Silicon Valley based oDesk, which is a marketplace for developers and companies looking for outsourced developer help, seems to be sailing along nicely. Next week they’ll announce that $10 million has been spent on outsourced projects to date, and they have 750,000 or so total billed hours. That’s up 50% from last November, when we reported that they had reached 500,000 billed hours. oDesk keeps a flat 10% of fees.
Until recently oDesk only allowed projects to be priced on an hourly basis. Two weeks ago they launched fixed price jobs as well, which is something many comments here requested in our previous posts about them. After a month of quiet beta testing, 750 jobs were posted at a fixed price, with an average price of around $500
The company says their top markets for buyers are the U.S., the U.K., Canada, Saudi Arabia and Australia, while the most popular markets for providers are India, Russia, the Ukraine, the U.S. and the Philippines. The programming skills most in-demand are PHP/MySQL, C#/.Net, ASP, Java/J2EE and C/C++/Win32SDK.
oDesk is based in Menlo Park and they have raised $6M from Sigma Partners and Globespan.
I like the idea of oDesk and the fixed price jobs certain sounds like a good idea but the system can be easily played to con a weeks worth of work out of an employer. You can only claim against the previous weeks work if you are unhappy and it’s very difficult to asses a weeks work in the context of a larger project.
Both projects I have worked on through oDesk as an employer have been a nightmare and I have lost money (and time), that put me off the service permanently as I found there is no recourse when things go wrong outside that week – you just have to grin and bare it.
Ed – I’ve heard so many good things about the company that I find it hard to believe your comment. You should leave your real name and get the company’s feedback.
They let you grin and bare it at your workplace, Ed? Are you guys hiring? ; )
Outsourcing projects isn’t just an option for startups these days, but for many tasks and getting things done on schedule it has become a necessity.
We’ve been using oDesk to help get http://www.StaffMom.com rolling and it has been a mixed blessing so far. Some very decent programmers for very attractive rates, but reliability is never a guarantee. Elance is still what I consider to be the best when it comes to project outsourcing.
I’ve been more impressed with oDesk than with eLance, and have found some good providers. They just seem to have a better overall approach. It’s much more about finding skills than just the bidding process. Plus, the range of skills seems to be broader (and from a broader range of places).
Also, linking this post on http://www.FiscalTimes.com — great reporting Michael, we read your blog every day.
Michael – I have had lengthy discussions about this with them, but in the end their policy meant I had to bite the bullet on the money I lost.
Don’t get me wrong, the concept is great, the way that it works is great, the staff are great and I wish this fixed price jobs thing was around when I was hiring. It’s just that last bit of security to know that fairness can prevail in the end. If I could have piece of mind I would gladly go back, it’ just that one week decision block that’s so hard to judge, I should have cut both developers as soon as I was getting concerned but silly me I gave them a second chance but by the time I decided to get rid of them I have lost the previous weeks payment.
Snickers McGee, lol, to early for me to be commenting I think!
p.s. I hope my experience won’t dissuade anyone from at least giving it a go though
I am giving oDesk a go, managing 3 people and probably 4 soon via the system. It’s been a good experience.
Although there are obviously things they could improve, the technology is much more useable than old websites like RentaCoder and eLance. In fact, some providers I know have jumped ship to odesk at the request of buyers.
I find there is a learning process to all of this that revolves around developing reasonable expectations on both ends. Lots of lessons learned, more regarding how to work with multiple individuals at a distance than specifically regarding the odesk system.
In general the oDesk vision is as their slogan says to enable an “on-demand” global workforce. I’m finding that within limits, within reasonable expectations, once you gain experience, this can be achieved.
Have plenty more takeaways on this topic if anyone would care to hear them but dont want to post a novel here…
Rentacoder is in my experience significanly older and more feature-rich then oDesk. It ought to be mentioned.
- Odesk is good – As a provider I couldn’t hang with the $12/hr average they wanted to pay me –
– I can get 15-18 locally, and that is what I currently do.
– I will however be looking to hire out – some 8-10/hr graphic design later in my career.
-RB
10% fees???? wow.
I have used all of them in the past rentacoder, elance and guru. I find the best quality for design and other non-coding jobs the best at guru. Elance and RentACoder have been a mixed bag. I’ve used and found both good and bad. It’s always a risk when dealing with individuals (rather than say a small company, many of whom are on all sites), but individuals (in general) seem to perform better than companies. But if they don’t perform or fail to deliver the only thing you can do is not pay, you still don’t have the work completed. ODesk protects the provider, but still not a lot of recourse if the provider’s work is not up to par.
