Takeaways from the Merger of oDesk & Elance

By on January 10, 2014

Elance&oDesk

Ever since oDesk and Elance announced their merger, enclaves of the freelance industry have been all a-gossip. Some freelancers are excited, some are panicked, and some are pretty sure the merger won’t affect them much at all. It is the latter category that appears to be most accurate.

Why the Merger Happened

Just a few short weeks ago, oDesk and Elance were considered rivals, metaphorically engaging in finger-snapping, ballet-leaping brawls straight out of scenes from West Side Story. Yet, both companies decided to merge when they realized they could be more effective together.

By combining their resources, oDesk and Elance can offer better benefits to their users. Some of the features that will be enhanced include: tools for more effective hiring, virtual collaboration, better mobile accessibility, and better ability to develop job skills.

And, of course, there is the huge financial benefit: per the New York Times, the two companies together are predicted to have 750 million in billings during 2014.

The merger will also help accelerate the growth and scale of the freelance industry: according to Business Insider, freelancers are expected to make up 40 percent of the entire workforce by 2020. After that, it’s likely freelancing will become the norm, and working full-time in-house will be the oddity.

The Merger’s Impact on Clients and Freelancers

The merger of oDesk and Elance will result in a yet-to-be-named new company (once regulators approve the merger). This company—in keeping with the ongoing theme—will allow clients to post jobs and freelancers to take them. The specifications of this company have yet to be released, or perhaps even established, but the intent is to allow clients access to better matches and freelancers access to superior jobs.

In addition to this new company, oDesk and Elance will keep their separate entities. So, in this sense, not much will change: clients will hire, manage and pay exactly as they have in the past. For freelancers, work profiles, work histories, and others aspects of online reputations will also remain the same.

No Big Deal at All?

As mentioned above, the oDesk and Elance merger is more of a moaner for some: a few freelancers are getting their laptop cords all in a knot. Yet, according to Business Week, most freelancers will find the merger to be a bit of a snooze.

This is because, of the estimated 18 million independent contractors in the US, most do not rely on oDesk or Elance for work. In fact, the average freelancer on either site averaged less than 100 dollars in 2013 (in other words, about enough to pay for a month of internet access).

Still, the merger may help pave the way for freelancers to make enough to pay for several months of internet access since it has the potential to attract corporate clients who feel more comfortable working with a larger company. This may especially be true if the merger leads an IPO.

Of course, the potential for corporate clients is great news for freelancers: corporations mean money, and more money is good. But, it could also be good news for clients of oDesk and Elance. As more and more jobs become available, stronger, more qualified freelancers will join, upping the odds that clients will find the perfect person to get the job done. Freelancers are already taking on more complicated tasks than many envision, and a better platform with deeper pockets may bring tools that accelerate this direction.

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Matthew Toren

About Matthew Toren

Matthew Toren is a serial entrepreneur, mentor, investor and co-founder of YoungEntrepreneur.com. He is co-author, with his brother Adam, of Kidpreneurs and Small Business, BIG Vision: Lessons on How to Dominate Your Market from Self-Made Entrepreneurs Who Did it Right (Wiley). He's based in Vancouver, B.C.