Offshoring No Longer Just for Big Companies

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Much of the anger over offshoring is aimed at big multinational companies like IBM, which have been shifting a growing number of jobs overseas, and their clients, many of which are also large global companies. But a Contra Costa Times article spotlights an interesting trend: startups that hire contract workers in low-cost countries through online job sites like oDesk and Elance.


Article author Scott Duke Harris offers several Silicon Valley examples, including data storage service Box.net, which outsourced software development work to folks in Siberia, and RockYou, a development company that creates applications for Facebook and MySpace that supplemented its local production capabilities with Romanian and Japanese workers.


Harris notes some startups are called "micro-multinationals" due to their prowess in hiring global employees.


As I noted in a recent blog post, hiring temporary contractors like those who plug their services on oDesk and Elance is an appealing option for companies, not just startups, in a rocky economy. As I mentioned then, contractors employed through oDesk worked more than 1 million hours in August, an all-time high for the 7-year-old site. Just a year ago, workers on oDesk logged less than half of that, about 400,000 hours per month. Online hiring is up 129 percent since last year, pretty impressive considering the flat employment growth in the larger economy. The number of temporary IT jobs appears to be growing.


oDesk itself uses a global model. As Harris writes, the company was founded by partners in California and Greece. It has 38 full-time employees in California and the equivalent of 106 other full-time jobs elsewhere around the world. An example of an oDesk team: A stay-at-home mother in Tennessee manages a customer-support staff primarily based in the Philippines.


According to oDesk CEO Gary Swart, Silicon Valley companies that use oDesk can typically hire six workers overseas for the cost of a single California-based employee.