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Session 8 - TopCoder

3 min read

TopCoder

Outsourcing: The business practice in which a company hires a third-party to perform tasks, handle operations or provide services for the company.

Crowdsourcing: The practice of obtaining information or input into a task or project by enlisting the services of a large number of people, either paid of unpaid, typically via the internet.

Difference:

  • Outsourcing you control who gets to do the task. Crowdsourcing you cannot choose who does the task.

Crowdsourcing examples:

  • Case Competitions
  • Crowdfunding
  • Open Innovation
  • Wikipedia
  • Freelancing like Upwork

Cross-side network effect, same-side network effect

Exam

  1. Identify that TopCoder is a Two-sided Platform and write down what each of the sides are
  2. Same-side network effects
  3. Cross-side network effects

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Negative Network Effect:

  • For TopCoder, what if the number of clients vs. developers becomes unbalance?
    • Too many clients: poor project quality, long delivery time, higher const…
    • Too many developers: talent loss, clients taking advantage of developers (e.g., reduced prize amounts)

How TopCoder solved the Chicken & Egg Problem

  • How did they onboard developers: they turned the platform into a recruiting pipeline for companies (they can hire the winners).
  • How did they onboard clients: they started as a consulting firm and approached smaller to mid sized firms.

Archive

Understanding Crowdsourcing and Two-Sided Innovation Platforms

Crowdsourcing refers to using digital platforms to access skills, ideas, or problem-solving capacity from a large and distributed group of contributors.

This case examines TopCoder, a two-sided innovation platform that connects corporate clients seeking customized software solutions with a global community of freelance developers. TopCoder does not simply match buyers and sellers. It actively designs contests, governs evaluation, and structures incentives to coordinate interaction between the two sides. 

In this session, we explore how TopCoder works as a two-sided crowdsourcing platform, the growth and coordination challenges it faces, and how generative AI is changing the role such platforms play in software development.

Case: TopCoder (A): Developing Software through Crowdsourcing (610032)Download TopCoder (A): Developing Software through Crowdsourcing (610032)

Now that you have read the case, consider the following case questions and bring your answers to class.

Case Preparation Questions:  

1. From a client’s perspective, what are the key benefits and risks of using TopCoder instead of traditional outsourcing or in-house development?
2. From a developer’s perspective, what makes participation in the TopCoder community attractive, and what tensions or risks does the model create for contributors?
3. Is the TopCoder model sustainable? What are the main platform-level tensions TopCoder must manage as it grows?
4. In the era of generative AI, does TopCoder become less relevant?

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