Lionbridge Technologies, Inc. (NASDAQ:LIOX)
Enterprise Crowdsourcing: Changing the Way Work Gets Done Conference Call
April 17, 2013 2:00 pm ET
Dawn Tiura Evans – President and Chief Executive Officer-SIG
Carl Esposti – Founder Crowdsourcing.org,
Dori Albert – Practice Manager
Dawn Tiura Evans
So folks while we’re getting the actual screenshots launched, let me just tell you I want to welcome you to the Enterprise Crowdsourcing Changing the Way Work Gets Done. You have got two amazing presenters with you here today, so I’m really excited about this webinar. And so, let me just go quickly through the agenda, what we’re going to cover today, and then I’m going to do some introductions, you know who we all are.
So I’m going to introduce you two new speakers, they are subject matter experts, so you are very lucky to be here today and hearing them talk. We’re going to do an introduction to the crowd in the cloud, and then Crowdsourcing for the enterprise and questions. Now, what I’d like to do is ask you to make this interactive if possible, so you have a question a box on your right hand side of your screen, if you click on that and open it, you may submit questions throughout today’s webinar.
We would like to take your questions as you think of them, but if we run out of time today, what we will do is make sure the presenters’ follow-up with you after the webinar is complete. So please keep your questions coming and helps us know where your interest level lies and it’s a new subject, so you might have questions, no question is dumb, we’d really love to hear from you.
Let me tell you a little bit about myself. My name is Dawn Evans. I’m the President and CEO of Sourcing Interests Group. And we are a membership organization and we have had the – just a wonderful opportunity to get no crowdsource and get to know Lionbridge and they advise this fabulous topic and we really want to solve its cutting edge, and it’s really what all of our members are talking about these days.
We are a 22-year old company, membership organization in a non-commercial environment, and we represent most of the major logos that you would recognize throughout the world as well. So I get to be a moderator here for you today, Dawn Evans, and my contact information is on the slides as well.
I’d also like to invite you to join us in the Amelia Island for our Global Sourcing Summit. It comes up May 14 through 16. Lionbridge will be presenting there. They’ve got a fabulous presentation and it gives you an opportunity to reach out Dori on the conversation, so make sure you look for Lionbridge folks at the summit.
And it’s Amelia Island just outside of Jacksonville, if you are not familiar, it’s a gorgeous place to get to, wonderful time to be here in May, and we will have three full days packed with everything for breakfast, lunch, dinner, entertainment, and in-between we’re going to have general sessions, breakout sessions, and we’re going to be talking about next practice, not just best practice, so please join us in Amelia Island.
So with that, what I would like to do now is introduce you to your two experts in this area. We’re so lucky to have Dori Albert here. She is a Crowdsourcing Practice Manager at Lionbridge, and she is responsible for driving sales and global awareness of their Enterprise Crowdsourcing division. That includes over $150 million in annualized revenue.
Prior to Lionbridge, she was the Vice President of Global Solutions at Dextrys and was responsible for developing and managing global client relationships, including offshore solutions delivered from China, as well as domestic consulting. She has spent more than 10 years at Keane, also working across business development, delivery, and client executive roles.
So Dori welcome, we’re so glad that you are here. And with us today also is Carl Esposti, and I’ve known Carl for a number of years. He spent the first half of his career working for leading providers such as CSC, Accenture, Perot Systems, and Fujitsu. In 1999, Carl co-founded TPI, now ISG in Europe, moving to TPI in the U.S. in 2004.
Carl was also partner at the Everest Group. In 2010, Carl founded Massolution, the leading research and advisory firm specializing an implementation of Crowdsourcing and Crowdfunding business models. And at Crowdsourcing.org, which is now the leading industry portal on Crowdsourcing and Crowdfunding, he also founded that as well.
So we have two amazing speakers with you today. We have a lot of content to cover. So with that, let’s just jump into the content and welcome Dori and Carl. Thank you for joining us.
Great. Thank you very much, Dawn. I just wanted to say, my other photograph makes me very serious and after seeing Dori’s smiling face here, I had to find an equally happy photograph, so excuse I touched that. So Dawn thanks so much for that, and it’s a real pleasure to be part of today’s webinar for a couple of reasons.
The adoption of crowd-based business model has been in development for at least 5 to 10 years now. But it’s only really in the last couple of years that we’ve been seeing a maturing of the more those larger enterprises have begun to include applications of Crowdsourcing as part of the actual sourcing innovation portfolio. So it’s really exciting any opportunity to introduce enterprise Crowdsourcing to new mainstream audiences, it’s a pleasure to be part of that.
And I’m also pleased to present today with Lionbridge, their enterprise Crowdsourcing division. And there are many, many innovative companies that are harnessing the crowd, but there is a much smaller number of providers that are currently able to provide real enterprise, great solutions, and support. So Massolution considers Lionbridge to be one of those leading providers. And because as she said only the subject of crowdsourcing is still so new, and there is a lot of people still trying to sort of grapple with the subject, understand the model and its applications, we are actually going to spend a good 20 minutes or so just putting some context to try and help people join the crowdsource looking to provide the context within research trying to understand the model.
So I’ve been very deeply involved in crowdsourcing for just over four years now. And my team and I have been at the forefront of crowdsourcing researching, educating, implementing the model in small, medium, and large businesses.
Ms. Dawn mentioned that I founded my solution on research and advisory firm and Crowdsourcing.org, which is our publishing events business, as an industry think trying to focus on the design deployments of crowd-based solutions for government institutions and enterprises.
