[kictanet] Outsourcing, a perspective following Obama's India visit

[Paul Kukubo ICT Board]

Listers

The following article appears in the Wall Street Journal. Two points of note for our reflection upon as Kenya. 

1. Labour supply shifting to small and medium sized businesses globally. Kenyan talent providers can enhance their participation in talent websites like freelancer.com to promote and sell their services directly.
2. On some services, India can deliver the project at a 10th of US prices for the same quality. The India US dependency is very high even among small businesses in the US which depend on Indian labour to provide basic IT services. This is an opportunity for Kenya.

Enjoy the read...    

The Obama Visit: An Outsourcer’s Perspective

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By Arlene Chang

Outsourcing has been a major political whipping boy between the U.S. and India in recent months but U.S. President Barack Obama and Indian Prime Minister Manmohan Singh both tried to quell the controversy in remarks before the press Monday. Mr. Obama said outsourcing was the subject of stereotyping in the U.S. which has to be updated and Mr. Singh said India was not in the business of stealing American jobs.

Matt Barrie is chief executive of Freelancer.com, an online marketplace that connects businesses looking to outsource work with service providers, many of them in India. The site has 1.9 million members. He talked to India Real Time’s Arlene Chang about his view of the U.S., India and outsourcing. Here are edited excerpts.



Freelancer.com
Matt Barrie, chief executive Freelancer.com
IRT: As head of one of the largest outsourcing websites, you must have a view on outsourcing of jobs?

Mr. Barrie: We were founded in 2004 and since then, our two primary markets have been the U.S. and India – expectedly. Of the employers posting jobs, 90% of those jobs come from the U.S. and of the jobs being completed 90% are done by Indians.

I do not see this as Indians taking away jobs from the Americans or outsourcing as being a bad thing.

If anything, this has been a tremendously good exchange. You have about 25 million small businesses in the U.S. and each of them needs people to help run and sustain their businesses. But they may not necessarily have the money or budget to do it through normal channels. Here, the service providers, a majority of which in the case of freelancer.com are Indians, are providing those businesses with the services they want within their desired cost.

IRT: Is it a stereotype in the U.S. that India takes away American jobs?

Mr. Barrie: It is a stereotype but the stereotype is actually contradictory. Most of our members seeking services are small and medium-sized businesses and each one of them needs to, for example, get itself a website and maintain it. This need is not necessarily met by the supply available within the U.S.

Small businesses are always thinking of getting their things done for a lesser cost, they need to be constantly cost effective. The service providers on our website provide those services to them at a fraction of the cost. This enables small and medium-sized companies to cut costs, become more competitive, and thus helps them grow their business – all of which in turn helps the U.S. economy. As we talk, there are a tremendous number of jobs being created in the U.S. just, say, in internet businesses, whose back-office operations are being supported by outsourced hires.

IRT: What are the statistics for the outsourcing exchange on your website?

Mr. Barrie: Since we started in 2004, we have completed around 850,000 projects and seen $67.41 million traded. Of the 1.9 million users we have, 400,000 of them are from India and are service providers. A similar number are service seekers from the U.S. The average cost of a job through our website is less than $200. So, as an example, if someone wants to build a website for their business they would normally have to pay about $2,000 in the U.S. to get that job done. On freelancer.com, we have people who do the job for $200. That’s one tenth of the actual cost. The U.S. is the largest poster of jobs for us and India has the largest pool of service providers, but India is also a significant employer. After the U.S., U.K., Australia and Canada, it is India that posts the highest number of jobs that need to be done.

IRT: What is the future of the outsourcing industry globally?

Mr. Barrie: I think the next five years are going to be extremely interesting. Labor markets are always in flux and while the big businesses are doing the bulk of trade, there is already a fundamental shift in the amount and direction of labor supply.  A huge amount of that labor supply is shifting to small and medium-sized businesses globally and as that happens there is going to be a revolution in places like India.

If a person wants to start their own small business, all they have to do is go online and get someone who can get up a website for them and manage it – all this done on a shoestring budget.

With more such businesses coming into being, there will be more work and the jobs not available previously will be out there. I think the off-shoring of the work of small and medium-sized businesses is going to provide an unparalleled opportunity for the U.S. and India, helping U.S. businesses in being more competitive and helping Indians get jobs that were not previously available.

IRT: What do you make of President Obama’s statement in Mumbai Saturday on there being a stereotype in the U.S. about outsourcing to India?

Mr. Barrie: I think a lot of what he said is rhetoric. He is in a politically different situation now after having lost the mid-term elections back home. I think he is pandering to the Indian-American vote bank back home when he said that, when he goes back to the U.S., he wants to be able to tell his countrymen that India has in fact created 50,000 jobs for America.



Ends





Paul Kukubo

CEO, Kenya ICT Board



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