Online job marketplaces are billion dollar businesses today, ducking the recent recession and expanding at a tremendous rate. No wonder then that more and more sites open up every day catering to a small niche of freelancers.

The two biggest general online job marketplaces are Elance and oDesk, but there are many smaller ones which are specialized, offering differentiated options for freelancer. These marketplaces have potential to add value at every stage of a freelancer’s career.

While online job marketplaces are a current trend worthy of your attention, you should consider the pros and cons before investing your time and energy into one. Let’s take a closer look.

Pros of Online Marketplaces

Online job boards bring freelancers and employers together to discuss the terms of working on projects. An online job marketplace offers a few more features than a job board, such as: payment, billing, invoicing, terms of the contract, and numerous administrative tasks. Here are more job marketplace benefits to consider:

• Ease of Finding Jobs: In this regard, online marketplaces are akin to a job board, in that you have plenty of employers looking for freelancers. Thus, it is easy to find potential clients, all listed in one place.

  This is especially attractive to beginners who do not yet have the necessary contacts in their industry and are looking to get their foot in the door. However, experienced freelancers can benefit from this too, if they are highly selective about which jobs they want to apply for.

• Level Playing Field: By this, I mean that when you are looking for work through online marketplaces, it is your work, rather than your qualifications that matter the most. If you have a good portfolio and a proven track record with other employers, you would likely be eligible for most jobs.

  This allows freelancers to try out new fields and encourages self-learning. If you are passionate about any field, you can learn it on your own and excel, without needing to go to college for specialized training.

• Feedback System: Although there is potential for abuse (and such cases aren’t unheard of), the feedback system at these online marketplaces are a great feature which allows freelancers to distinguish themselves.

  It also provides a good indicator of the quality of the worker and allows the job poster to filter out applicants. It is a good system for both parties involved because as a freelancer, you would want to avoid an employer with consistently poor feedback from other workers, and vice versa.

• Potential Lifelong Clients: Most of the people looking for freelancers are small businesses and entrepreneurs. If the quality of your work is good and you are reliable, companies will often approach you first the next time they need something done (rather than post on job marketplace again). This saves them time to work with you again and gives you opportunities to build long term clients.

• Ease of Starting: Online marketplaces give you a good starting point to understand the business that you are in. Serious freelancers, as they progress, will have a professional website and/or blog dedicated to their services. However, if you are starting out, you can post your portfolio, resume, and more on your profile on the online marketplace that you choose to be a part of.

  Depending on the site, they can have special features like the ability to take specialized tests, the results of which can be posted on your profile. All these are helpful tools to sell yourself.

Cons of Job Marketplaces

Of course, there are also reasons why many freelancers do not like to be part of online marketplaces. Some of these include:

• Pay: This is one of the most important reasons why freelancers tend to shy away from these places. As a freelancer, you need to fend for yourself and you need to demand a certain pay for your time and expertise. A very important feature of online marketplaces is that it is global in nature, which is a huge strength and weakness.

  For freelance workers in countries with a higher standard of living, it is just not viable to compete on wages with someone from the developing world. The difference in wages can be enormous.

  Each freelancer, after all, bids according to the standard of living they are comfortable with in the place they currently live in. This causes a downward pressure on the overall wages in the marketplace which, understandably, freelance workers aren’t too fond of.

• Commission: Since freelance marketplaces do a lot more than simply post jobs, they take a cut out of your paycheck. This can be anywhere from 8% to 12%. They handle things like invoicing and give you easy tools to manage your tax returns. They also have systems in place to make sure you are paid for your services.

  Whether all these features are worth the extra money that you end up paying is difficult to determine. However, commission is a big reason why freelancers don’t want to work through this system. An alternative is to form a personal relationship with the client so that the next project you can work on independently without the involvement of a third party.

• Freedom and Privacy: You would think that as a freelancer you have more freedom than a regular employee at a company in terms of how you complete the work. You would be surprised then to learn about monitoring tools some job boards have in place.

  oDesk is notorious for using a very intrusive system to monitor working hours of workers. They monitor keystrokes and mouse-clicks, take random screenshots of your computer screen, and send it to your employer. This is not the ideal work environment that many freelancers would like to work in.

• Filtering Time: Owing to the quality of jobs posted, the filtering time to go through all the jobs and apply for the ones that you like can be a significant portion of the total time you spend freelancing on these online marketplaces. On the plus side, there is a market for all kinds of services, but as a writer, you probably don’t want to transcribe an hour long audio recording for a couple of dollars.

  Sorting through the job postings take time and effort. This is another reason why even if you work through this system, you should always try to form a personal relationship so that for future projects you don’t have to spend a lot of time filtering through all the listings.

• Payment Delays: Freelancers should also be aware that in job marketplaces there is a delay between the time when an employer pays for the project and when you actually receive the money. This averages about a week or 10 days.

  Not all freelancers are comfortable with such delays. This is also one of the ways in which these companies make money. In addition, transferring money from your online account to your bank account can involve additional fees, which is again a loss of immediate revenue and liquidity for the freelancer.

Weighing the Pros and Cons

If you wish to join an online job marketplace, be sure to weigh the pros and cons carefully first. You could be investing a significant amount of time and energy into this and you don’t want to end up doing something you don’t like.

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