Pro Connect is one of the newest online talent matching platforms in Japan, focusing on experienced freelancers. Freelancers list themselves and companies list assignments on Pro Connect’s platform. Then, matchings happen by either freelancers applying to the job or the companies contacting freelancers to ask their interest on their jobs. Through this process, Pro Connect creates value for both companies and freelancers.
For companies, Pro Connect creates values by (1) helping them find high skill talents and by (2) giving flexibility to their talent management system.
First, many companies in Japan lack the high quality, specialized talents mainly due to a structural deficiency, especially in IT engineers and consultants (The Japanese government estimates that the supply of IT engineers falls short by about 300k today and this gap would increase to 600k by 2030). Pro Connect not only provides the pool of freelancers to the companies but also tries to guarantee the quality of each freelancers to avoid the mismatching. To do so, it interviews all freelancers during its sign-up process to assess skill levels and experiences and reject sign-up applications if the skill level is lower than expectations. In addition, Pro Connect opens their assessments on the platform for companies to have enough information about freelancers before contracting them.
Second, maintaining high quality talents with specific skills in house is costly if companies do not need the skills always (i.e. IT consulting firm working on projects which require different type of skills, number of people, etc.). Pro Connect provides companies with flexibility. It enables the companies to contract the talents with specific skills of their needs in the time they need, thus increasing their quality of work for each job while lowering total cost.
For freelancers, Pro Connect creates value by (1) helping them find ideal jobs and by (2) lowering cost by minimizing intermediation, and (3) creating trust by being transparent with commission rate of 8%. First, Pro Connect consolidates a wide variety of jobs on the platform, so freelancers can find and apply for the jobs that match to their interests and lifestyles. Second, unlike a traditional matching platform, Pro Connect does not offer many helps in matching and in return lowers cost and commission rate. Since its commission rate of 8% is cheaper than other competitors which usually charge 10 to 30 %, Pro Connect attracts experienced freelancers who already know how online matching platform works and prefer lower commission rate in return for less service. Third, Pro Connect is transparent with their commission rate and create a sense of trust on the platform.
Pro Connect charge the commission rate of 8% on the payment from companies to freelancers. The company was founded last year and there is no data available of their performance yet, but assuming from its competitors’ numbers, freelancers that Pro Connect is targeting earn average of $15k per month, which offers Pro Connect $1,200 per matching per month. Since Pro Connect is getting many tractions and their fixed and variable cost is very low, I would argue that they are in a good position to be profitable soon.
Pro Connect enjoys both direct and indirect network effects. The platform’s low commission rate attracts some freelancers and the number of freelancers is increasing through word of mouth. Then, a number of skilled freelancers assessed by Pro Connect increases the number of companies on platform.
Pro Connect also gains a merit from multi-homing. Both companies and free lancers usually do multi-homing since there is no significant demerit for them to do so (only receiving many emails). While Pro Connect does not offer many helps in job matching, freelancers can receive support to find the ideal job on other platforms and they can check whether there is the same job on Pro Connect where a commission is cheaper.
While Pro Connect seems to have a competitive edge to other competitors with a lower commission rate and a niche platform with only skilled freelancers, there is a critical risk. It seems not difficult for others to create this type of platform and it can end up with price war. They might want to try to grow as big and fast as possible to become an essential platform in order to get an exclusivity from companies to post jobs only on Pro Connect while maintaining the traction from freelancers with a lower commission rate.