SMEs, freelancers throng online service marts

Online service marketplaces (OSMs) like Elance and Guru are becoming increasingly popular with small- and medium-sized enterprises (SMEs) and part-time job-seekers

OSMs, say experts, are equipped with Web 2.0 features like desktop sharing, Wikis, whiteboards, RSS feeds, and continuously integrate more features to add value to virtual workstations.

They provide a flexible workforce, low-cost labour and access to specialised skills. Within India, women, who comprise 10 per cent of the total user base on OSMs, are engaged in writing, translations and online tuitions from home.

Translation, writing, graphics, engineering services, business consulting, tutoring, web, database and software development, accounting and tax preparation services, architectural, marketing and sales support and drafting legal documents are some of the most popular services being sought on OSMs.

Freelancers can simply create a business portfolio to highlight their expertise and bid for projects posted on the marketplace by buyers. The minimum bid rate for most projects could be anything between Rs 4,000 and Rs 20,000, and it follows the open/closed auction bidding system. Some OSMs charge a registration fee (anything between Rs 400 and Rs 2,400) from both freelancers and buyers, and some earn through commission-based fees on completion of the project.

There are currently about 100 OSMs on the internet, but hardly any in India. One such OSM, Lime Spot LLC (a Lime Group company, based in the US) launched an India-based OSM, LimeExchange, in February 2008. Agencyfaqs, an advertising news portal, has also launched an OSM, Freelance Exchange, recently.

Pawan Agarwal, head, India operations, LimeExchange, says: "Ours is a social networking platform, where people can make communities. Communities allow crowd-sourcing. One can make a virtual team to work on a single project."

Community features help buyers vote and price products. The company also plans to have an affiliation programme, another Web 2.0 feature. Besides, it is planning to integrate video-and teleconferencing and screen-sharing features within two months.

Bala Girisaballa, vice-president, nineMotion Systems, a Bangalore-based OSM, notes: "Initially, work from top cities (Bangalore, Delhi, Mumbai and Chennai) is getting outsourced to smaller cities. Within the top cities, large companies outsource niche work to smaller companies. All this is happening through offline channels today. This can potentially happen through OSMs."

Indian businesses are also opening up to outsourcing to other countries. For instance, nineMotion focuses on the US market. But sensing potential in India, it is launching a new service called nineExpert, focused on the Indian market. This will be an exchange medium for companies to hire top-class, experienced talent on a consulting basis for short-term needs.

However, for OSMs, freelancer rating and feedback is extremely critical for buyers to know that they are engaging with a reliable freelancer. Web 2.0 features like rating and commenting systems help buyers get that comfort feeling with freelancers.

The sector has other India-specific hitches, like low internet penetration with just around 50 million Net users. There is also the bandwidth problem, besides payment issues. It is a challenge to offer services via credit cards since banks are not comfortable dealing with services. Credit card payment integration still has security and website usability issues. Internationally, companies like PayPal need to support payments in India.