Recently we have been analysing the pros and cons of this relatively new, but very successful, online phenomenon for an Alsace-based client. Services such as Odesk, Guru and Elance have been cashing in on globalisation by providing the means for even the smallest of businesses, individuals even, to outsource just about any process or project.
The theory is simple enough, you need something doing but you don’t have the skills or the time to do it yourself, so you sign-up to one of these services, place an advert and wait for the bids to come flooding in. You select your preferred bidder, and if they agree to the terms of your engagement a contract comes into effect until the job in question is completed satisfactorily.
Each of the main service providers use their own specific models to earn revenue from the user base, and at face value it appears to be a highly profitable business to be in. The question is however, how effective a means is it for outsourcing, or indeed finding work?
As a job-seeker you are faced with the onerous task of having to undercut rival bidders in order to get a foot in the door. This leads to unfair downward pressure on prices for skilled work, particularly considering that many workers are based in low-cost countries. This then leads to a deflationary cycle as potential employers learn quickly that they can get a lot for their money, and will post and repost the same job until they get the lowest possible price.
This then leads to the services filling up with jobs that are so wildly under-budgeted that no-one in their right mind would bid for them. For example we recently found one employer who wanted someone to research and write chapters of a new book, specifying a word-count of approximately 42 thousand words. At face value this job would take about six months to complete but the employer is expecting to pay between 500 and 1000 USD. No wonder then that many of the services are referred to as ‘e-slavery’.
Many of the service providers of course have wised-up to this problem, and are now charging job seekers to use their services, regardless of whether any job ever gets allocated or ever completed. Unfortunately this is somewhat counter-productive to good business process outsourcing.
In our view the fairest, and most fool-proof model can be found on Freelancer.com where employers are required to pay a refundable deposit on each job post, avoiding the system filling up with unfulfilled jobs, and only taking revenue from completed transactions. Membership is free for both providers and employers – so the potential user base is not restricted to those who can afford the service’s subscription rates. I don’t doubt the profit margin is smaller than that of Guru and others, but one thing is assured on Freelancer – it’s future as a successful BPO service.
