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Outsourcing: Fabio Rosati, CEO of Elance (Part 4)

Posted on Thursday, Dec 15th 2011

Sramana Mitra: That’s what I do, always. I don’t even bother too much with the interview. I give them a trial project and see how they feel about it.

Fabio Rosati: Some people like to interview because they get to understand, for example, in customer support, if the communication is very good. Communication is really important, availability in time zones. That kind of stuff matters to some folks. So, [it] depends on the job. The trial … what system do you have around the world that allows you to do that? Not many. So, trial is great. And then, once you’re on, there are best practices on how to build a team successfully. Most people have to recognize that for somebody to become dedicated, loyal and committed to your business, they need the same kinds of things that you would expect: good communication and empathy. I’m part of a team, and I’m going to make my online team be part of a team. Visibility – if you want me to be available for you next week, let me know that you intend to work with me every week. Don’t expect me to be available each time on short notice because I may have other work. I may have other clients, other commitments. So, visibility’s really important.

We find that the people who commit a certain number of hours or a certain amount of work flow or project flow every week get the best results because they have stable work for their Elancers. So, that works really well. Finally, be fair. Be fair in feedback. Be fair when the work doesn’t get done right. If you’re a good manager, this comes naturally to you.

SM: You speak as though most of the workers are freelancers. Is that an accurate observation, or do you have a lot of companies?

FR: We have a lot of companies on Elance as well. We have both. So, we have what we call businesses of one, who are the freelancers. And we have businesses of many, who are the teams.

SM: And what is the split between the two?

FR: It’s an interesting question. We have 1.3 million profiles on Elance. About 500,000 are active. If you go to our directory, we show only people who are logging in and are active in the system. We don’t show you the full 1.3 million. We just show you the people who are engaged, just because it’s a better user experience in search results and stuff. Of the more than 500,000 that are active, 440,000 are individuals and about 60,000, close to 70,000, are small to medium companies. Some of the individuals started by themselves, for example, and built it up, built a whole team. There is a person from Calcutta who started a company, and a few years later, became one of the top providers on Elance. The company is called SynapseIndia. There are many examples. There is a designer in Los Angeles, Steve Soto, who started by himself, part time, while he had a full-time job. Eventually, he started making enough money on Elance to go full time by himself. And then eventually, he started making enough to build a full-fledged agency.

SM: When you talk about these kinds of examples, what kinds of revenues are they pulling a year?

FR: If you go on our directory, we have the option to do public or private earnings. The ones that show the earnings, some of the large providers make $1 million, $1.6 million, $1.5 million a year.

SM: And how many of those do you have?

FR: Probably a few dozen.

SM: These stories are very interesting. I completely agree with you that the nature of work is changing. The small and medium businesses, the constituency that I work with, small startups, really need offshore services, and this is the only way to reliably hire offshore services.

FR: No question. No question.

SM: Would you talk about how they become successful?

FR: Most of them become successful, first of all, by being really good as businesses of one. They realize that as businesses of one, they have to market their services, develop excellent relationships, deliver good outcomes so customers are super happy with them and bring back more business. And then they get to a point where they wish they had the ability to double and triple themselves. What they end up doing is they start hiring people either on Elance, so they have a lot of people actually hiring other Elancers to help them, or outside of Elance, they start building little teams and companies, and they switch their memberships from individual memberships to business memberships so they can bring the whole team onto the system. That’s typical. Now, within that, we noticed that there are a couple of different mindsets. And I have a very strong bias for one mindset over the other.

One mindset says, I, entrepreneur, don’t want my team to know that this work is done on Elance. So, I am going to keep my team kind of in the dark. I will put a very strong management layer where only I and some of my trusted lieutenants deal with the customers, and then all of the work is done by my staff on premise. That model has its limitations, in part, because what happens is that the client now has to deal with an intermediary every time and is not necessarily dealing with the person who actually does the work.

There is another model that says, I am going to hire every one of the people on my team. Sure, I will specialize. I have people who do marketing, and there are account managers, but I will allow the client and my team members to talk to each other because that delivers a better outcome. Both models are successful on Elance, but the one that typically delivers the highest level of satisfaction is where the entrepreneur is open and willing.

This segment is part 4 in the series : Outsourcing: Fabio Rosati, CEO of Elance
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