals and firms a good platform to work on,” she says, from her home in New Delhi. Doing a few assignments on a platform tends to open up a line of communication for the providers with it, which translates into work. “Over the months, we have built familiarity with the platform and they have also understood our quality of work,” says Ronak Meghani, a software engineer and web designer, about Jade. “That makes it easier for us than, say, new providers.” “This works equally well for small and large businesses,” says Paul. “This gives them access to talented people they probably could not afford or retain on a full-time basis,” she adds.
…For Crowd-sourcing Platforms… Crowd-sourcing platforms usually charge clients either per transaction or per subscription. Part of this goes to the providers. According to Srivastava, Jade keeps 20% of the client fee and passes on the rest to the provider. Some like Talenthouse also charge a registration fee. Selling advertising on the website is another revenue stream. “We seek brand sponsorships for each ‘creative invite’ that we put up,” says Arun Mehra, CEO of Talenthouse India, a joint venture between Reliance Entertainment and Talenthouse, a crowd-sourcing platform for performing arts. However, given the nascent nature of the business, hardly any crowdsourcing platforms are making profits. “Each project ends up making an operational profit,” says Srivastava of Jade. However, adds Khanna of crowdsourcingindia.com: “Most platforms are in investment mode.” With an eye on a wider audience, platforms are investing in technology, marketing, research and delivery methods. The challenge for a crowd-souring platform is to bring together a large number of providers and vendors on a platform, while keeping its marketing spends low and maintaining high quality in delivery. Says Srivastava: “Platforms are also struggling with payments. They need to figure out the best way to accept payments from vendors and distribute it to providers.” Srivastava says a mature online presence is needed for crowdsourcing to be effective. “Internet penetration in India, as well as speed and bandwidth, is still not very high, though this is changing,” he says. Paul says 23% of the 500,000 active contractors of Elance, a US-based platform that has facilitated programming jobs worth $400 million, are based in India. “With loads of talent available in smaller cities and towns, crowd-sourcing can help businesses access it without having to wait for these people to migrate to metros,” says Paul. “On top of that, there is a significant cost arbitrage within the country. That makes for a nice value proposition.”
…And Large Corporations Even big companies are adapting crowd-sourcing into their business. In early-2010, Parle Agro used Twitter to identify supply-chain gaps. When it launched Hippo, it asked consumers and retailers to tweet to a specified Twitter handle the non-availability of this brand of potato chips in their neighbourhood. The company says it received tweets from 25 cities and sales jumped 76% that week. “The symbiosis of crowd-sourcing and social media makes for a perfect business plan,” says Nadia Chauhan, joint MD & CMO, Parle Agro, who plans to develop such channels and communities for each of its brands. Hero MotoCorp’s ongoing ad campaign, ‘hum mein hain hero’, asks the public to upload their video to the AR Rahman tune on its website, which the company then incorporates into its TV ad. “Its genesis lies in this ownership displayed by people: what if every individual was given a chance to create a video that could be seen by others?” explains Anil Dua, senior vice president-marketing and sales, Hero MotoCorp. As is evident, large Indian companies are still using crowd-sourcing for soft activities, unlike, say, the US. Dell, for example, launched a crowdsourcing site, ideastorm.com, in early-2008. According to Dell, the site has logged about 11,000 ideas, of which, 350 were implemented. These include making USB 3.0 port a standard feature on its PC and laptops, a common charger for devices, and introduction of anti-glare on notebook screens. The real appeal of crowd-sourcing, though, is for smaller, less mainstream outfits and ideas. In microfinance, for example, crowd-sourcing is enabling a meeting of minds. According to Rangan Varadan, founder of Micrograam, the power of the crowd-sourcing model is two-fold. One, because investors are socially-conscious individuals, there is little pressure on a microcredit company to be aggressive in repayment and collection, or pursue excessive profits or growth. Second, it offers an effective vehicle for thousands to contribute towards rural development. “We should also look at this model from the perspective of people who are interested in doing something for the benefit of the poor in India, but are not sure how,” says Varadan. “Until recently, the only option they had was to donate to charity.” Infilms,crowdsourcing is promoting independent films. For example, in 2009, Onir raised onethird of the 3 crore budget of his last film ‘I Am’ using Facebook and other socialnetworking sites. “Hundreds of people from many countries contributed as little as 1,000 and as much as 15 lakh,” he says. Directors Anurag Kashyap, Ashvin Kumar and Guneet Monga want to follow suit. “Crowd-sourcing in India is currently at the stage where e-commerce was two years ago,” says Mehra of Talenthouse India. “It is about to explode.”
