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Outsourcing: Matt Barrie, CEO of (Part 4)

Posted on Saturday, Nov 5th 2011

SM: You said India is number three in terms of employers. That’s the one that I find interesting. The fact that India is number one in terms of freelancers is a very obvious one. That’s where outsourcing really took off, especially software outsourcing. That makes total sense to me, but India as number three on the employer side is a bit interesting. Can you give me some more color on that?

MB: Yes, I can. When I talk about liquidity, what that means is if I have to do a search today on my marketplace, I can probably find 20, 30, 40, 50 jobs that might have 500 people or 1,000 people bidding on them. So, the marketplace is very, very liquid and competitive. As a result of that, what are seeing is inter-exchange arbitrage and intra-exchange arbitrage. For example, if you go to Elance, you’ll look at the projects, and you’ll see the projects have got, like, 10 bids on them. The reason why is because if you’re being charged $1 to make a bid, and you’re the 12th person coming along, you think, do I really want to spend a $1 when there’re already 10 people bidding on this project? There’s not a lot of depth; there’s not a lot of liquidity. As a result, the projects are more expensive. So, a website might go for $1,000 on their marketplace, and you could maybe get it done on mine for $300 or something.

What will happen is you’ll actually have professional bidding teams that will bid on these low liquidity marketplaces and then just subcontract them out to us. So, we see a lot of projects come and get recycled. And that happens even within our own marketplace. It even happened to me, actually.

There are some humorous anecdotes where I got some copywriting done, and I wasn’t really looking for the best price. I was just picking one of the freelancers that I particularly liked. I outsourced to her a whole lot of articles, and then some months later when I re-outsourced to get some more work done, a completely different provider gave me my own articles back. And I said, hang on. These are my articles. How did you get these? And then the provider apologized profusely and said that she’d been hired as a subcontractor for years by this other person. Because the job was similar, she thought that she’d be very good at it. It’s actually quite funny, because the first girl I thought I hired was from the United Kingdom. She was writing articles about night clubs around the world. The second person who came to me, who undercut the first one — who was actually being paid $10 an article – by bidding $4 an article, was an American pastor who lived in a church somewhere out in the Midwest. It turns out, when I checked the account of the first person, it was actually someone in India who just said she came from the United Kingdom. It’s kind of interesting, the whole dynamics and how it played out.

SM: What are some other interesting dynamics that you see in your marketplace? I love this business. Our company is a big consumer of these kinds of services. I also love the fact that people in such faraway places have access to projects in such a fluid marketplace. I love your business. Tell us more about it.

MB: Okay. There’s a whole bunch of stuff. I’m continually blown away by the sophistication of the jobs that go through the site. The main stream jobs are things like build me a website and design me a logo and those sorts of things. We constantly see very, very scientific, very, very deep research. There was a small US R&D firm seeking someone to help with hydrogen engine research. They outsourced that job and had people bidding on it. When I launched the architecture section, within a few hours, there was a project which was design for me an affordable luxury hotel in Barbados. There was a design for me a fully functional dune buggy that I can drive around at 30 kilometers (18 miles) an hour. There were 40 people bidding on that for about $270. Design for me a car wash and café for something I’m setting up. It was $170 with 40 people bidding on that. There was a kid in Rhode Island who lived across the road from his friend. He wanted some kids to water balloon his friend’s house. So, he assembled freelance teams of kids to go and throw water balloons at his friend’s house. I thought it’s probably something we would have pulled down if we’d seen it, but people do all sorts of weird and wonderful things.

I saw one the other day that was “I’m a researcher in Africa. Right now I’m on a satellite radio, and I’m doing some conservation project.” I think it was for the pygmy hippo, and he goes, “I want a poster designed, but the funny thing is, I’m actually sitting in a swamp looking at these pygmy hippos. I want someone on the Internet to go and do the work for me.” The stuff that really amazes me, that blows me away, is the stories that come from the users. I think that because we are focusing on the developing world and emerging markets for our freelancers – and that’s one of the big differentiators between oDesk and Elance, which will advertise in American, “take your $100,000 career and go online and become a virtual contractor.”

This segment is part 4 in the series : Outsourcing: Matt Barrie, CEO of
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