Crowdsourcing - a boon or bane to innovation?

Bangalore: With the economic downturn, companies are looking at all options to cut costs and crowdsourcing is the latest entrant. By spending a fraction of the money for designing products, crowdsourcing looks like an attractive option for companies. According to Businessweek, LG crowdsourced a new cell phone design for just $20,000, the same project would have cost them in millions if it was designed by a design firm. But, currently experts are divided on the viability of crowdsourcing in the long run.

Some analysts predict that crowdsourcing is the future of the advertising, marketing and industrial design segments. They expect it to accelerate creativity across a larger network. Others predict that this practice of opening up a task to the public instead of keeping it in-house or using a contractor, will be the end of those businesses, who were earlier involved in similar projects, due to the downward pressure on prices.

The crowdsourcing marketplaces are CrowdSpring, InnoCentive, TopCoder and uTest provide platforms for companies to host their projects. Participants utilize this opportunity to create a design as per the company's requirements. After all the entries are submitted, the best design in the 'Crowd' is selected by the company. The marketplaces reward the winners of the contest with up to $50,000. According to Businessweek, due to crowdsourcing, traditional forms of compensation connecting corporations to creativity are splintering beyond money to include fame and community.

Some companies like Nike, Dell and Starbucks have created their own platforms, which allow customers to help them create new products and messages. Though, it faces many challenges ahead, the growth of crowdsourcing shows no signs of slowing down.