TopCoder eyeing SMB market

TopCoder, a company known for its competition-based software development services, is turning its sights on the SMB market with a new portal called TopCoder Direct that will come out of beta at the end of October.

Whereas TopCoder has previously used its community of programmers to develop custom applications for enterprises, the new offering will enable a wide range of customers to set up coding contests on their own.

Users furnish a description of what they want developed, name a prize purse and start a contest. Community members then submit entries, and the user chooses a winner and downloads it.

"The enterprise business is still strong. But this was always the vision from the start," said Robert Hughes, chief operating officer.

Initially, TopCoder Direct will focus on front-end tasks like logos and Web site look-and-feel. Later the service will move to full-blown application development. The second release will introduce "co-pilots" -- community members that for a negotiated fee will help customers set up competitions.

There is no charge to access the site; customers pay to start a contest. TopCoder will make money by taking a cut -- now set at 20 percent -- of the prize purse.

"It took us quite a while to build the supply side -- the community -- and to build out the processes, to get a predictable outcome from the community," Hughes said. "There'll be somewhat of a learning process for us [with TopCoder Direct]. Not everything is going to work right out of the gate."

Financial services provider Tree.com has been involved in the TopCoder Direct beta-testing period.

The service doesn't yet appear to be a money-saver, but that is not why Tree.com is involved, according to Keith Moore, senior vice president and head of the company's emerging business unit.

"We have a lot of great of ideas, but don't have a lot of flexibility to ramp up projects and ramp them back down," Moore said. "It's not an outsourcing model for us, it's really a bandwidth and innovation model ... I can see over time how it could be a potential money-saver for us, but we're not looking at it that way."

In general, outsourcing application development can make sense, assuming the project is concretely defined and it is easy to measure success, according to Redmonk analyst Michael Coté.

"It's a very binary sort of thing. Either the code works or it doesn't," he said.

"The more you know what you want, the cheaper it is," Coté added. "You can imagine if you made a house without a blueprint. You'd probably start over a few times."

TopCoder claims to have more than 170,000 community members in more than 200 countries. In addition to the custom development work these individuals perform, TopCoder has a catalog of prebuilt application components. The company claims that a program can be half-completed from the start, thanks to the catalog, which is available via subscription.

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