The US government is going full throttle against outsourcing, but the small enterprises and individual entrepreneurs have a different story to tell.
Sample this: James Long is a consultant, residing in the US and needs to travel frequently. His itinerary that includes budget travel and best hotel deals are managed by his secretary Preeti Shah in Surat. When he needs a letter typed, he either calls her or electronically transfers the recorded message. The typed content is then mailed back to him.
The service comes at a fraction of what it would cost to employ a full-time assistant in the US, as Shah is a part-time virtual assistant and is paid by the hour. The average price ranges anything between $2 and $30 for an hour.
Surat-based Transform Solution has been providing virual assistance services to clients in the US and Europe for more than two years. The assistant is paid $600-$700 per month depending on whether he is a full-timer or working part-time.
Welcome to the world of work-on-demand. The internet is flooded with freelancers and small firms – service providers – selling their expertise and services to firms that need to get their work done.
US-based online portals such as Elance.com, oDesk.com and Guru.com provide a platform for these people to access jobs (projects), and related tools and services to manage their business. About 50 per cent of the service providers are from the US and the rest from other countries. The good news is that despite the slowdown freelancers and small firms continued to get business. These sites provide the platform for basic web designing, translation services, technology specific work and full BPO services, among others.
In 2008, oDesk had 14,000 Indian service providers. This has grown almost seven times to 118,000. For Elance, India is yet to catch up with the rest of the world. Earnings from providers based in India grew by 21 per cent in 2009 (over 2008) and they are on track to grow by 30 per cent in 2010 (over 2009), said the company.
Overall, online professionals earned a record $23 million on Elance in Q2 2010, a 45 per cent year-on-year increase.
During the slowdown, services providers did see an impact on the way they managed their businesses. “Indian providers’ share as a per cent of the overall Elance earnings since 2008 has remained stable at approximately 35 per cent. In 2008, it was 37.33 per cent, touched 35.26 per cent in 2009 and for year-to-date period it is 35.25 per cent,” said Fabio Rosati, president and CEO, Elance.
Consider the case of Transform Solution. The firm that started providing administrative support services in 2002 with just 15 people has moved on to become a provider of back office support, call centre solutions and services provider, virtual assistant and recruitment process outsourcing, among others.
Transform Solution is one of the 21,414 Indian service providers on Elance.com. The portal has 160,000 service providers from across the globe.
“Obviously the recession did impact our profitability by 10-15 per cent, but we continued to grow our business and our clients base did not reduce. There were pricing pressures too but instead of reducing we added new services for our customers. If you compare 2009 over 2008, our revenues grew 25 per cent. Since the beginning of this year we saw a positive movement,” said Ashfaq Shilawala, founder and managing director of Transform
Solution. The company with a 190-employee base is scaling up to 250-260 employees by the end of 2010.
While the industry is still small compared to the $1.4 trillion global outsourcing industry (as of 2009), the need to hire freelancers picked up during the slowdown when firms across regions wanted to cut cost. In the US too, the preference to hire freelancer have increased.
In the case of oDesk, it surpassed one million hours per month online work in August. Online hiring was up 10 per cent month-on-month and 129 per cent up from August 2009.
In the last one-and-a-half years, things have changed a lot. With recession hitting the US, many American firms logged on to these portals, but Indian providers have managed to hold their ground. On oDesk, India leads in terms of the number of assignments with 31,292, followed by Philippines with 19,124 and the US with 15,407.
“Not only many US firms logged on to such sites but also reduced their pricing to compete with Indian providers or for that matter providers from other geographies. We reduced our pricing to $18-22 per hour from $20-25. Also, since the project size went down we started bidding in the range of $25,000 - $100,000 from the earlier $70,000 to $150,00,” said Chintan Shah, CEO of Mumbai-based GMI (Grey Matter India).
GMI, which has been on Elance before 2008 was acquired by Idhasoft in 2009. Since then, the company has diversified into having a US sales team. But Shah maintains that business from Elance continues to grow.
“In the past year, we’ve noticed more complicated work being assigned online. The number of job opportunities for project managers has leapt 70 per cent since 2009 alone, showing a strong desire from employers to find qualified people to manage their software and web development projects on an ongoing basis. The demand for the developers themselves remains strong, and technical skills – especially those that can be applied to up-and-coming technologies – remain very strong for contractors based in India.
The skills in demand from Indian contractors are currently software and web development, data entry and graphic design,” said Erica Benton of oDesk. oDesk is spread across 215,000 employers and 720,000 contractors.
