Money Magnets

Making money through Internet-based Freelancing

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It's finally in the news.  A lot of people worldwide, especially in developing countries, have turned to the internet for their monthly cash flow.  In this article, Jeremy Wagstaff of Reuters, features Ms. Sheila Ortencio, a former university librarian turned internet freelancer.  After earning a meager salary, barely enough to support her family, as a universtiy librarian, Sheila shifted to freelancing using the internet and has since earned enough money to buy a land for a house plus make down payments for a condo unit.

Her story is definitely inspiring.  There is money to be made freelancing in the internet.  As Sheila put it, it's the independent and modern Filipino family's way of making a living.  It's a very interesting read.  Read more about the internet freelancing industry after the jump.

Global Army of Online Freelancers Remakes Outsourcing Industry
by: Jeremy Wagstaff
source: gmanetwork.com

LIPA CITY - Not far from the world of regimented cubicles and headset-toting call center operators, a quiet revolution is stirring in its slippers.

University librarian Sheila Ortencio, for example, was so poorly paid that half her salary went for childcare, and her meals amounted to dried fish and one fried egg per day. Four years on, she juggles two daughters, a husband and two Pomeranians as she catalogues ebooks online from her parents' couch.

In her freelancing job, she's earned enough money to buy land for a house nearby and make down payments on a condo in the capital.

"I have double the work but, it doesn't bother me because it doesn't feel like work," she says.

Ortencio is one of more than half a million Filipinos registered on freelance website oDesk.com - more than are currently employed by the country's growing business process outsourcing (BPO) industry.

While it's early days, proponents of so-called commercial crowdsourcing contend that a swelling army of global freelancers is already disrupting traditional outsourcing - from preparing tax statements to conducting research on pediatricians.

"This is all about cost arbitration across borders," says Siou Chew Kuek, a Singaporean researcher who works with the World Bank. "Now you can farm out your work to anyone in the world."

LOW-HANGING FRUIT

Driving this trend are a dozen mostly U.S. startups that let other small and medium-sized companies carve projects into chunks and then recruit individuals or teams of freelancers to do the work. By leveraging a faster, more ubiquitous and cheaper Internet, the startups can pluck the low-hanging fruit of IT and data-entry outsourcing that big BPO players such as Infosys and Wipro once considered their own.

Australian-U.S. startup 99designs, for example, has paid out $40 million to some 180,000 graphic designers, with its largest user base outside the United States being in Indonesia. Elance has 266,000 freelancers in India who have earned nearly $150 million. Odesk has 2.4 million registered freelancers and more than 480,000 clients - companies including Cisco and HP.

"This is moving the entire BPO industry - that was dominated by these large middlemen organisations that take most of the profits - to the cloud," says Anand Kulkarni, an academic-turned-entrepreneur. "Now you no longer need to be able to afford Infosys rates to be able to get quality results out of an outsourcing system."

For sure, the BPO industry is not necessarily quaking in its boots. The industry was worth $150 billion last year and is growing at 5-6 percent a year, according to Pradeep Mukherji, an Indian IT consultant and adviser to the World Bank.

Crowdsourcing companies admit it's still an uphill struggle to persuade firms to experiment with outsourcing work to freelancers rather than keeping it in-house or sticking with established BPO players.

For freelancers, many face a precarious career: not always getting paid for work completed, going without healthcare insurance, and job opportunities not always being available. Indeed, many freelancers who have signed up with oDesk have never received feedback from clients - suggesting they have either not tried to pitch for work or haven't won any yet.

"It's true to say that it's hard to get that first contract," says Panos Ipeirotis, an associate professor at New York University who studies oDesk data.

SECOND WAVE OF INNOVATION

Such imbalances are feeding a second wave of innovation in the industry. The first outsourcers focused on what oDesk.com CEO Gary Swart calls the eBay model — using recommendations, feedback and trust to create a market where companies find good freelancers and freelancers can build a reputation.

But as freelancers build closer relationships with clients, both sides prefer a more structured model where trusted freelancers hire their own team, prompting oDesk and others to tweak their software to accommodate them. Ortencio, for example, manages several other oDeskers on behalf of long-term clients.

In the past couple of years, other startups have tried to mend weak links in the chain. A potential employer posting a project on Elance or oDesk, for example, can be overwhelmed by applicants - making it difficult for them to find the best freelancers quickly, and harder for freelancers to stand out from the crowd.

Kulkarni hopes to solve this problem by having his startup MobileWorks train workers to guarantee quality, and by breaking down projects into micro-tasks to lift less-skilled workers onto their first rung. Tasks range from transcribing hedge fund forms to generating sales leads.

Once they're proficient at micro-tasks, Kulkarni says, "they would be let loose on sites like oDesk or Freelancer.com" where they can earn higher fees.

Ortencio similarly multiplied her pay. She started out charging $1.50 an hour - the same she was earning as a librarian — but is now billing $8.50. Her experience is far from unique: The average contractor on oDesk, the company says, has seen monthly income grow 190 percent after three years.

Nearly all crowdsourcing companies make their money by charging a fee to contractors for each successful transaction. All declined to share detailed earnings, but oDesk, which claims to be the biggest online workplace, said that its contractors earned about $75 million in the first quarter of 2012, against $40 million a year ago.

"MICRO-ENTREPRENEURS"

While crowdsourcing is global - Elance boasts clients in 180 countries and freelancers in 155 - much of the growth is coming from Asia. Indonesians, for example, flock to 99designs.com, where instead of up-front contracts they submit graphic designs in the hope of winning a prize.

Recently dozens gathered in the Javanese city of Yogyakarta to thank 99designs in a video. The first the company's Australian president and CEO, Patrick Llewellyn, heard about it was when it was posted online. "I was moved to tears," he said.

