Distributed Labor Networks
Distributed Labor Networks is a concept from an article in Wired magazine on the emergence of Crowdsourcing
"Just as distributed computing projects like UC Berkeley’s SETI@home have tapped the unused processing power of millions of individual computers, so distributed labor networks are using the Internet to exploit the spare processing power of millions of human brains.
For the last decade or so, companies have been looking overseas, to India or China, for cheap labor. But now it doesn’t matter where the laborers are – they might be down the block, they might be in Indonesia – as long as they are connected to the network.
Technological advances in everything from product design software to digital video cameras are breaking down the cost barriers that once separated amateurs from professionals. Hobbyists, part-timers, and dabblers suddenly have a market for their efforts, as smart companies in industries as disparate as pharmaceuticals and television discover ways to tap the latent talent of the crowd. The labor isn’t always free, but it costs a lot less than paying traditional employees. It’s not outsourcing; it’s crowdsourcing."
"CloudCrowd has 18,000 registered workers who participate in its Labor-as-a-Service business. CloudCrowd’s project managers begin by breaking down a complex task into hundreds or thousands of smaller tasks. These tasks are then passed on to Cloudcrowd’s registered workers. CloudCrowd speeds delivery time and lowers costs in a wide range of BPO (Business Process Outsourcing) applications. Tasks that CloudCrowd has deconstructed include tracking the University of Southern California’s “lost alumni” and a wide range of web content creation tasks.
Both Trada and CloudCrowd eschew the winner-take-all model of contest-oriented crowdsourcing projects. Instead, they offer well-defined incremental pay for incremental results. In the case of Trada, an expert gets paid for each click-through of the ad that the expert created (Trada also offers pay-per-sale crowdsourced campaigns). CloudCrowd gives its workers a pre-agreed payment for each unit of work they successfully complete. In CloudCrowd’s case, a worker’s “success” is measured using a system of escalating peer reviews that are also crowdsourced." (http://workingknowledge.com/blog/?p=1207)
Traditional Outsourcing compared to the Open Development model of Open Source Software
Distributed Knowledge and the Global Organization of Software Development by Bruce Kogut and Anca Metiu Wharton’s Management School.
Summarized at http://www.softpanorama.org/OSS/webliography.shtml
"Based on interviews with dozens of software engineers and managers in four countries – the U.S., Ireland, India and Singapore – the study points out that the growth of a global infrastructure has made it possible to "exploit globally the opportunities opened by the digitalization of production and products."
Metiu and Kogut see the open source movement as a tremendous driver of innovation. "The open development model opens up the ability to contribute to innovation," they say. "It recognizes that the distribution of natural intelligence does not correspond to the monopolization of innovation by the richest firms or richest countries. It is this gap between the distribution of ability and the distribution of opportunity that the web will force companies to recognize and to realign their development strategies." In other words, engineers in China, Israel or India who are unable or unwilling to move to Silicon Valley or the Research Triangle need not be locked out of innovative product development: They can play a vital role in the creation of new products and services.
Metiu and Kogut contrast the open development model with another model of software development, commonly used in the industry, which they call the "global project model." Using this approach, software companies set up offices around the world – paying close attention to the locations of their customers – and then develop software wherever it suits them best to do so. This lets the company take advantage of time zone and labor-cost differences to slash software development costs. Example: Trintech, an Irish company that makes electronic payments software, has offices in the U.S., Ireland, the U.K. and Germany. The company organizes software development work in a way that lets it expand the working day to 16 hours. Some Indian software firms, including Tata Consultancy Services, Infosys and Wipro, boast that since programmers in the U.S. can hand off tasks each evening to their colleagues halfway in India who are just beginning their working day, they can achieve a "24-hour working day."
The study points out that global sourcing today depends on three main factors: The coordination of modularized tasks, communication and shared context. All of these have limitations, though. First, coordination in software across borders is particularly difficult when the task is creative. Second, when software is developed internationally, problems can crop up in transmitting certain kinds of knowledge. Third, a shared context limits coordination across distances because people interpret the world in which they live in different contexts.
Metiu and Kogut found that software firms typically outsource only routine tasks to offshore sites and aim primarily at exploiting the low cost advantage. For example, they looked at a large financial services division of an American firm which did only simple sub-contracting work with Indian software houses. They also studied another telecommunications company which developed software offshore. When this company’s customers demanded features embedded in software rather than in hardware, it was hesitant to commit to outsourcing for strategic products.
However, their research also showed some positive developments which encourage moves by companies towards greater innovation. For example, they found that many offshore software firms like Infosys and Wipro want to be more than just low-cost vendors. They wanted to take part in the innovation process by developing their own products. The researchers believe that global outsourcing will cause global capabilities and aspirations to converge.
A key question to the researchers was: Can companies develop a strategy in which the distinction between onshore and offshore software development merges? At Trintech, for example, the company has tried to make virtual development of software possible by moving closer to its customers in Silicon Valley. The company still has been unable to fully exploit the 24-hour global sourcing cycle. While this model represents a radical departure from the early days of software development, it still did not significantly enhance the scale of innovation.
Kogut and Meitu note that customers also are realizing that even as costs fall, innovations need not occur only in the richest markets. But how is this possible when innovations are designed by the customer, closest to the market? The researchers found that the market itself may move to where the software is being developed. Case in point: Wipro in Bangalore had a customer located in San Diego that requested the development of a software product where the specifications were laid out, the architecture drawn up and the final product shipped back to the customer. Wipro’s software team never met the customer.
So how can firms profit by this strategy? It is possible to do so by shifting revenues from selling the software to the provision of services, online support and training. Further, if companies are able to combine the open source model with some proprietary software, as Netscape did with its Mozilla licensing policy, they can still maintain a competitive edge.
In all this, an important aspect that Metiu and Kogut studied was why software engineers across the world would volunteer their time to develop free software. Their conclusion: engineers intrinsically have a gift-giving culture, and the motivations are also driven by norms of reciprocity, reputation enhancement and by love of their work. They may also benefit financially in the future. Vendors and engineers are increasingly asking to move from a mere fee payment structure to a share of profits in the final product.
Metiu and Kogut conclude that open development is a model that can be transplanted from software to any field where tasks can be broken up into modules and where a wide understanding of the common language and culture exists. They add that "the promise of harnessing the intelligence in the global community through web-supported innovations will be a key element in the strategies of firms, as well as of public and creative institutions." (http://www.softpanorama.org/OSS/webliography.shtml)