What Is Crowdsourcing?

Crowdsourcing involves obtaining work, information, or opinions from a large group of people who submit their data via the Internet, social media, and smartphone apps. People involved in crowdsourcing sometimes work as paid freelancers, while others perform small tasks on a voluntary basis. For example, traffic apps encourage drivers to report accidents and other roadway incidents to provide real-time updated information to app users.

Understanding Crowdsourcing

Crowdsourcing allows companies to farm out work to people anywhere in the country or around the world, which lets businesses tap into a vast array of skills and expertise without incurring the normal overhead costs of in-house employees.

Crowdsourcing is becoming a popular method to raise capital for special projects. As an alternative to traditional financing options, crowdsourcing taps into the shared interest of a group, bypassing the conventional gatekeepers and intermediaries required to raise capital.

Crowdsourcing usually involves taking a large job and breaking it into many smaller jobs that a crowd of people can work on separately.

Crowdsourcing vs. Crowdfunding

While crowdsourcing seeks information or work product, crowdfunding seeks money to support individuals, charities, or startup companies. People can contribute to crowdfunding requests with no expectation of repayment, or companies can offer shares of the business to contributors.

Key Takeaways

  • Crowdsourcing is the collection of information, opinions, or work from a group of people, usually sourced via the Internet.
  • Crowdsourcing work allows companies to save time and money while tapping into people with different skills or thoughts from all over the world.
  • Crowdsourcing seeks work or information from a group, while crowdfunding seeks money.

Benefits of Crowdsourcing

The advantages of crowdsourcing include cost savings, speed, and the ability to work with people who have skills that an in-house team may not have. If a task typically takes one employee a week to perform, a business can cut the turnaround time to a matter of hours by breaking the job up into many smaller parts and giving those segments to a crowd of workers.

Companies that need some jobs done only on occasions, such as coding or graphic design, can crowdsource those tasks and avoid the expense of a full-time in-house employee.

Example of Crowdsourcing

Many types of jobs can be crowdsourced, including website creation and transcription. Companies that want to design new products often turn to the crowd for opinions. Rather than rely on small focus groups, companies can reach millions of consumers through social media, ensuring that the business obtains opinions from a variety of cultural and socioeconomic backgrounds.

Fast Fact

Uber, which pairs available drivers with people who need rides, is an example of crowdsourced transportation.

While crowdsourcing often involves breaking up a big job, businesses sometimes use crowdsourcing to assess how multiple people perform at the same job. For instance, if a company wants a new logo, it can have dozens of graphic designers assemble samples for a small fee. The company can then pick a favorite and pay for a more complete logo package.