So the best way to think about our company is that, we’re like – this is McKinsey Consulting, government research plus [IDV or safer] publishing membership programs. We are based in LA, still very small competitor. With Lionbridge’s status, we are growing quickly. We’ve got about 38 people now located at various parts of the world.
So having spent the first 20 years of my career in outsourcing, offshoring, and I had the good fortune about 2008 to recognized to have a distribution of work, which we know in the 80s and 90s as was moving from inside the enterprise to outsourcing, and then to offshoring in the 90s and 2000s, this now we’re starting to be disaggregating and distributed further. So when we think of sourcing now, it’s not just about the best company for the work, it’s actually about the best work (inaudible), so this completely changes the paradigm.
And there are no longer enterprises constrained by the resources of single entity that makes decisions based on who is available at economically affordable prices.
With Enterprise Crowdsourcing, enterprises can now give the work to the best worker, whether that’s the best price or whether it’s – who is available as qualified and you only pay for what you use and you only pay if the work is done well. So I hope my background in outsourcing and offshoring enables me to sort of communicate the necessary context to help you understand how crowdsourcing fits within the overall sourcing continuum. So as John said again, this is a great opportunity to ask whatever question comes in mind, so stop us at any point. I will try and answer the questions I can, and if I can’t, I’ll pass them to Dori, who has got Dawn as a further backup.
So your view of crowdsourcing is going to be partly based on your perceptions and experiences from old traditional sourcing models, such as outsourcing, offshoring. So we share Robert Frost’s view, an American poet, it’s pretty skeptical. You might view these models as exploitive of the worker and unpatriotic. That means moving work out of the country to take advantage of lower labor, cost in other jurisdictions.
Now, Albert Einstein on the other hand, we all know, he was right about an awful lot of things, so matches very differently. As one of the earliest crowdsourcing visionaries, he predicted the fast and accurate, but dumb computers are working in conjunction, and so often inaccurate, but brilliant humans would together produce results beyond imagination.
So the advent of crowdsourcing is really the realization of this vision where a company such as Lionbridge and our business requires to be systematized and distributed to the best person for the job, in a workflow that’s quick, accurate, and efficient. So crowdsourcing doesn’t replace outsourcing or offshoring. It’s rather a scalable, on-demand model. This is a long side up forms of sourcing often producing results that are just unattainable to alternatives models.
And as I assume, that is a kind of work, is in the majority, educated professionals, the majority of which plays even in U.S. or in Europe. We’ve researched extensively the composition and characteristics of crowd workers. And the many performed crowdsourcing work with pleasure to utilize their spare time, sometimes during their normal working week, or performing work to supplement their income.
So crowdsourcing is going to have a much more disruptive shift on outsourcing then the gradual shift that happens as weather is being moved offshore that’s had in the last 10 to 15 years. Offshoring was driven by the mobilization and the enablement’s of workers in low cost countries. It wasn’t really the nature of the work change, it’s just that it was becoming cheaper.
Crowdsourcing, however, is about fundamentally new way of getting work done, it’s usually cheaper. But less so, because you pay less for the worker, it’s mostly through deficiency, the best work, the job always available paying for productive time and paying for result, flexibility, so you can turn it up or on or off or down or just as you need the outsourcing promise to deliver this, but it didn’t offer 100% variability.
Crowdsourcing is built on a variable working model, without the incumbents of fixed cost that large outsourcing providers carry, which ultimately means the customer always carries and face to some of that risk. Speed processing of large pieces of working small chunks by hundreds of workers at once at crowdsourcing company such as Lionbridge compete, it can provide completely scalable models and always have access to greater numbers of crowd workers then you’ll ever be able to use those.
And that is like a mobilizing deploy a 100 or 1,000 or 10,000 workers very, very quickly. And they can work in parallel that thereby producing better results quicker and typically this sort of lower cost. So the paradigm shifts that these as well as additional benefits and are enabling out enterprises will work with the crowd is just, hasn’t been practical or possibly using conventional metrics.
So it’s already being used strategically by many big parent companies. Amazon with the shopping comparisons, product descriptions, create localized content for product ranges Expedia that translates in travel guides and reviews in multiple languages, Google and eBay using Crowd to optimize search results, Facebook content moderation. So the use of online work is to perform and solve problems, crowdsourcing the next disruptive model, which really going to help you run your organizations for less, improve your business effectiveness and efficiency and help you outperform your competition.
Dawn Tiura Evans
So, Carl, before you go any further, I’ve been asked a couple of clarifying questions. And then, I’m also going to ask you to try and slowdown a little bit, because while you have a lovely accent and you’re so passionate, sometimes it’s hard to keep up with you and understand it all. But the first question is, can you actually define crowdsourcing? What is crowdsourcing and what isn’t crowdsourcing? Could you just give us an expert definition?
Yeah, actually that’s a nice question. So the easiest way to think of crowdsourcing is, it’s an online model for distributed production, problem solving, and for capital formation. So you can use it to get work done, solve problems, in the case of crowdfunding or creating capital. It does require online participants to create something new. I mean, there are lots of instances of communities where people interacting, sharing photographs, and things of that nature. But this requires, online communities being tapped for specific purposes. It requires the Internet, so you can connect with lots of people very quickly, so you can direct an organized work. And it requires an organization orchestration, so that there is some value, some output that comes from that interaction.
Dawn Tiura Evans
Okay. All right. Thank you.
Thank you. So expenditure on enterprise crowdsourcing is accelerating year-on-year. Our 2012 enterprise crowdsourcing study, we researched over 30 of the largest providers to learn about the size and growth of the industry and then the type of work that was being performed. And that work, what does the work – looks like few of the businesses where the early adapters went it to the workforce, their characteristics. So we learned that from this research, enterprise crowdsourcing was growing exponentially with expenditure increasing year-on-year at an accelerated rate.
