oDesk was founded by Odysseas Tsatalos and Stratis Karamanlakis. The two friends created a new technology platform (an online workplace) to allow distributed teams to work together and help instill trust in work happening via the Internet. oDesk, along with its network of freelancers (spanning any type of work that can be done via the Internet) launched in 2005.^[4]

As of 2012, oDesk is the largest online marketplace in which independent professionals and their clients can establish and fulfill work arrangements.^[5] The company’s business strategy, including new pricing, is credited with helping it surpass competition to establish market dominance.^[6]

Online Work Industry

Staffing Industry Analysts puts oDesk into a category of fast-growing staffing businesses that it refers to as “online staffing” platforms:

“Online Staffing — A type of Talent Exchange consisting of an online platform where contingent workers, contractors, freelancers can offer their skills and services for limited projects or even on-going assignments and where organizations and individuals can post their requirements or put tasks/projects out to bid.” ^[7]

Staffing Industry Analysts estimated that the total global market for “online staffing” was approximately $1B:

‘Fifteen years ago, this industry segment did not exist. But today (after an acceleration starting around 2007) it generates about $1B+ in global revenues, consists of over 50 firms, and is growing at high double-digit growth rates. Six major players account for about half of the total industry segment revenues in 2012, but it can be expected that future market/industry expansion will also be based on now-smaller or not-yet-formed players.” ^[8]

While there is awareness of the largest players in this segment (oDesk, Elance, Freelancer.com), other players are developing often along evolutionary paths (e.g. Work Market, Workana, Onforce, NextCrew, et al).

In March 2013, Staffing Industry Analysts, projected that the “online staffing” segment would grow to $5B by 2018.^[9]

Online marketplaces often manage the payments and make money by charging membership fees and/or “marking up” on the billings of the contractors/freelancers. The mark-ups can range from 5 percent to 15 percent. In general, these mark-ups are significantly less than the mark-ups of traditional staffing firms, which usually—technically—enter into an employment relationship with their workers.^[10]

Description

oDesk allows clients to create online workteams coordinated and paid through the company’s proprietary software and website.^[11] The name is a short version of “online desk”^[12] in reference to the company’s intent to enable anyone to work anywhere, anytime. Prospective clients^[13] can post jobs for free, and freelance workers (“contractors”) may create profiles and bid on jobs, also for free.^[14] The company collects 10 percent of the payment.^[15] Payments are made through oDesk, which handles many bookkeeping tasks for the transaction. In addition to the marketplace aspect and the payment/bookkeeping services, the company uses collaborative software, “oDesk Team,” that allows clients to see a provider’s progress while he or she is billing time. The transactions are transferred into the contractors’ accounts only after a 6-day safety period. The company’s site is entirely in English, and all transactions are made in U.S. dollars.^[16]

The company describes itself as an online workplace. As of December 2012, oDesk had 2.7 million freelancers and 540,000 clients worldwide.^[17] In January 29, 2012, the company reported that its top 5 countries (in terms of dollars spent for oDesk contractor services) were (in rank order): (1) US, (2) Australia, (3) Canada, (4) UK, and (5) United Arab Emirates.^[18] oDesk reported that services paid by clients hiring through the site for the year totaled $360 million in 2012.^[18]

The specific areas of expertise supported by the site include web development and a wide variety of programming/software development skills, graphic design, writing and administrative support. The company provides voluntary skills tests in various disciplines from English aptitude to specific programming skills, and profiles include a feedback mechanism.

Financing

oDesk has raised four rounds of financing. The first was by Globespan Capital and Sigma Partners.^[19] The second round was raised in September 2006, led by Benchmark Capital and included the previous two investors.^[20][21] The third round was raised in May 2008, led by DAG Ventures and included the previous three investors.^[22]

The most recent round was announced in March 2012. Certain investment strategies managed by T. Rowe Price Associates, Inc. led the round, with participation from Benchmark Capital, Globespan Capital Partners and Sigma Partners.^[23]

The venture investors on oDesk’s board include Greg Gretsch and Kevin Harvey.

Innovation

The company’s oDesk team software increases transparency and allows a client to have confidence in the billing done by a contractor whom the buyer may never have met and who may be half a world away. In an October 2008 interview with website Web Worker Daily, CEO Gary Swart said the work diaries “give buyers unprecedented visibility into work performed,” and that the Team software’s “hassle-free tracking guarantees convenient, safe, and accurate billing for all work performed.”^[24]

Merger

On December 18, 2013, oDesk announced that it would sign a definitive agreement to merge with its competitor, Elance to create an online workplace for a combined total of 8 million registered individuals. A joint statement issued on the same day stated that Fabio Rosati, chief executive officer of Elance, would lead the combined company. The new entity’s name was to be announced after the deal was closed. According to Rosati, the executive team and board will be balanced with people from each company. Both websites would stay open, and the company will keep both Silicon Valley headquarters, with ODesk in Redwood City, California, and Elance in Mountain View, California.^[25]