Mike
Doesn’t Odesk put up ads on your blog?
Carl
I have had a similar experience to Ed’s. I have hired five developers through oDesk and had little recourse when things went very wrong. I will say that the oDesk people are very nice and very supportive. Seems like a good team.
One of the developers I hired was very good, but the other four were very bad. I think the best coders offshore are working for larger companies like Infosys or Tata; I don’t think those firms are on oDesk. In India, for example, I think it is more prestigious to work for a big firm, unlike the Valley where most great coders want to be at a start-up. Most of these individuals and small firms lack the process discipline for good development. That is an especially bad match if the hiring party is small or inexperienced.
The other thing going on here is that most developers ask to work outside oDesk to avoid the fees. That’s a violation of their agreement with oDesk and certainly unethical, but it is a real problem for oDesk because they really can’t enforce it.
I see oDesk as pretty much a job board at this point. The site is great for finding talent, but I don’t see any ongoing value in them being involved in projects. Their tracking tools are cool, but impractical. With IM, Skype, Email, Basecamp and CSV, I have everything I need outside of oDesk. I think its a tough sell for them to continue to take 10% of everything. That’s probably why they lowered their rates a few months back. The value just wasn’t there.
All of this seems to show in their numbers. At 10% fees and $10 M in projects, that’s only $1 million in revenue so far. Of course, they used to charge 30%, so let’s assume that historically they have done about $2.5 million. Still nothing too impressive there.
You overlooked the fact that Benchmark made an $8 million investment back in September. I assume they are smarter than me, so take my opinion with a grain of salt…
[Full disclosure: I work as Marketing Manager for oDesk]
I’m glad to see the comments above and wanted to comment on a few issues that have been raised.
Protection for the buyer:
For buyers that don’t want to manage providers closely, we offer the option to post a fixed price job which ensures that buyers only pay when their requirements are satisfied. Most oDesk buyers however still prefer hourly, which offers more control (over requirements, milestones, and weekly limits) and more visibility (because of the oDesk Work Diary https://communi....com/work_diary). The visibility of the Work Diary allows buyers to find out immediately if work is not going according to plan, which allows them to course-correct or cut their losses right away, rather than wait to hear from their remote worker at the next milestone date.
Hiring the right provider:
oDesk is a marketplace, which means that there is a spectrum of skills, quality, and prices. Most buyers rely on the provider’s profile, particularly on their feedback score, to decide who to hire. The vast majority are able to find a qualified provider and have a great experience. A small number hire someone with the wrong skills, or take a chance on an unproven provider, and may lose a couple days. Hiring always involves risks – our goal at oDesk is to give the buyer more information and control to lower these risks.
Our fees:
Signing up and finding the person you want to work with is totally free, for either party. We only take a fee once work begins. 10% fee includes unlimited access to:
* The oDesk Work Diary
* Integrated Development Tools – Subversion, Bugzilla, Mailing List and more
* Skills Tests (Providers take these tests to certify their skills)
* Processing Payments to Providers (in any country)
oDesk has been very useful for our startup. The fixed price jobs feature was a massive leap ahead for them and I’m not sure why they didn’t put it in sooner. Before they put it in, we favored eLance or RentaCoder.com, both of whom offered fixed price jobs and reliable escow/mediation in case a developer tried to take your money and run. The quality of coders on oDesk was always a little bit behind eLance and RAC because IMO the best developers also value fixed price jobs and reliable mediation.
I think #13 hit the nail on the head. As soon as we found oDesk coders who we liked and developed trust in, we pulled them out of oDesk and added them to our development team. We saved 10% on the fee but mostly it was that we needed to communicate with them outside oDesk anyway and the service ceased to add any value. To replace the escrow/mediation of oDesk we simply tied feature implementations to payment and were very careful about code reviews. I don’t think anyone would run a $50,000 IT project via oDesk – their best customers are probably individuals with an idea and a few thousand bucks to burn.
Provider qualification is where the problem is I think. I think that eventually oDesk could turn *into* sites like eLance and Rentacoder who do very little to qualify the provider before signing them up.
From a provider perspective, “bidding” on projects was where the problem usually was; the price wars eventually come to oDesk as more and more providers sign up.
Thankyou for your comments everybody. Very helpful information here : )
>> Roj Niyogi
>> Provider qualification is where the problem is I think.