In 2009, enterprises spent just over $150 million on crowdsourcing, which increased to $214 million in 2010, that was an increase of 52%. But between 2010 and 2011, expenditure increased to the much greater rate, $375 million, up to 74% increase. So our only projections on the size of crowdsourcing markets in 2012 is now suggesting the market is, in fact, doubling in size, and we are expecting total numbers to come out closer to $750 million of total expenditure.
So crowdsourcing moves out of the labs, beyond the initial developmental stage, where the prime unit companies researching applicability in the spectacle application, so we are in the early stage where these leading companies are rapidly examining deploying crowdsourcing solutions in order to perform well as it cannot easy or effectively be performed through several models or more traditional models.
Dawn Tiura Evans
And Carl could you, I’m sorry, Carl, one question came in on that, and said where is the demand coming from, what type of companies are driving it, that’s a huge growth curve there?
It is certain. So from an industry perspective, crowdsourcing’s made inroads to various degrees in each industry vertical. But the Internet centric businesses produces all sort of distributors of visual goods and businesses in – rich in digital media needs are the big adaptors at this stage in the market development. Its strongest adoptions, in fact, have a high demand on translation, community moderation session demanding, things of that nature. And then, the latest wave of adoption is those companies that have really big requirements for processing that big data needs.
Dawn Tiura Evans
Okay, good. Thank you.
Another question that we often get asked is, what types of companies are using crowdsourcing, what size of companies? So it’s really interesting to look at what type of enterprises are using each of these different categories? Crowdsourcing’s value proposition is really about providing an on-demand access to the scalable workforce. This is made possible through improved infrastructure and new payment systems that now allow us to pay people small amounts of money for doing small tasks basically. So it’s made outsourcing as a transfer of work that is much more viable for small and medium enterprises.
Expertise-based crowdsourcing is really when you’re tapping into the crowd for the client specific knowledge, local knowledge, language skills, professional qualifications, it’s pretty evenly spread across all sizes of enterprises.
The ideation-based category, which is really around problem solving, getting feedback from the crowd, all other people’s ideas and developing those ideas into solutions or products, is really mostly used by the larger enterprises is obviously I guess hopefully innovating is necessary for their model. So it’s really the more mature organizations or bigger organizations that are either trying to solve critical business issues will changes in market conditions.
The micro-task area, which are really the small tasks perhaps 10 seconds, 20 seconds, 30 seconds of task in terms of the time it takes to perform those, are actually being pretty evenly spread, but medium sized companies account for about 40% of the revenues in this area.
So, okay, so freelance; freelance is an interesting category. So this is really sort of describing the nature of the workforce as opposed to the way the work is being deployed. In a lot of the freelance marketplaces, that’s been a great opportunity for smaller companies to identify expertise and to be able to deploy that expertise.
There is no cost of entry to that market. And interestingly, a lot of the freelance marketplaces are now building tools and capabilities on top of that workforce. So it allows that capability to be deployed at the task level as opposed to hiring a worker by an hour. So the evolution of work into the Crowd, so I just want to sort of talk briefly about the progression of work as it involves from the cloud into the Crowd. So, outsourcing make many promises, but it didn’t deliver against all.
In the early years, savings were pretty high, pretty well it was a seller’s market. The large scale transformation contracts were delivering up to 30% or even 40% in some instances. But many outsourcing providers over promised and under delivered. They tried to reign in the cost space often at the expense of the customer. So while outsourcing was so going to variable in a very distinct resource usage and pricing, this was really, really a myth in a significant transferred liabilities mean that customers always fall lot of the risk if the required volumes decline significantly.
So the globalization of services on the other hand then allowed the separation of work from the worker. So new technology such as remote infrastructure management, then allowed the workers often to be located thousands of miles from the customers. These models have been delivering savings of 30% to 40% and that was quite achievable. So the increased mainstream adoption of cloud-based services has been driving the standardization of processes.
And this has led to the increased availability and use of highly scalable cloud-based applications. And these are preparing enterprises for the use of on-demand technologies that are infinitely scalable and usage based.
So cloud-based work at Crowdsourcing is being enabled by two forces; firstly, cloud-based technologies that are enabling a more effective use of Crowdsourcing versus captive labor for traditional outsourcing tasks, and then innovation by Crowdsourcing income such as one of Lionbridge that are building sophisticated systems and manage the workflows, automate the quality controls needed as quickly and verify the performance of the workers and worker management systems. This enabled enterprises to utilize and manage public crowd workers.
So there were four basic models for how to engage the crowd, and we’ve spoken about how crowdsourcing is working in some of the different types of applications.
Now how do you actually engage with the crowd, what sort of options do you have and I want to credit this, model this work to a friend Daren Brabham, who is an assistant professor at University of North Carolina at his early research in this area. So the first way is you can actually post tasks for higher workers, so obviously Lionbridge is good example of this, Amazon Mechanical Turk.
If you take Lionbridge and obviously you can provide, you can put task into a crowd, these can be [forms] that require the disaggregation of confidential data, distributing that to workers, recompiling that. So these are the types of tasks that are executed through the sort of the labor based marketplace models.
Another way of using it is you can direct an organized work. So this model is suitable when knowledge exists or can be created from available sources and this could be [prorogues] and records, and it provides a frame that creates a symbol and organize, and manage knowledge in a way into the single location. So examples of this would be a target who used the crowd to move this 40,000 product catalogue from Amazon to its own public e-commerce sites and Lionbridge, again, for translation and localization services. There are a couple of examples.