As more enterprises take some of their work online, it’s opening up freelance opportunities for certain skill sets: visual artists, software testers, web and marketing professionals, copywriters and actors, among others. Deepti Goel, for instance, has earned about $7,000 (about 3.5 lakh) by designing logos and doing animation work on Jade Magnet for about 15 clients from the UK and India. The 29-year-old graphic designer is currently designing a website for a client in the Middle-East. “It has provided lot of freelancers, individuals and firms a good platform to work on,” she says, from her home in New Delhi. Doing a few assignments on a platform tends to open up a line of communication for the providers with it, which translates into work. “Over the months, we have built familiarity with the platform and they have also understood our quality of work,” says Ronak Meghani, a software engineer and web designer, about Jade. “That makes it easier for us than, say, new providers.” “This works equally well for small and large businesses,” says Paul. “This gives them access to talented people they probably could not afford or retain on a full-time basis,” she adds.
…For Crowd-sourcing Platforms… Crowd-sourcing platforms usually charge clients either per transaction or per subscription. Part of this goes to the providers. According to Srivastava, Jade keeps 20% of the client fee and passes on the rest to the provider. Some like Talenthouse also charge a registration fee. Selling advertising on the website is another revenue stream. “We seek brand sponsorships for each ‘creative invite’ that we put up,” says Arun Mehra, CEO of Talenthouse India, a joint venture between Reliance Entertainment and Talenthouse, a crowd-sourcing platform for performing arts. However, given the nascent nature of the business, hardly any crowdsourcing platforms are making profits. “Each project ends up making an operational profit,” says Srivastava of Jade. However, adds Khanna of crowdsourcingindia.com: “Most platforms are in investment mode.” With an eye on a wider audience, platforms are investing in technology, marketing, research and delivery methods. The challenge for a crowd-souring platform is to bring together a large number of providers and vendors on a platform, while keeping its marketing spends low and maintaining high quality in delivery. Says Srivastava: “Platforms are also struggling with payments. They need to figure out the best way to accept payments from vendors and distribute it to providers.” Srivastava says a mature online presence is needed for crowdsourcing to be effective. “Internet penetration in India, as well as speed and bandwidth, is still not very high, though this is changing,” he says. Paul says 23% of the 500,000 active contractors of Elance, a US-based platform that has facilitated programming jobs worth $400 million, are based in India. “With loads of talent available in smaller cities and towns, crowd-sourcing can help businesses access it without having to wait for these people to migrate to metros,” says Paul. “On top of that, there is a significant cost arbitrage within the country. That makes for a nice value proposition.”
…And Large Corporations Even big companies are adapting crowd-sourcing into their business. In early-2010, Parle Agro used Twitter to identify supply-chain gaps. When it launched Hippo, it asked consumers and retailers to tweet to a specified Twitter handle the non-availability of this brand of potato chips in their neighbourhood. The company says it received tweets from 25 cities and sales jumped 76% that week. “The symbiosis of crowd-sourcing and social media makes for a perfect business plan,” says Nadia Chauhan, joint MD & CMO, Parle Agro, who plans to develop such channels and communities for each of its brands. Hero MotoCorp’s ongoing ad campaign, ‘hum mein hain hero’, asks the public to upload their video to the AR Rahman tune on its website, which the company then incorporates into its TV ad. “Its genesis lies in this ownership displayed by people: what if every individual was given a chance to create a video that could be seen by others?” explains Anil Dua, senior vice president-marketing and sales, Hero MotoCorp. As is evident, large Indian companies are still using crowd-sourcing for soft activities, unlike, say, the US. Dell, for example, launched a crowdsourcing site, ideastorm.com, in early-2008. According to Dell, the site has logged about 11,000 ideas, of which, 350 were implemented. These include making USB 3.0 port a standard feature on its PC and laptops, a common charger for devices, and introduction of anti-glare on notebook screens. The real appeal of crowd-sourcing, though, is for smaller, less mainstream outfits and ideas. In microfinance, for example, crowd-sourcing is enabling a meeting of minds. According to Rangan Varadan, founder of Micrograam, the power of the crowd-sourcing model is two-fold. One, because investors are socially-conscious individuals, there is little pressure on a microcredit company to be aggressive in repayment and collection, or pursue excessive profits or growth. Second, it offers an effective vehicle for thousands to contribute towards rural development. “We should also look at this model from the perspective of people who are interested in doing something for the benefit of the poor in India, but are not sure how,” says Varadan. “Until recently, the only option they had was to donate to charity.” Infilms,crowdsourcing is promoting independent films. For example, in 2009, Onir raised onethird of the 3 crore budget of his last film ‘I Am’ using Facebook and other socialnetworking sites. “Hundreds of people from many countries contributed as little as 1,000 and as much as 15 lakh,” he says. Directors Anurag Kashyap, Ashvin Kumar and Guneet Monga want to follow suit. “Crowd-sourcing in India is currently at the stage where e-commerce was two years ago,” says Mehra of Talenthouse India. “It is about to explode.”
Bhanu Pande ET120124
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