Marketonomy: Surfing for Offshore Labor

Can a small business find the same cheap, international programming skills that Big Business is tapping? Yes -- but watch out for sharks

"Psst. Hey, Joe. You want a cheap Web program? I'll build you a custom one. I give you everyday support. Cheap offshore price for you -- VB, SQL, C, Java. No problem. So, what do you like?"

I'm exploring the online marketplace for technical day labor and a dozen programmers are tugging at my sleeve from thousands of miles away. Srirangan says he'll build my program in a week for $300. "Sylvester the Cat" says $150 with a six-month warranty. Sergey -- I can just see him in a black leather trench coat -- is trying to coax me into a back-alley chat room "to negotiate". I half expect him to show me an e-commerce suitcase full of Rolex knockoffs.

As a commercial developer I've received hundreds of solicitations from overseas programming shops offering cheap labor and fast service. A number of my larger clients outsource projects overseas, and I've worked with teams from India, Ukraine, Thailand, even a couple of programmers from Ghana. But as overseas technical outsourcing hits the big time, with companies like Oracle and Dell shifting large blocks of technical jobs offshore, technical day labor is emerging in its shadow.

Through bulletin boards, chat rooms, and developer portals, you can post your functional specs and get programmers from all over the world to fight for the job with low -- and lower -- bids. Need a quick Web service built for your Intranet? Zeljko from Croatia will knock it out for a few bills. Want to build your own shopping cart for an e-commerce site? Shahid in Pakistan and a couple of buddies will have it done in a week. Pricing for these services comes at an hourly rate lower than what you would pay a migrant laborer in San Francisco for yard work.

PERILS AND PITFALLS. While sites like Rent-a-Coder offer some protection from getting ripped off -- payment goes into escrow until you sign off on the code -- you better know what you're doing before trawling through the world's newly wired labor markets. Just as you wouldn't hire the cheapest day laborer to serve as the architect of the your dream house, the attraction of cheap offshore programming shouldn't tempt you to forego proper planning on your technical projects. Technical laborers promote technologies they know best, and they tend to take the shortest path to a paycheck. You also should carefully consider any offshore development of sensitive programs -- e-commerce shopping carts, say, that collect credit-card numbers -- if you aren't certain of your legal recourse should something go wrong.

I came to this marketplace to get my toe in the water for some of my clients. The current market is driving prices down relentlessly, and cheap labor on the production end is the only way to make up the loss in margins. I'm developing a few programs overseas to see which projects I can reliably develop using different sources of offshore labor, providing a more competitive price to my customers without sacrificing quality. The whole exercise has me reflecting at every turn on the future of my industry.

The Internet always promised a world without borders and I've experienced the benefits of that new reality. I've worked with a number of clients, associates, and partners scattered all over the globe without moving from my computer screen. I've even taken unannounced holidays from my office without leaving my clients behind. One of my business partners -- a role model for anyone who dreams of more than a live-to-work life -- spends three months of every year in an isolated Costa Rican village, surfing in the mornings and coding in the afternoon on a veranda overlooking the beach. If your work is intellectual and you have a lifeline to the Internet, it doesn't matter where you are. But with the rest of the world catching up to our technology skills -- China is expected to graduate 500,000 engineers this year -- my partner may be forced to move to Costa Rica permanently in order to keep his costs down.

GO OVERSEAS, YOUNG MAN. I can see the writing on the wall while I'm working my way through the technical day-labor marketplace. While large companies continue to develop the offshore labor supply, smaller businesses are demanding the same benefits in cost -- and the market is finding a way to deliver. The challenges are similar to those faced by any manufacturer who relies on outsourced production: guaranteeing consistent quality while keeping costs down. Providing that layer of quality management and planning while prices drop is where I see a bright spot for my business.

While it's always daunting to face up to a major shift in business I've been heartened by the unexpected discovery that I'm more prepared to manage offshore labor than I thought. It turns out the universal broken English of the marketplace is a lot harder to understand than a line of code. While I can't tell the difference between Emese from Hungary or Veronica from Argentina in a chat-room lineup, a few samples of code tells me everything I need to know. At least for the project I'm shopping today, I'm confident I'll get the quality I need and improve my margins.