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Unfortunately, many may not have a choice if they are desperate enough.
I think it is better to have measurable goals for your employees(especially freelancers) and evaluate whether your employee actually meets these goals then to rely on some invasive software.
Not to mention that you could probably throw together some program to simulate work and fool the oDesk/eLance software pretty easily.
I agree with you, if you are paying someone to accomplish a goal -- you
should just set up your goals/milestones to have built in checks against
procrastination.
Sadly, some corporations already have this kind of software installed.. especially the crappier divisions like telemarketing and support.
If you are actually doing the job you are supposed to do, then there shouldn't be any problems with letting the employer watch. But everyone that has worked in an office before knows that you are not working 100% of the time. Probably not even 50% of the time. How many times have you seen people checking personal emails, playing solitare, reading popular blogs, or just standing around the water cooler shooting the chit. Come on, be honest, we all know this happens. If you are a regular employee, then that's the price the employer pays to do business. But if you are freelancer, you are charging a premium and you should be delivering what you promised.
I'm for odesk and if my employer gave me the opportunity to work from home with an odesk type software, I'd take it. Of course I own the company so many I have a different perspective.
The big flaw in monitoring schemes is that they are concerned essentially with time monitoring & do not measure quality. Anyone can play around with a screen for hours on end, messing around & not achieving very much. We've probably all done plenty of this. One hour's really good work can easily be worth hours of what is really idling time.
And of course all these systems can be gamed in various ways. And people soon learn this. The result is that those who come out the best are not the best workers, but those who play the system the best. When organizations run in-house team competitions, sad but the best team does not always win - the team that has learnt to cheat the best wins.
Advocates of oDesk - learn from this.