Another approach is the broadcast search, I refer to this as (inaudible) approach. And this is where an answer exists, so there is an empirical answer that exists in the (inaudible), don’t know who knows that answer and these types of crowdsourcing ones allow you to go into those communities and ask those questions, so at one end you got examples of Q&A sides like (inaudible) and at the other end, you got challenged base and problem solving communities like either in the senses that the science can’t predict data, or maybe Genpact SolutionXchange for business process management problems.
And then the fourth model is where you can use the clients to actually get ideas and in present feedback. So these instances, there is no (inaudible) correct answer, but the right answer is really a market driven answer and is one that will support – is supported by customer taste of preferences. Examples of this could be for example (quirky) radiation, what communities put forward ideas that product developments and then those products are enhanced and contributed to by the community members or things like 99designs for creative concept.
So how do you get going with Enterprise Crowdsourcing. You need to consider a number of things, as I mentioned our research is focused on Enterprise applications of Crowdsourcing and our advisory work engages us with enterprises that are wishing to learn about Enterprise Crowdsourcing in order to design and deploy these strategies.
So the first step in the process is to identify suitable work. As you move forward in order to explore and deploy Crowdsourcing solutions you need a framework in order to be able to identify based on business needs, certain tasks with our best skill support given those needs for deployment through Crowdsourcing model.
So the first look on the left, this is a typical process model within an organization, so the framework of this nature allows you to look at these processes and identify within each of those business processes where the work is and to match that with the both business and the markets’ capability. The second is obviously to identify which of these Crowdsourcing models of this project is best suited for achieving the goals. As depending on whether you are seeking to process large amounts of work or engage the crowd to get opinion or feedback or you want to collect and organize information, you need to understand which of these models is best suited for your needs.
The first step is to select the right crowd. So what is important is model selection, do you need to access a large crowd that’s fast, that don’t require specialized knowledge, (inaudible) can use your own workers, your own customers as part of the crowd, and would you need specific skills like translators in multiple countries or a crowd that has professional qualifications like credit of CPAs.
And then the fourth step is to understand the market landscape. And on Crowdsourcing, there is a feature where you can go to a sidetrack, you’re going to find over 2,000 different Crowdsourcing, crowdfunding companies at the moment, which is very, very overwhelming. But there is only small number, a much small number of companies that provide enterprise great services and solutions. And then some of these enterprise level companies provide a whole range of capabilities and used cases at professional services capabilities to help large organizations to design and deploy this work, Lionbridge is also a good example. Actually, there are a number of smaller companies that have very specific targeted solutions that are either aimed at particular cash reserve to check our industry.
So just to wrap up and handover to Dori just to summarize, enterprises are exploring and adopting these models in much greater and greater numbers, and as I said they require access to different types of crowds depending on the needs. From our perspective, the winners are going to be the enterprises and providers that can deliver an integrated approach to Crowdsourcing by blending the models with the ability to direct the rewards to the most appropriate worker for any task. I mean the providers are the best positioned strategically as those that can provide a full range of new space and obviously professional services that are necessary to design and set up this work, so future enterprise models, so the delivery of services are being built on strategy that harness public and private crowds in [New York town].
So with that, I’d like to hand over to Dori Albert from Lionbridge. She is going to explain to us how crowdsourcing the enterprise is changing the way work gets done.
Dawn Tiura Evans
And Carl, while we’re handing over the controls, could I just ask a quick question that came in, and that is how do suppliers and freelance providers learn about the different opportunities? Where are these tasks actually posted?
So the tasks are posted on community portal. So some of these portals are sort of self-set where you can go in and you can set up the work. Some of them the more sophisticated work, those you’d work with a company like Lionbridge to set up those workflows, but ultimately, the workers are receiving that work. it’s being posted and then dispatched to particular workers via an online crowdsourcing community portal.
Dawn Tiura Evans
Okay. And then this is a very typical question that you might want to think about, [if you see] applications design to help onboard the $30 million new Affordable Care Act applicants?
I don’t actually understand that, please excuse me for doing that, but if I can try and sort of interpret that will turn – trying to understand that question. And there are many, many, many entities, whether they are federal government, whether they are local communities that are looking to provide digital work opportunity for particular categories, it might be veterans, it might be disabled people, we’re working in Malaysia with the Government of Malaysia creating a marketplace to generate 160,000 digital skills by 2020. So if I’m putting two and two together, not getting five, there are many organizations that are looking to enable marketplaces to provide work to people that perhaps can benefit from this type of labor and this sort of opportunity.
Dawn Tiura Evans
Okay. I think that answers it. Thank you, that’s great.
Great. Well, thank you, Carl. That was a great overview. My name is Dori Albert. I’m…
I got it.
You got it, Dori? Okay.
I got it, yeah.
Okay. I’ll get out of the driving seat.
I run the Enterprise Crowdsourcing Practice here at Lionbridge. I think Carl did cover a lot of the bases of Crowdsourcing and how it’s defined, but I wanted to just add to that on exactly how Lionbridge defines Enterprise Crowdsourcing. And as Carl mentioned, there’s several different facets of Crowdsourcing; all the way from contact work to volunteer type work. But when we talk about Enterprise Crowdsourcing which is the offering that we have here at Lionbridge, we’re really talking about this being the next generation of outsourcing.
And the only way that it really can be the next generation of outsourcing is to provide the necessary project management, risk mitigation, security and quality control so that the end product is of the quality necessary for the enterprise to consume it. And that’s very important when Lionbridge talks about how we go to market and what our services are because at the end of the day, the only that an enterprise is really going to want to use this as an alternative is if the work that comes out is of very high quality.
