Online hit for freelancers

08 March 2012 - 03:07 By Toby Shapshak

Knysna, the sleepy southern Cape town, hardly seems like the setting for an e-commerce success story.

Computer. File photo.
Computer. File photo.
Computer. File photo.
Computer. File photo.

However, graphic designer Carol Hampshire has earned herself the distinction of being the highest-paid freelancer in South Africa, using an online system called Elance. Her company, called Red Hot Designs, made $75 000 last year.

"The reason I left Cape Town was because of Elance. I can work anywhere in the world. I have the freedom to do things most of society can't do. One of my dreams has always been to live in a beautiful place," said Hampshire.

There are just under 10000 South African freelancers using Elance (elance.com), and in the last four years they have earned $1.4-million, said Kjetil Olsen, who is vice president for Europe.

Elance is a vast online skills resource which lets companies post jobs for the 1.3 million registered contractors, who include designers, writers, marketers, consultants or people who do admin or research.

The potential client posts a job for which potential contractors bid.

Both client and contractor are evaluated by previous business partners. Good work results in good ratings, which is a means of evaluating contractors, said Olsen.

The system is transparent, showing the value of the individual job and the contractors' past earnings.

The client can therefore see the skills of contractors, their earnings and their job history (including ratings and feedback).

"It's like Tripadvisor for talent," said Olsen.

On the other side, the contractor can vet the clients by looking at the jobs they have posted, the feedback they give to the contractors and the amount they have been paying, said Olsen.

Elance has paid out $500-million in contractor earnings since 2007, when the company was formed. It paid out $150-million last year alone.

Contractors are guaranteed payment for work completed, while clients pay only for results.

Elance also offers escrow services, essentially a means of keeping money in a trust account.

"The escrow services are key to the success of Elance, and the confidence of the contractor," said Arthur Goldstuck, managing director of researchers World Wide Worx, who has used the system.

"Although you pay upfront, you only release the funds when you are happy with the jobs. It puts pressure on the freelancer to deliver."

Goldstuck used Elance two years ago and mentioned it to FNB's Chris Savides, who brought PayPal to South Africa. Savides contacted Elance, which last week exhibited at Design Indaba. PayPal is one of the mechanisms through which contractors can be paid.

  • Shapshak is the editor of Stuff magazine
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