That’s definitely been a big issue. We have something at Rent a Coder– the “Expert Guarantee”– to separate experts from amateurs. Coders must put-up something substantial (their money) to guarantee their abilities to meet your needs… and to guarantee their dedication to your time frame.
Just as you show your good faith to pay (by escrowing the bid amount at the beginning), the CODERS show their ability and dedication by depositing money upfront. If the coders don’t completely finish by the deadlines, then they lose the deposits (to a non-profit organization: right now it’s http://www.directrelief.org) and you still get escrow back. You set what percent of their bids they’ll deposit, and they know your expectations before they even contact you with bids.
If you don’t want an Expert Guarantee, then you don’t have to use it. As you know, some people aren’t looking for only the experts. For those who are (and for experts who want to connect with the serious buyers), it’s a good way to go.
Dawn Ippolito
Rent a Coder
Something more from me…
Some commenters touched on the topic of which outsourcing site better protects you.
>> 15. Matt A
>> Before they put it in, we favored eLance or RentaCoder.com, both of whom offered fixed price jobs and reliable escow/mediation in case a developer tried to take your money and run.
Ye olde “take your money and run” maneuver.
The true protection against that is when the powers of escrow AND of arbitration are combined. Really, there’s no true value in an escrow that lacks arbitration, and partial mediation isn’t a guarantee.
If there’s to be protection, the arbitration has to get involved with missed deadlines, contested project requirements, and whether or not the work meets specifications. You’re not being served by a process that helps you mediate but asks you to hire (as in pay for) an outside mediator when you need to reach a settlement. And the buyer’s time and money aren’t protected when the process will rule on time log disputes but will make the buyer pay the billed hours even if the work is inadequate or won’t ever be completed by that coder.
Neither of those options truly protects the buyer, and neither of those options truly protects the coder. You certainly don’t want to have to resort to grinning and baring it with Ed. (Well, you don’t want to resort to bearing, at any rate. The other is at your discretion.) I recommend finding out where you’ll have true protections… before an unfortunate situation in which you might need them.
Dawn Ippolito
Rent a Coder
I’ve been using oDesk for several months and about $15K worth of that $10M billed, and I’ve been using eLance for years as well. My experience reflects a lot of the above comments – I’ve had a wide variation in quality of code coming out of oDesk. I’m not so worried about the loss of the money from someone who stinks, as I manage my guys more closely than that, and the loss of a week is not that big a deal – the much bigger deal is the damage the person can do by writing a bunch of bugs into the code.
All that aside, my biggest problem by far is people flaking! I have no way to track down some guy 5,000 miles away who barely speaks english. A lot of these guys are moonlighting from their normal jobs, so after they’ve been working for you for a few weeks earning extra money they get sick of it and just disappear for a week or something, which is a major pain.
The thing that I think can mitigate that is a robust feedback system. I rely pretty heavily on it for oDesk, and I still think they could improve the system a bit. As providers get good feedback, they will be able to charge higher rates, and develop a good business out of it.
One other thing that happens that people should be aware of is that who you hire is not always who they say they are – people will let their friends use their oDesk profiles in order to build up their time and hopefully their reputation.
We are Prakash Software Solutions Pvt. Ltd., India, working on Odesk as provider from June 2006 and it is excellent to work with.
I think the the hourly base business model is first time introduced by Odesk and it is the full-filling the gap when buyer is non-technical or have no clear specification. It is well suitable for both provider as well as buyer in case of buyer is non-technical or have no clear specifications.
I think that the buyer who wants to develop a product and want to continuous improvement, outsource his research and development activity, Odesk is the optimum market place.
Single developer or company????
As per our experience, my opinion for buyers that they should hire a company rather than a single developer for large business project. The general problem with singe developer is that they could be employee of particular company and doing work on the week ends just for extra income. So, some times they are not very reliable and serious about work. This is complete waste of time, money and efforts. Further, buyer will not avail a replacement if single developer absenteeism’s. So, in such case Buyer cannot enjoy 100% outsourcing process.
For small task (max 1 or 2 week) the single developer would be great rather than hire a company.
The major benefit to hire a company is that buyer can enjoy 100% outsourcing due to decentralization of delegation of authority. For solution of particular problem there is involvement of separate entity. So, the flow of the project doesn’t affect at serious stage as with single developer.
Further, the companies are hunger for goodwill rather than chunk. So, Buyer can avail a superb value addition service.
Another fact is that the profile of the company is never fake. Buyer just need to review the company profile rather than to review multiple or fake resume of single developer.
Ultimately is all depends upon buyers decision whether he wants to waste or save time and money.