One of the most interesting things asked about how Crowdsourcing is different than traditional sourcing model is really the change from a role-based model to a task-based model. So if you think about any traditional sourcing model, whether it’s on site with temp workers or offshore in a facility, almost all of those models are reliant on headcount-based model typically in an hourly rate concept and the challenge with role-based model is there’s a certain amount of non-productive time that comes inherent in any FTE model, we think about administration activities, non-productive time, meetings, absence, vacation, holiday, sickness, in this model, in the Crowdsourcing world, you’re really getting to an output-based model, because the work that’s delivered is delivered on a GAAP basis.
So you’re now not relying on specific individuals and specific people and skill set and you’re not relying on picking account for all of the downtime that they may have in a day, you are only paying for the work that you get back, which is where a lot of the cost savings comes in, in this Crowdsourcing model, which we’ll talk about in a minute.
So from our perspective at Lionbridge, there are some really key things that we think that really differentiate Crowdsourcing from traditional souring and outsourcing. From a productivity standpoint, the ability to increase the throughput that you get is enormous. This is 100% a 24/7 coverage model and it’s not just because there’s people all over the world that can log in and if any of you have experience in the outsourcing world and you’ve heard the term follow us on, typically what that means is that that work that – the companies are moving work from center to center to follow the working hours.
From a productivity standpoint in the Crowdsourcing model, you are not limited to a 9 to 5 workday or shift in a center. Workers are online all the time, workers work at night, workers work on weekend and location, well, it’s important because there is different day times, some people like to work at 2 o’clock in the morning, and there’s really no limitations from a productivity standpoint.
In addition, you can have huge thousands of people working at one time, so you can have parallel processing and move huge volumes of work through this type of model. From a flexibility and scalability standpoint, once you are able to put up a Crowd in place, you really have on-demand access to the specialized resources. They can be in any geography, because you are not putting people on the center; you are able to leverage people from all over the world, we can leverage people with multiple languages, and you can scale-up and scale-down almost on a movements noticed in order to accommodate for the fluctuation in a normal business process.
So if you think about seasonality of work, so for example, timely with Tax Time, obviously a lot of companies have to scale-up at Tax Time to process taxes, especially at state and local government. We can easily scale-up and easily scale-down to be able to accommodate for that seasonality and fluctuation in work.
From a cost saving standpoint, I think Carl touched on this as well. We look at the cost savings, again one thing I want to make clear is that, this isn’t about paying people less. This is about coming up with a new model and a new way to incent people and pay them and a new way to charge our clients. It’s cost effective, because you are eliminating the downtime.
You are truly paying for the output that comes out of this and you are also eliminating the overhead associated with having infrastructure such as facility and all the things and the employees, because you are typically working in a contractor type of model, so you don’t have all the overhead of having full-time employees.
From a predictability standpoint because this is output-based pricing, as a client you know what you are paying for, you know what works you are going to get back for what you are paying. In a traditional sourcing model, you know what you’re going to pay and you have service levels and other things that try to make sure that you’re going to get that potentially penalties, but you still at the end of the day do not know what the full results are going to be in a given time period.
In this model, you know exactly what you’re getting back and what you’re paying for it. And from a time-to-market standpoint, I think we touched on this, which you can put thousands of people on one project if you really need to speed up that project as well.
When we think about Crowd-based management model, we really start at the lower end of the volunteer communities. You guys probably heard there’s a lot about the Superbowl about Crowdsourcing the Superbowl halftime and commercials. And those are really volunteer community. Sometimes they have a prize at the end of it, like getting your picture in the Superbowl halftime show. They are typically run by a corporate site, because by the marketing department to try to get some buzz out there. But that’s really kind of at the lower end of it, there is sometimes the ideation tax in there to solve some sort of problem with again sometimes the prize at the end.
The next bubble up is more geared toward what we believe in these small and medium businesses where people want to leverage a marketplace. So I would really put a mechanical perk or an oDesk, or an Elance in here where companies sell and they just put work on a platform and any worker essentially can go pick up that work and actually perform that task. Typically, is for some sort of credit or something not usually for money at the end of the day.
When you move up to value chains and we really want to get into the enterprise application. One option is that enterprises can use their own platform. And we add compliance today that preferred to have their own platform, which typically the more sophisticated high tech clients that have been doing this for long time. But they have their own platform, but company like Lionbridge provides them the ability to recruit the workers all over the world and most important to pay them.
It’s a very complex to figure out how to pay workers in several different markets, there is different odds, there is different taxes, there is a lot of things that you have to take into account. When you do that and typically clients don’t want to bare that burden on recruiting, maintaining and payment and that’s one big value that we can bring to enterprise.
So where the real high value come is when you’re leveraging all of the things that a company like Lionbridge has to offer. We have our own platform that we can use to customize used cases for our clients for all of our reference come in and again, still providing them, recruiting the management and the payment of the workforce.
Dawn Tiura Evans
So Dori, and you have a lot of experience in this marketplace right now, but a couple of questions came in that I think are very important. One is, is there a best practice of managing a community? And then a related question is, do you do background checks or other checks being run on your virtual crowds? So what is best practice and do you run background checks?
So the best practice on managing a community, I’ll take that one first, is really applying the same fundamentals that you would do a traditional model. We have product managers, we have quality managers, there is a ceratin level of quality checks that we design into our workflow that enables us to manage the quality of our work, as well as the quality of our workers and actually have a fly back, we’ll talk to that with a great passion. We can get into more detail about that. But if you think at the fundamental level, it’s really providing the same things that you would just slightly different way, because you are managing people through an online community, but it’s the same fundamentals of project management, service level agreement, things that you would into a normal type of projects.
