Kevin Yili Hong, Temple University
Paul A. Pavlou, Temple University
February 2013
In this report, we discuss three aspects of online labor markets. First, we give an overview of the current state of major online marketplaces that offer intermediary services for buyer companies and IT professionals with a focus on one marketplace in particular – Freelancer. Second, we show some findings on the measurable economic benefits online labor markets provide to companies that outsource IT services (measured with consumer surplus) and what factors contribute to higher buyer satisfaction. Third, we offer a novel perspective on the frictions that exist in the micro-level interactions between buyer companies and service providers given the global nature of these markets and how reputation signals can alleviate these frictions. Finally, we offer practical implications and recommendations for companies that use these marketplaces to outsource IT services to professionals across the globe.
We identified two key aspects that affect the selection of service providers and the pricing of their services: global frictions and reputation signals.
© 2013 The IBIT Report, Institute for Business and Information Technology, Fox School of Business, Temple University, Philadelphia, PA 19122, USA. All rights reserved. ISSN 1938-1271.
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