Crowdsourcing, the loosely organized, widely dispersed, largely autonomous method of harnessing the power of people on the Internet.
It is good for developing free encyclopedias and open-source software. But what sort of profits can it generate?
UTest will not have 97 percent margins, but it won't have 20 percent ones either, says CEO Doron Reuveni
The answer to that question may become clearer in the next year or so as companies continue to test the market. One worth watching is uTest, a startup bringing crowdsourcing to the software testing market.
UTest is growing rapidly. The Massachusetts company has now completed 500 debugging projects for companies that include Intuit, Microsoft and Google. That is up from 20 about six months ago.
CEO Doron Reuveni says the goal at present is to grow and not worry about turning a profit. Breakeven should come at the end of next year, though Reuveni won’t say what margins he anticipates.
“You’re not going to be a software company with margins of 97 percent,” he says. “We’re also not going to be IBM Global Services (with margins) at 20 percent.”
Where uTest falls in that broad range will be insightful. Other crowdsourcing companies, LiveOps for instance, have shown that chalking up substantial sales is possible.
But it is difficult to estimate how much revenue will fall to the bottom line.
That’s in part because UTest’s business model is anything but simple – despite the relatively simple concept of crowdsourcing. It pays its 18,000 testers in a variety of ways, including for the reports they file, the bugs they catch and the customer feedback they receive. Testers can make up to $4,000 a month.
At the same time, uTest charges customers monthly, quarterly or annual subscription fees, in addition to selling individual “testing cycles.”
If the average project cost a customer $9,000 (the cost of six testing cycles) and the average tester makes $2,000, making ends meet may be difficult. But if the business can scale, the results could easily swing in uTest’s favor.
With this in mind, it will be interesting to see what the company can achieve in a year. By then it will be easier to tell if crowdsourcing can scale.