Dawn Tiura Evans
Do you actually contract with the people in the Crowd, do you actually have contracts signed for people on the Crowd or…
We do. All of our workers that come through go through a very heavily screening process. They actually have to apply, they fill out an application. We actually go through quite a bit of screening and testing for these workers. We do different levels of checks based on what client requirements are, but all of our workers do sign an NDA with us. So they are under a contract, a non-disclosure agreement for all of the work that they are given.
Dawn Tiura Evans
Oh, very interesting. Thank you.
Welcome. So just a very quick snapshot of Lionbridge. Lionbridge has been in the business since 1996. We were founded with our heritage in localization and translation. We’re a $457 million company, with about $150 million of that in our crowdsourcing space. And I’ll just really quickly give the background of Lionbridge, because we’re a localization and translation company. And if any of you know that base at all, it’s a fairly commoditized industry.
All the work is priced by word, and there’s cost constraints in that room. From an operational standpoint over 10 years ago, we were forced to look at new and innovative ways to deliver that service. And one of the things that we did being ahead somewhat of an innovator at that time was use of the new web technology to create some portals that we collaborated with our translators all over the world on the contract basis. And that was really how crowdsourcing was born at Lionbridge.
A couple of years later, some of our forward-thinking high tech customers came to us and said, well, you can do this in the translation space. We have some other work that you would like us to try it in the search relevance and some of the data space. And we started to expand and then from there has organically grown with our client base to that. We have a recurring base of over 800 clients.
95% of our revenue comes from clients that have been with us for a year or more, and we have our own unique Crowd in the Cloud delivery platform, which I’ll touch on in a minute. So the three pillars that we see that are very important in this model are a global private workforce. And I kind of jumped ahead a little bit, but all of our workers are private. They’ve gone through a screening process, we qualify them. We made sure that they can do the work in the project that we allow them to see that work.
There’s over a 100,000 workers in that crowd in over a 100 countries. The next pillar that’s crucial to this model to provide a managed service is program management. And we have 26 program management centers all over the world and in different locations and different languages, so that we can manage global workforce, and then we can manage all of these products in an effective way.
And third is a proprietary crowd platform. This is the platform that we use to interact with our workers if whether actually completing the work, and we also have an operation platform that lets us manage all of the work, all of the operational essentials like making sure we are adhering to our SLAs, checking on the quality of our workers, making sure that their quality is the par and releasing work at the appropriate time, so we’re making sure that we’re meeting our client expectations on all of our projects.
Dawn Tiura Evans
So Dori, I know we don’t have a lot of time, but there are a couple of questions that came in around the work itself and how do you manage your work and workers to ensure adherence to the clients, SLAs and quality metrics? And then related to that is what about the quality of the work provided by the Crowd when the work is outsourced, service provider is typically responsible for the quality. How does the model work with the Crowd then?
So the quality question that you just asked, basically what we do is, we have certain levers and it depends on what the task is and how it’s defined, but it’s a, for phase data entry, for example, if someone did enter something, we typically have a dual source process for someone else has to enter the same thing in order for that to pass for quality and for the workers to get paid.
So we have a certain amount of checks and balances within all of our workflows that allow us to check for quality, and I’m sure that the quality coming back from workers is of the par that we need it to be, so we’re adhering to our SLAs and we pay it for the quality of work and that’s very well defined and explained to our workers. What was the first question, Dawn?
Dawn Tiura Evans
Well, in that video and how do you manage your work and workers to ensure that they adhere to the SLAs, so I think you’ve really covered a bit of both of the questions there. Thank you.
Okay. Great, thank you. So from a coverage perspective, I’ll just spend a minute on this. I think I covered most of it. Last year, we completed over 450 million tasks. We are the largest managed service crowdsourcing company. As far as I know, we’re the only public company out there, and the only one that can say that they have a $150 million in revenue.
Our product is private, we have our own platform, and we have a very sophisticated process for on-boarding our workers as well as understanding the payments in all these countries, and that’s really key. We pay our workers in money in multi-currencies, and we pay them directly to their bank account. A lot of these companies out there were paying some sort of credit or they can only pay in one currency, and we found that is critical, if you want to work with workers all over the world that you need to be able to pay them and pay them in local currency.
So to give you an idea of the demographics of our crowd, the one thing that I’d like to point out when I present the slide is that, it’s a highly educated crowd. Over 90% of our workers had a higher education degree, so you’re not talking about some wild unmanaged crowd. From a demographic standpoint, one would think that these are people on all these, overall countries and it’s not the case. The biggest two demographics are Europe and North America, although, we have workers in over a 100 countries and then in 4,600 local markets.
So you asked me a couple of questions about quality, Dawn. Here is our quality pyramid, and this is really the process that we go through more designing all of our tasks for our clients. There is quite a depth to it, the first is qualification. All of our workers are pre-screened. They go through a qualification process. For some of our projects, some people have to go through several hours of online testing, and pass that testing before they’re actually let into the crowd.
We actually have about 5,000, around 5,000 applications per month, and we typically only review and approve a 100 to 300 workers on a monthly basis.
In the next level, you have injected testing which is known as [global] testing to some people. Where we have a task, the worker has no idea that it’s actually a test, but we have a very clear idea what the answer should be and if they are not answering it correctly, then we can actually put them through some additional guided training to make sure that they can improve their quality or disqualify people that way as well.
