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Online Labor Markets: An Informal “Freelancer Economy”

Online Labor Markets – The IBIT ReportThe Institute for Business and Information Technology (IBIT) is pleased to announce the release of The IBIT Report – Online Labor Markets: An Informal “Freelancer Economy” authored by Kevin Yili Hong, Temple University and Paul A. Pavlou, Temple University.

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.

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