According to the BrainBench’s 2006 Global Skills Report, Pakistan ranks No. 11 among all countries in terms of IT certifications. Yet, while many of the countries much lower in the list (like Brazil at 17 and the Czech Republic at 28) are often cited as hot offshore destinations, Pakistan never makes it to the list because of political instability. Online marketplaces would give the skilled Pakistanis a chance, even though the country may not emerge as a hot destination in near future. For buyers, it dramatically expands labor pool by freeing the individuals from the limitations of their location.
Threat to Big Outsourcing?
There seem to be unanimity that online marketplaces are no threat to traditional outsourcing. “I would say that direct competition with direct outsourcing is not here yet, as these markets primarily serve small firms and individuals who lack expertise and resources to engage in direct outsourcing relationships,” says Radkevitch.
“We cater to a different set of users. We are not the best place to come to if you want to ink a billion-dollar outsourcing deal,” agrees Guglani.
But what about the impressive list given at their site, that includes such names as Bristol-Myers Squibb, HP, Johnson & Johnson, Motorola, Pfizer, and Viacom? “Sometimes, for small, but time-sensitive projects, they find us more effective,” clarifies Guglani.
These companies use online marketplaces for small projects such as a local Website development or non-IT services like photography and editing.
That means the size of the market is still small. The combined business of the top three American marketplaces — Elance, Guru.com and Rent-A-Coder — is not more than $100 million. That is sometimes the annualized revenue of an IBM or TCS from a single large contract. Rough estimates suggest that the total market size is not more than $200 million — that is less than the revenues of a tier two Indian service provider.
However, Guru.com’s Gugalni believes that they are still nascent. The market to reach one billion dollars in the next few years and accelerate from there, he expects.
While the size is still fairly small, does their mechanism of tapping global talent and “flatness” prompt the outsourcing heavyweights to target them for acquisition? “I will say that someone like eBay may be a more appropriate buyer, since auctions, though of a different kind, is its core competency,” says Guglani.
Guglani disagrees fiercely. “I do not see the possibility of eBay coming in; services are very different from products. I do not know any company which has succeeded in marketing both.”
The industry is unanimous that this opportunity is for the small, by the small and of the small. In the size-obsessed global business, it is interesting to see how long they remain so.