Multiplicity, when there’s a concrete answer to something like I mentioned in data capture, you know what the answer should be. You can easily do a sourced task, so you can have two people to do the same thing and not move forward until they match or you can do a per percentage in order to kind of check quality on a percentage of the task. But for more subjective tasks like translation that we do, you really need some sort of moderation step, and that moderation step can be done by a peer or that moderation step can be done by an expert which is typically an in-house expert at Lionbridge. The level of quality they would put to this, there is always a cost associated with the different levels. So we have to design that based on the quality requirements of our clients on that particular project and what results we’re trying to achieve.
So Lionbridge has – you talked about how does an enterprise work with us or work with a crowd company; we’ve defined four key areas of services that we offer; data management, testing, translation and custom crowd. And I’ll take you through a couple of slides that talk through some of these cases.
On the data capture side, I mentioned earlier the state and local government, today there’s still over 31 million paper tax forms submitted to the federal and state and local governments every year. And we precisely in local governments have a solution for data capture to basically take the information off of these paper tax form and digitize them so that the tax, the Department of Revenue can process those tax form.
It’s a combination of technology that allows us to take that information and scramble it behind the clients’ firewall, so there is absolutely zero security risk when this information goes out to our workers and we do a source of this, so the work that we return back is 99.99% accurate. So that’s a really interesting offering in the crowd that allows us to work with secured data. And we do some healthcare form such as (inaudible) forms, the work of birth record, there is a whole number of paper forms that this works with.
Data enrichment is an offering that allow the customer to complete a data set. So if you think about information publisher who actually sell information for their revenue generation channel, this allows them to create new data set very cost effectively where we have workers who are paid for returning back record and we’re paid for the records that we return or they are enhancing a data set with additional data points that this company can then go and sell. But another viewed case in this area that I think pleases to everyone company is CRM and sales force data. We have some clients that we work with to enrich their sales force data and cleanse that sales force data, so that their sales force and their marketing department has more accurate information to go out and sell to their target audience.
Carl mentioned big data, this is a very big area for us and it’s really any very large data set that require the human intervention to make some sort of decision on. So it could be cleansing, it could be add the attribute, it could be normalizing into one format, so companies can [then go to] analytics on it, but most of these big data sets still require some sort of human intervention. This is a very cost effective way also a very large amount of data.
On the testing side, we provide global testing, which means that if a company wants to release a product, software, hardware, a website or a mobile application globally, we have workers all over the world that can test those in the local market and make sure that they’re functioning correctly, which we test for things like transaction, for connectivity, for usability, and for functionality.
On the translation side, obviously, Lionbridge is a translation company, and we have crowds of professional translators that do a lot of our work. But in this case, I’m talking about crowd of bilingual speakers or native speakers. And we do translation mostly on product or traveler reviews, and there was a very interesting say that just came out of Forrester that talks about the reasons that consumers buy, and most influential items in their decision. And the first one was recommendations by kind of friends and family. The second was a recommendation from a professional outfit like CNET. And the third was product and user review.
So this is really taking bilingual speakers and native speakers to translate things like product and user reviews that are written by users. And the real value for the retail or the travel leisure industry is that, it allows them to very easily and cost effectively go and enter into new market and market their product into those additional global market.
And lastly, a custom crowd is our ability to customize a solution for a customer. And that’s really working with a customer to come up with solution to fit their specific needs. And a very quick example that I’ll give you is for one of our high-tech customers who sells an ERP system, they needed to capture tax law changes all over the world to make sure that their ERP system would capturing that.
So we hired CPAs in 25 countries who monitor any tax law changes. Once the tax law change was logged, it actually went to a second Custom Crowd that we built, a system then on that knew this ERP system, and the system’s document were created that was then sent to an internal customer development team to make the appropriate change.
Dawn Tiura Evans
So Dori, there are couple of questions regarding the Custom Crowd. First is, how difficult is it to add and mature a new data domain area in this model. So let’s say, when they came to, how long did it take you to get a Custom Crowd up and running?
So every Custom Crowd is different, because it, of course, depends on the skill set, the location, and the number of people. But, for example, for one of our high tech customers recently we need to hire 300 people across five countries, and we were able to do that in five weeks, and that was some fairly specific skill set that we had to hire for.
Dawn Tiura Evans
Okay. And, folks please keep your questions coming. I know in the interest of the time we will not get to all of them, but and I told you, you would love these guys presenting this topic today. So we will make sure that they follow-up after today’s webinar, so get your questions in, and we will get you an answer after the webinar is complete. But we do have some really great content to cover right now, so I’m going to hold a few questions for a couple of minutes here.
So I will very quickly reserve at this point, but I get asked very often how do we start, and it’s not as difficult as it may seem even though you are completely changing the way the work is getting done. It typically just starts with the working session with some folks from my team. And once we identify some areas, we can very quickly go in and design some use cases and the workflow process that we can then go pilot within our system and our workers and then move over to execution. And this process can be as quick as two to four weeks from the initiation of task design and the pilot really depends on how long you want to run it. But it’s not only the process, and we have a very, I wouldn’t say, formal, but we have an understanding of how to move people through this quickly.
So for Lionbridge, I think we’ve talked a little about this, but there is some really key differentiators for Lionbridge in this space. We focus mainly everything and all of our efforts are focused on providing our clients a quality product. We’ve been doing this for over ten years for a public company. We know what we’re doing. We understand what the requirements are of our customer, and we’re creating crowd and workflows and designing projects, so that the clients are receiving the quality results that they want, which is why we have such a great return rate in our customer base.
