It involves outsourcing to a group of people (the crowd) a task that is usually done by an employee or contractor. Respondents whose work is not used do not get paid.
But the practice is not without its critics, who say it is devaluing the work of professionals and can create a false economy. Businesses might save a few thousand dollars at first but they have no recourse if the work is not exactly what they want, and they have to pay someone else to start over.
Mark Hayes, of New Zealand data back-up and insurance firm Data Protect, which used crowdsourcing to cut its start-up costs by about $5000, says it is a great tool for businesses because they can get what they want at a cheaper price.
He says it's not a bad arrangement for those doing the work, either, because the best respondents win the most projects and the feedback they get from businesses helps them hone their work.
But Kristen Rupapera, director of design firm Monster Graphics, is not so sure. "It's like going to a restaurant, ordering everything on the menu, trying it and then saying, 'I think I'll just pay for this one'."
She says it devalues what designers do because there are no quality checks or guarantees. "Iain [Spanhake, her business partner] has 13 years' design experience and is fully qualified." She says if they were to get involved in crowdsourcing to get work, he would be competing against "people who think they can design" who were offering work at cut rates.
And while the work may initially look similar if the amateur designer is talented, eventually crowdsourced work will prove itself to be a false economy. "We see people who have had a logo done for $100 then go to a signwriter and find the file can't be used so it has to be redesigned."
She says a good designer goes through an in-depth briefing process with a client to make sure the work is exactly right. But Lucky Rentals chief executive Nathan Brand says he was not worried about not getting professionals when he decided to crowdsource his company's marketing. The firm had formed in Christchurch a year ago and did not have a big marketing budget.
Knowing he needed to keep his website updated to rank well in online searches, he turned to Fiverr.com, an online market in which people offer their services for $5. For 100 days, Lucky Rentals' website would be updated with content sourced from Fiverr. He says he did not give much instruction, "just this is our company, our message and these are our key features".
He says it is proving to be money well spent. "Being a young company, we're trying to be seen as out of the box. The beauty of crowdsourcing is we don't moderate [the content] - just give it a once-over check for insults."
Lucky Rentals now owns all the website's content and will be able to use it in future. Brand says it has been great to have a variety of different styles of marketing. "[Otherwise] I'd have to sit down and figure it out myself."
He agrees that at $5 a commission he is not tapping into the marketing geniuses of the world. "Ninety-five per cent of them are amateurs. There's a lot of skill base on there but you have no idea whether someone is a professional, hobbyist or having their first go.
"At $5, you're not getting Saatchi & Saatchi, but I can't afford them anyway."
As with concerns about outsourcing, the move to crowdsourcing has prompted fears that work may be lost to those who can do it for the least money.
But Data Protect's Hayes says crowdsourcing has not taken the place of employees. "We would have had to have gone external anyway."
Businesses can also use crowdsourcing to get leads. Websites such as Leadvine.com, with the tagline "the community is your sales force", use salespeople all over the world to find customers and clients for businesses.
Crowd proud
Mark Hayes was able to save about $5000 by crowdsourcing out a lot of the work required to start up his new business. A small Kiwi company with a budget to match, Data Protect used the power of crowdsourcing to do everything from creating the company's logo to coming up with website concepts.
The company offers data back-up and data loss insurance. Hayes says he decided to give crowdsourcing a go when he was setting up because he was "trying not to spend a whole lot of money". He was able to get the company off the ground with no exposure to debt.
For the logo design, he was able to set up what was effectively a competition between multiple designers, with 40 or 50 logos coming back.
"They were all submitting more and more and better and better logos."
It ended up costing $250.
He says 99designs.com, a logo and web design firm, and crowdspring.com, which does web design, logo design, print design and company naming, were helpful and he used www.clickworker.com to get market research done.
"It allows you to assign tasks and have them completed by the crowd by having the task broken down into microtasks."
On the web
Wikipedia.org/wiki/list-of-crowdsourcing-projects
Openinnovators.net/list-open-innovation-crowdsourcing-examples
Crowdspring.com
Clickworker.com/en
Leadvine.com
Namingforce.com
