Freelancing on the Internet
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Freelancer Websites
The advent of the Internet has created new opportunities for freelancing, particularly for software developers from countries with low average salaries, such as Bulgaria, China, India or Romania. A number of websites have become bustling marketplaces for farming out software development projects to foreign freelancers at rates generally considered rock-bottom by American or Western standards. Such websites typically provide a convenient central forum for posting job requests, rating and documented history to judge potential buyers and sellers, an escrow system to protect participants from fraud, and arbitration in the event of disagreements between the coder and the buyer. The system for setting prices is usually organized as some kind of an auction.
Coders
The majority of the coders at such websites are apparently from India and Eastern Europe. Nevertheless, there are some from United States, England, and other high wage countries. Coders vary from individual freelancers, sometimes college students working in their spare time, to small software companies with teams of developers. The rates commanded by the coders generally depend on the scope of the project, e.g. a rough estimate of the time it would take to complete, their history of past work done when contracted through the website, as well as on financial limitations of the buyers.
Compared to offshore outsourcing
This kind of Internet-based outsourcing can be thought of as a small business variant of the wider business practice of offshoring. Whereas larger corporations may set up their own subsidiaries in cheaper rates countries, small businesses as well as individual developers, whether employees or themselves freelancers, find it convenient to look for opportunities to get projects done through Internet freelancing sites. A typical project price, as of 2004, is several hundreds US dollars, well within reach of an individual or a small company in the United States. Freelancing can be best utilized for all web related work, where distant is virtually zero to communicate. Freelancing on the Internet has opened doors for many people to use their brain and earn money from any part of the world.
Inherent problems and implications for businesses
Internet freelancing raises many issues for businesses involved in outsourcing some of their work. Protection of intellectual property is one major issue. There is probably little realistic recourse for an American company in the event that the coder from India would publish or resell the code developed for them. On the other hand, the practice of Open Outsourcing completely side steps this sticky issue. Other problems may include difficulty in fully communicating the necessary specifications of the project at hand, as well as the risk of the coder failing to complete the project on time, potentially jeopardizing the buyer's business plans. Therefore, the projects typically posted on freelancer websites would optimally not represent the core competency of the buyer company. Rather, they would constitute the more mundane and labor-intensive tasks that are much easier to describe accurately in writing than to implement in a complete and polished manner. Perhaps, it is no coincidence, then, that a good deal of the projects posted as of April 2004 have to do with programming custom web applications. Even if the source code of such programs, such as a PHP script for an online store, were leaked by the coder, it would probably have little value to others, and such a leak would hardly hurt the buyer in any way.
Perspectives on the future of Internet freelancing
A lot of criticism of Internet freelancing has been voiced by developers in high wage countries, particularly United States, because of its obvious, and by now, to an extent, realized, potential to depress prices for programming work. It would appear, however, that this practice is here to stay. Whereas one may imagine a protectionist government restricting offshoring by corporations, preventing such low budget business contracts arrived at through the Internet essentially by individuals across borders would require changes to the Internet infrastructure that are unimaginable at present. On the other hand, Internet freelancing arguably constitutes much less of a threat to local developers than the wholesale outsourcing of project teams by large companies. Ideally, a symbiotic relationship would be arrived at between American developers and offshore freelancers, with the former being employed primarily to formulate project specifications and to customize or to combine into a larger whole the components produced offshore, as well as to develop components that constitute a core competency of the company and hence may be placed in danger of intellectual property theft. If established, such business model may also prove essential for the smaller companies' ability to compete with larger competitors, capable of setting up subsidiaries offshore or of contracting the major and more reputable foreign software companies.