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The industrial internet of things

The IIoT and crowdworking – revolutionising employment?

The digitisation of the production process, typically referred to as the 'industrial internet of things' or ‘Industry 4.0’, means that some manufacturers no longer need to have employees on site. Instead, the increasing ability to exchange information and data anytime and anywhere has led to a rise in outsourcing tasks.

In this rapidly-changing working environment, companies are also reaching out to the online community, referred to as ‘the crowd’, to take on certain roles in the production process or in connection with the development of a new product. Known as ‘crowdworking’, it is slowly transforming the employment market and, in certain sectors, challenging traditional forms of employment.

The growing importance of crowdworking is also reflected by the market size of the industry: according to a recent study by the World Bank, the gross service revenue related to online outsourcing was estimated at $2bn in 2013, and is expected to increase, reaching $25bn by 2020.

What is crowdworking?

Crowdworking is the outsourcing of several tasks to the online community. The tasks are typically posted on a web-based platform, which is maintained by an intermediary company (such as Amazon Mechanical Turk, Upwork, Crowdsource and Crowd Flower). These platforms allow crowdworkers and companies to connect and negotiate directly (‘open service platforms’). Sometimes the intermediary firms also assist in finding or hiring professionals and perform quality checks (‘Managed services platforms’).

Contractual relationships in this environment vary. The key elements are contracts between the crowdworker and the intermediary company on the one hand, and the company and the intermediary company on the other. Often, there is also a third (contractual) relationship between the company and the crowdworker.

The tasks performed by crowdworkers cover a wide range of subjects. They often comprise simple repetitive activities (eg searching for certain terms on certain websites and recording the results) but can also include highly specialised tasks such as software development and website design. Sometimes these tasks are performed co-operatively with other crowdworkers. In other situations, the tasks are performed on a ‘first come, first served’ basis where only the worker who provides the first acceptable result gets paid.

Generally, crowdworking is not restricted to individuals employed by a certain company or group of companies. Instead, it is typically open to whoever is interested in rendering the services requested, as long as that person has access to the internet.

Benefits, limits and downsides of crowdworking

Crowdworking can have a significant and positive impact for companies.

It allows them to access an enormous labour pool that cannot be obtained within a company. Also, crowdworkers are typically not granted access to employee benefits such as unionisation, collective bargaining or minimum wage. This brings cost advantages. In addition, crowdworkers have no long-term contracts. Instead, the business relationship to the crowdworker is generally narrowed to the specific task the person has been assigned, and automatically terminates once it has been completed. This gives companies an additional level of flexibility.

In spite of these benefits, there are also limits and downsides to crowdworking. In particular, companies risk a loss of internal competence if a large number of tasks are given to external crowdworkers. This is one reason why critical tasks are not typically handed over to crowdworkers. In addition, there are reputational risks if companies are not providing fair employment conditions to crowdworkers or if they dismiss regular employees in exchange for the use of crowdworking. The quality of work provided by external crowdworkers may also be variable and, if no adequate training is provided, could prove to be insufficient. As a consequence, quality control is crucial to ensure that the work of crowdworkers actually adds value.

Legal classification of crowdworkers

A major concern around crowdsourcing is the legal classification of the workers. Across a number of jurisdictions, crowdworkers are not considered to be employees. Instead, their status is somewhat similar to that of an external contractor.

Whether or not such classification is correct needs to be reviewed on a country-by-country basis. It also needs to take the specifics of the business relationship between the crowdsourcing company and the crowdworker into account.

For example, crowdworkers may be more likely to qualify as employees if the person has been hired repeatedly or for projects with a long duration.

The qualification of crowdworkers as employees would lead to a number of issues, which would become even more relevant if crowdworking became the main source of income. Issues include:

  • the obligation to provide employee benefits to crowdworkers;
  • the correct legal framework in cross-border crowdworking; and
  • the ownership status of data and/or products provided by crowdworkers.

In addition, a number of current contractual practices may be considered invalid, at least in some major jurisdictions, if crowdworkers are recognised as employees. For example, some web-based crowdworking platforms state that products created or services rendered by crowdworkers may be rejected without explanation and with no obligation to pay compensation. Others offer concepts whereby only the individual who provides the best or first acceptable result gets paid. Such practices would likely be declared invalid if crowdworkers qualified as employees (and may even be questionable if the crowdworkers are contractors).

The position of labour unions on crowdworking and other forms of protection

Crowdworkers typically earn less than average employees (often significantly less than minimum wage) and in some areas they are competing against the regular workforce.

As a result, labour unions are concerned about the rise of largely unregulated crowdworking. The lack of protection offered to crowdworkers and the lack of regulation in this sector may result in increased efforts by unions to reach out to crowdworkers in order to promote union membership. They may also try to initiate new legislation to regulate crowdworking.

Aside from traditional labour unions, there are other forms of protection for crowdworkers, particularly mechanisms that try to bring transparency to the market. There are platforms such as, where currently 36 different platforms are ranked and evaluated by crowdworkers. Crowdworkers give information on payment, communication, evaluation of workers and work quality. Experts analyse various aspects of the terms and conditions, including rejection of products and unilateral change in terms and conditions.

Certain companies are also trying to improve working conditions for crowdworkers by way of voluntary self-commitments. In Germany, for example, Testbirds, Clickworker, Streetspotr and the German Crowdsourcing Association have concluded a code of conduct which contains obligations regarding payment, data protection and privacy.