We have our own crowd management platform, which allows us to customize use cases for our workers. Our crowd is a private crowd, it’s not a calls action for anybody who wants to come to work. We put a lot of emphasis on the quality of our workers and we make sure that their quality continues through the life cycle of working with us. And we think it’s very key; this managed service approach is what makes us deliver at the period customer service for our clients.
And just lastly, I thought it would make sense to tie-up with what are the lessons learned that we have since we’ve been doing this for over 10 years. The first thing that I would say is, depending on what your end result is, I would make sure that any partner you work with in the crowd space has the proper incentive. Lionbridge, for example, we’re paid by our clients to make sure that your programs are delivering the results that you want. We’re not a platform where we’re taking a cut of whatever work it is that you’re putting out there. To make sure you’re incenting your partners for the things that you want to achieve.
Global payments are very complex. Paying workers is not one, a small pack, considering out all the legalities and even just the bank fees that are associated with paying workers globally is really important. We have a multicurrency bank out of Ireland, in which we pay out our workers. We have a global deployment of SAP, which is what we handle all of our operations including our crowd work within.
So finding a partner that understands us is very important. You need to have a sophisticated recruiting engine, just like payments you need to be able to understand how do you recruit workers in the different countries, how can you source unique skills in different locations. Again, that’s not something that’s very easy to do. It’s not as simple as just putting an online ad out there. There is a lot more that goes into it.
Having a task platform that continues to grow is really important. A client can have their own platform, but it makes a lot more sense for us when we have our platform, we can very easily create a new use case for our clients. And even use cases that are of similar nature like data enrichment, typically requires some customization based on what exactly the client is looking to do and what information they’re looking to enrich.
It’s important to have a private crowd. You don’t want, if you’re going to put any sort of proprietary information even if you prompt any appropriate measures of securing that data, you want to make sure those workers are on their NDA. And if you fill that one you know, while the company is out there, they are not. So this is one thing I would caution you on.
And finally, we strongly believe that managed Crowdsourcing is what equals quality results. If you want to work with a company that knows how to do project management and program management that knows, that has quality managers that are going through making sure that the work that you’re trying back is of quality results and can hear to service level agreement.
Dawn Tiura Evans
So Dori a question came in, and as I said, I mean, I’m going back to an earlier side, slide where we talked about the number of crowd workers is doubling year-over-year. Is that because of the economy? Is it the trends that you think will continue? Or do you think when companies start hiring full-time employees, there will be less people to work except the Crowdsourcing and applications?
You know, that’s a very interesting question, Dawn. My opinion on that is that sometimes we’ll always be cyclical, right. There’s always economic implications on any workforce model, whether retiring FTEs or you’re working with people in a crowd. But the one thing I will tell you is that the flexibility of crowd work in freelance model is a growing trend all over the world that you’re seeing more and more people we are attracted to it, especially the suit of Genwire come up in the workforce.
People are looking for a work model where they can work anywhere, anytime; nine to five is something that’s not that puzzling, we’re starting to go away. People want to work where they want, when they want. So I really don’t think that if the economy gets stronger that that’s going to change the amount of workers that we have, of course, we’ll see when that happens.
Dawn Tiura Evans
And you’re probably right, there’s, go ahead, sorry.
Sorry, Dawn. I just want to say that there are going be over 3 billion workers online by end of 2016 and 5 billion by 2020. If this is not a model that it’s going to slowdown, it’s going to accelerate. And this is about the democratization of labor as we’ve seen with many other things. we choose how to shop. we shop based on reviews of other customers. We publish our own content on YouTube. So it is a very fundamental model, and it’s going to generate more capacity over time.
Dawn Tiura Evans
That’s great. So one last question then, because I know we’re out of time and folks, we are going to be sending out the slide deck to you in a PDF version for you to reference. And then once again, please keep your questions coming over, we’re still online. And also, if you do have the contact information for both of our presenters in this deck, so please also make sure you reach out to them and make sure you visit Lionbridge at the summit if you’re there and make sure that you try and find Dori in the crowd as well.
So last question, how do you execute security requirements with the crowd, sometimes they are very specific and very critical for doing business?
Well, I think that’s a question from me and that’s a pretty broad question, because it really depends. We have certain ways of – from a technology standpoint managing secure data. So doing certain things with the information before the user clients’ facility, we have specifics and certain software models that we do to ensure that security. We have measures that we take with our worker. There are certain other additional bubbles of security and training that will go through with our workers if necessary for certain projects.
And then it really has to do with how do we design the specific work or task of where you have to design in those security parameters within that, and there is different levels. There is something that aren’t perfect to send out to a crowdsourcing, if you have something that someone have to use a certain computer in a facility, obviously that’s not going to be good for a crowd worker.
So there are certain things and certain work that we wouldn’t suggest sending out to a crowd, but typically we can work with our clients and understand what their security requirements are and change the workflow in a way that we can accommodate for those.
Dawn Tiura Evans
Awesome, that’s wonderful. So folks, like I said, between Dori and Carl, we’ve got experts here in the Lionbridge and all of their content and 10 years of experience who knew that there is a company out there with 10 years of experience in such a new topic. So with that, we are out of time. I want to thank you for your questions, I want to thank you for your attention, and please let’s keep the conversation going. This is the way for the future, so let’s make sure that we’re all getting our questions answered.
So with that, thank you so much Dori, and so much, Carl. And with that, we’ll have to sign off and say, have a great day.
Thank you very much, Dawn.
Thank you very much, Dawn, thank you, everyone. Thank you guys, it was wonderful. Bye-bye.
Thank you for attending.
[No Q&A session for this event]
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