It’s a fine line between reducing labour costs through international outsourcing and exploitation. Earlier this month Australia’s Freelancer.com, the darling of employment websites, sped straight across that line to join the bottom-feeders. What were they thinking?

Online labour marketplaces – sites that link businesses with the growing global digital workforce – are nothing new. oDesk dates from 2003, vWorker from 2002, Elance from way back in 1999. Amazon’s Mechanical Turk, which provides tools for hiring pieceworkers for tasks as tiny as deciding whether a single photo is adult content or translating a single sentence from one language to another, was launched in 2005. CrowdFlower, providing tools to manage Mechanical Turk tasks, came in 2007.

Nor are they particularly controversial. Apart from oDesk’s habit of recording screenshots of what’s on workers’ computers or even webcam shots, and a study which showed that around 40 per cent of the work on Mechanical Turk supports spammers, the main targets of criticism are crowdsourcing sites like Melbourne-based 99designs.

Launched in 2008, 99designs uses a competition model. Want a logo for your business card? A hundred hopefuls, probably more, will compete for your prize of $200 or more. You only pay the winner. Everyone else is working for you, generating designs for your consideration, sometimes even producing revisions following your feedback, for precisely nothing.

Meanwhile SitePoint, which owns 99designs, has scored an investment of $35 million. Investors clearly support the idea of unpaid labour. I’ll admit I find it difficult to disguise my disgust.

Until now Freelancer.com, the leader of the pack, has avoided this sort of controversy.

Founded in Sweden in 2004 as GetAFreelancer.com, the site was bought by Australia’s Ignition Networks in 2009, re-named, and it now boasts 2.6 million workers on file and more than a million projects completed. It has made a tidy $85 million in commissions and earned CEO Matt Barrie the title “Entrepreneur of the Year” from BRW magazine and this year’s Webby Award for “Employment Site of the Year”.

While the top project categories are predictable – web development in the PHP programming language, website design and graphic design, plus plenty of bread-and-butter work like data entry and copywriting – Barrie has been keen to emphasise the variety on offer.

“We saw one project which was ‘Help me design an algorithm to detect skin cancer’, there was a guy who wanted someone to help him design the schematics for a jetpack, and someone else wanted a 3D walk-through of a hotel done by someone with a CAD/CAM package,” he told me in April.

“We send about a million emails an hour out,” Barrie said. “Chances are just about any job you can think of now you can probably find someone on the other side of the world to do it for you.”

Barrie has also emphasised the benefits for the developing world. “Primarily what we’re about is connecting Western world individuals and small businesses with developing world labour,” he said. “Over half the jobs come from the United States, followed by UK, Canada and Australia and so forth, although interestingly enough India is the third-largest outsourcer of jobs on the site.”

The workers come primarily from India, Pakistan, Bangladesh, Philippines and Vietnam, says Barrie.

(That could be set to change. It’s been two years since I was told that Kenya had the potential to become Africa’s call centre capital. India was just starting to price itself out of the market as workers’ expectations rose, and the TEAMS and SEACOM cables were just lighting up to provide East Africa with its first decent internet access.)

“If you’re in Bangladesh and you’re [a] search engine optimisation specialist, life is pretty grim. You might be on $2 or $3 or $4 a day, right? But now you can jump online and potentially earn a month’s wage in a matter of hours or days etc by freelancing,” Barrie said. He tells some good rags-to-riches yarns.

But all that has changed. On 6 June, Freelancer.com announced that it had joined the crowdsourcers, launching what they claim to be “the biggest and most lucrative logo crowdsourcing site in the world”.

“What does this mean for 99designs, DesignCrowd and other niche crowdsourcing companies? Especially when considered in the context of Accel’s recent $35 million investment in 99designs?” asked Freelancer.com’s publicist. “Are niche players doomed to fail as the majors move in with tailored vertical offerings?

“The two contests we currently have running on the platform have already received over 6000 submissions, and it’s only been a week!” said Barrie.

It’s all a little unsavoury. Explicitly naming the competitors you intend to crush is one thing. Pride that more than 5999 people won’t be paid a cent for their work is quite another.