Global Outsourcing For All

Centric is frugal – we watch our costs so we can provide the same level of service as the Tier 1 professional services firms for less money – and still make a decent profit for our efforts.  Some examples:  we use Google Apps for some of our IT infrastructure in particular gMail, and we use for all our teleconferences (yes, it really is free).

It appears that we’re not the only ones looking to save a buck.  I’ve been exploring several ask / bid sites for professional services designed to make the buying process more competitive and as a result cheaper.  Examples include:

  • Brickwork India

These web sites are marketplaces for freelancers – essentially eBay for services.  Most are very small in terms of revenue at this point, the largest is @ $60M.
What appears to be selling on these sites? Well-defined programming tasks and simple graphic design work (logo work, simple brochure-ware web sites).  But the common denominator is cheap – my un-scientific research suggests that most of the work gets done offshore for as little as $1.50 – $8.00 per hour.

The process is quite similar across all the sites.  Software buyers post project descriptions and specifications.  Buyers generally include a bid price.  Many of the sites, such as RentACoder have escrow services for the transfer of funds.  Interested professionals bid on projects and ultimately the buyer awards the work to the bidder.  Funds are placed in escrow.  Work is done by coder, reviewed and approved by the buyer, and funds are transferred out of the escrow account.  Like eBay, buyers and sellers can rate each other.

Some of the sites are attempting to do much more than graphic design and programming. also includes services like painting, sculpting, marketing and advertising, sales, engineering, CAD, architecture, network design, legal, photography and videography.  DoMyStuff takes it down another level to include any kind of handyman work imaginable from weeding a garden, decorating a room, cleaning a household, or replacing a head gasket on a 1995 Isuzu Rodeo.

So am I looking for a new career away from consulting?  Is Centric’s model threatened?
Cheaper certainly sounds good, right?  Well here are my concerns, as well as many others who have posted comments about these sites:

  • Clutter – it’s hard to quickly find the good stuff.  There are lots of noise and “junk” projects on these sites making it hard to find real opportunities.
  • Low End Brawl – it’s highly cost competitive – how many really good professionals want to compete on a cost only basis for projects?  Essentially these sites connect third world developers willing to work very cheap with buyers in first world countries.  There does not seem to be a place in the mix for first world developers.  An example, the average Bulgarian gets a salary of $150 per month, or $3.75 per hour.  So if they could make $10 per hour on eLance it’s a big raise.
  • Many of the projects posted on these sites are from buyers with questionable endeavors at best:  1) People looking to get spam-ware written, 2) People looking to get a clone of a popular web-site, 3) People looking to get a clone of a popular software application, and 4) Students looking to hire out their homework.
  • Many projects have pricing objectives that are absurd.  Example, code me an ebay for $10K or less.
  • Virtually all of the projects are fixed fee.  These kinds of bids have to be made very carefully on projects with a well-understood and static scope.  I’d say that it’s difficult to achieve this over great distances using less than perfect communication tools (email, phone, etc.).

So, I’m not worried yet.

I welcome your comments.
Mike Brannan