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Rich Pearson is Chief Marketing Officer of Elance.

The way that businesses recruit and manage workers is undergoing a dramatic transformation.

A volatile economy and an increasingly entrepreneurial culture have produced a corporate climate awash with contract jobs. According to a recent study by Accenture, the practice of hiring freelancers is the future of HR — enterprises now spend $300 billion per year on freelance labor.

The rise of cloud-based recruiting and workforce management tools have emerged with solutions that make it far easier for business to find, manage, and pay freelancers. These tools are catalyzing disruption in the way that companies hire and scale.  The continued growth of online work marketplaces are proof that the cloud is at the forefront of this swiftly adapting market.

In fact, Elance CEO Fabio Rosati, will be speaking on the topic of “Closing the Talent Gap with the Cloud” at VentureBeat’s CloudBeat conference next week.

Replacing an antiquated model

The quality of contract work comes at a price. Freelancers don’t require benefits, human resource departments, or many other assets of full-time employees. But they require other investments.

For large companies, every relationship with a freelancer may require two or three other relationships — ones with recruiting agencies, vendor management systems, and compliance service providers. And each freelancer has to be paid with his own check, which puts a strain on internal payroll systems.

Top freelancers often balk at the inefficiencies of this process, preventing companies from hiring the best talent.

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However, cloud-based job platforms are changing all of this.

The cloud helps companies find the right talent quickly

For example, the cloud has replaced the traditional recruiting agency by providing frictionless access to a large, searchable community of rated and ranked talent.

In the same way that ecommerce sites like eBay are policed by peer reviews, cloud-based job platforms require customers on both ends to build up a reputation to succeed. Businesses that don’t respect their contracts gain poor reputations. Writers, programmers and designers that don’t deliver receive poor reviews. The cloud’s feedback system makes high-quality talent and good opportunities easy to spot.

In a survey of enterprise staffing professionals conducted by the Human Capital Institute, nearly 70 percent of respondents agreed that temporary hiring had significantly improved the quality of their workforce.

But staffing in the cloud would still be a headache if job platforms didn’t provide worker management solutions. Some enterprises work with hundreds of freelancers – managing contracts and payments to each one directly, regardless of how those freelancers are found.

The cloud is changing this process by automating and centralizing the exchange of every contract, work document and communication, no matter where the freelancers are based, or how numerous they are.

The cloud helps companies manage talent

One of our clients, a leading Internet content provider, employs over 600 contract writers.

Communicating with these writers took several full-time team members multiple days to manage before the process was migrated to the cloud. Making payments was a painful process with numerous errors.

Now, instead of making 600+ individual payments, the company makes a single payment to us, and we instantaneously pay the entire freelancer base. This provides every writer with instant gratification, which has resulted in an increase in motivation and writer production — and in turn, produces significant gains for the company.

The cloud helps companies get more personal

We don’t often think of staffing in terms of the “human relationships” involved, but this is exactly what the cloud is allowing us to do.

By automating and centralizing the process by which talent is found and managed, the cloud has put the humans at the forefront, where they belong.  A new survey we conducted this year showed that businesses are no longer hiring online freelancers solely for one-time work; 50 percent of businesses are building teams of freelancers to engage on multiple projects.

And, the same Internet content company I discussed earlier told me that the cloud had removed the hassle of all the mundane tasks.

“So now,” she said, “we can use our human time to focus on the human relationships.”


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