Merger of oDesk and Elance decided for in 4 month – Good or bad for employers and virtual assistants?

by Francis
(January 06, 2013)

As a regular user of the outsourcing service oDesk, I was surprised to read about its merging with its biggest competitor, Elance. This is quite big news that resonated strongly with their respective communities.

The New York Times reported this decision between these two service providers on the 18th December. The merger is planned to be effective for in about 3 month (official statement: in the first quarter of 2014)

The CEOs of both companies, Gary Swart (oDesk, click for the official statement) and Fabio Rosati (Elance, click for their statement), state that this merger was not a necessity out of lack of funding, but simply to improve both services by sharing their tools and expertise.

However, I believe this will definitively come with some re-organization (read: some people might be out of a job) as well as with some unexpected changes.

Just for an example: if Thomas Layton (oDesk) will become the executive chairman of both companies, what happens with the former executive chairman from Elance?

But I can understand that in order to stay in business, globally, these companies must make business decisions.

What is good and what is bad about this merger?

If you take the time to review the comments of the user base, you will find the following worries and a few positive reactions:

First, the positive reactions:

1. If they combine the escrow system from Elance with the fixed price projects from oDesk, there would be more security for the VAs doing fixed price projects.
2. Instead of wasting resources fighting each other, both competitors can now invest more into making the services even better.

However, the negative reactions outweigh the positive by far. Here are some points of criticism from users of both services:

1. A very valid concern, that I also support, is that less competition (or even monopoly) is bad for the quality of the services. It will stand to be proven in the future how the services will really change.
2. Some VAs are afraid that their hard worked on profiles might change somehow. But for now, it is planned that both services continue to co-exist, with profiles, payment methods, platform usage and feedback rates unchanged. At least that is what can be read in the official statements.
3. In the opinion of some users, there seem to be more scammers on Elance. In others, people state that the users of oDesk are lowballing the prices. Other commenters claim that Elance has a better reputation than oDesk among freelancers, and that this merger will injure the reputation from Elance. Especially the fear of the market becoming “cheaper” is very visible among comments from users.These general opinions are not confirmed by me, but the general worries are that whichever service has the less honest users will pollute the other.
4. Some users are afraid that an apparent business principle of Elance, focussing on lowering bids and increasing fees, might be ported to the other platform.
5. Finally, some freelancers, especially in the comments of the oDesk statement, take the opportunity to appeal against unfair bannings and suspensions against them. Interestingly, some official answers looking into the case are given. Perhaps because the mods need to take care of appearances.Anyways, if you feel you might have been treated unfairly, it might be a good idea to appeal publicly on these posts?

Generally speaking, underpricing yourself is not something you should do, even if you feel pressured to do so. It’s a question of principles.

Is this merger good or bad business?

But will these decisions be good or bad for employers and virtual assistants alike? As an active oDesk user, my opinion is not easily impartial. But I have found a great critic from geekpreneur.com supporting the opinion that virtual assistants (the providers) should be worried about this merger.

Both services try to reassure, but only time will tell what will happen

For anyone, here are the reactions of both services to the complaints and worries voiced above (here and here). However, the statements feel a bit lukewarm to me.

The biggest worry is clearly the cost structure and the fear of fee increases due to this merger. Both outsourcing services insist that nothing will change to this regard.

But take a look at their words, stated like a politician. If you look closely, there’s a “legal” loophole:

The CEO of oDesk, Gary Swart, states that there will be

“No increase in fee based on the merger.”

In other words, whenever these two merged companies can find another reason (to cover expenses, due to the economy, because it is “unavoidable”) they might still increase fees…

A commenter observed this well, and I put a screenshot of his comment into an illustration on top of this post.

What is your opinion about this change?

What do you think about this merger?

Will it be beneficial? If yes, for whom (employers or VAs)? And if not, why?

Please share your thoughts in the comments below!

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