Such growth is prompting crowdsourcing companies to set up operations nearer to where the action is. Taskus, a boutique outsourcing company, and Freelancer.com, for example, have both based their Asian operations in the Philippines.

Some are going further afield. On a trip to Nepal, Canadian Mark Sears saw so many engineers and MBAs sitting idle that he saw a business opportunity and moved his family to Kathmandu. Now CloudFactory trains teams to complete micro-tasks on behalf of clients back home, like annotating videos of amateur hockey games. His latest recruit: Mohamud Juman, an English-speaking Facebook addict who collects trash outside their office.

Indeed, companies like CloudFactory and MobileWorks say they are out not only to turn a profit but also to battle poverty. World Bank adviser Mukherji says this so-called "impact sourcing" already employs 560,000 workers and could account for nearly a quarter of the total BPO workforce by the end of the decade.

Governments and organizations such as the World Bank are taking note of the potential for an industry that generates foreign exchange but requires very little capital outlay. Bangladesh was one of the first countries to declare online earnings tax-free, for example, and MobileWorks has recently signed an agreement with the government of Jamaica to deploy the service on a national scale.

All companies stress they're out to make money by mobilizing what Ajay Vinze, of the W.P. Carey School of Business at Arizona State University, calls a movement of "micro-entrepreneurs."

Sheila Ortencio puts it more simply: "We want to be an independent, modern Filipino family." — Reuters

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20 comments:

1. Rovie Aguis said,

   Truly inspiring read. As a mom, it makes me more convinced to even stay at home, take care of my baby and have a career on the side as online freelancer.
   
   Thanks for this Steph. Update us more with articles such as this one. I am currently starting my money and finance blog pero wala pang update :)

   on October 15, 2012 at 3:02 PM  

   
   
2. Cherry said,

   wow! that's a very inspiring story. thanks for sharing. :)

   on October 15, 2012 at 3:25 PM  

   
   
3. Algene said,

   It really feels good to stay at home and earn easy money :)

   on October 15, 2012 at 7:09 PM  

   
   
4. riz said,

   at first, i was really never convinced of how can one make money out of the internet, a.k.a blogging.
   but, two years after sinking deep into this world, i'm reaping my small rewards :)

   on October 15, 2012 at 7:54 PM  

   
   
5. Momgen Reviews said,

   It is very true even you are only at home you can still make money. That is why hubby did not want me to work outside the house since I make more money online...

   on October 15, 2012 at 8:44 PM  

   
   
6. Gee said,

   I have friends who work for Odesk and I know it is paying well.

   on October 15, 2012 at 9:37 PM  

   
   
7. papaleng said,

   Indeed, a very inspiring story. Though I must admit I have bad experiences with Odesk, kaya nga nakalimutan ko na siya. A number of my clients don't bother to pay me ,and what's worst, yung finish product ko, eh, was published online without my consent. Salbahe ang ilan dyan. But on the bright note, maraming jobs available.

   on October 16, 2012 at 1:39 AM  

   
   
8. Aggie said,

   Work at home jobs are the best jobs for moms like me!

   on October 16, 2012 at 1:57 AM  

   
   
9. Nova said,

   i do admit that i have a small knowledge when it comes to freelancing, i have resources yet, i'm just way too lazy to read and learn myself, it is one great money making online, thanks for this tips

   on October 16, 2012 at 3:01 AM  

   
   
10. Dez said,

    Inspiring. I love to try out Odesk too.

    on October 16, 2012 at 5:23 AM  

    
    
11. betchai said,

    this is very inspiring, these days, there is no reason to whine having no income being a stay at home, for indeed, there is a way to still earn money even if we are home, though may not be easy, but no job is really easy.

    on October 16, 2012 at 7:48 AM  

    
    
12. Dhemz said,

    this is really a great story..thanks for sharing!

    on October 16, 2012 at 9:19 AM  

    
    
13. cheerful said,

    interesting and thanks for sharing the story...very inspiring! :)

    on October 16, 2012 at 9:51 AM  

    
    
14. Pretty Kat Schulz said,

    Honestly, this is my only job right now for almost two years, and I love it for i can work with pajamas, shorts and and trunks. No make up,lipstick etc etc and I am still earning. Thanks to this online job.
    
    BTW: I have never tried to visit ODesk, anyway, is it free to join?

    on October 16, 2012 at 10:36 AM  

    
    
15. Money Magnets said,

    Thank you all for your inspiring comments. It will help all those who read this when they do decided to try freelancing in the internet as well.
    
    Papaleng, thanks for sharing your experience with Odesk.
    
    Pretty Kat Schulz, I believe it's still free. Share your experience when you do. Thanks
    
    

    on October 16, 2012 at 3:04 PM  

    
    
16. Lainy said,

    I have been with Odesk as a Content Moderator but I wasn't able to finish my contract due to my hectic sked offline. I have a regular day time job, I run a few blogs at night and working at Odesk simply kept my head spin. LOL! I hope to get things done though when work isn't so toxic. Most likely after the Automated Elections :-)

    on October 16, 2012 at 9:03 PM  

    
    
17. emzkie said,

    yes! there are so much opportunities in the internet. the internet made our life easy, searching for a job make it easy. u can even go to college by not leaving your house. it is scary sometimes, if we depend on the internet, because there are also lots of cons. but hubby and I are trying to venture our business in the internet, we are still studying the tricks, on how it will succeed,

    on October 16, 2012 at 10:48 PM  

    
    
18. Marie said,

    i am proud to say that I started as a ghost writer in oDesk 3 years ago and now, I am turning 19 and a vice president of a web developer company based in Thailand!
    
    Nothing beats working from your home!

    on October 17, 2012 at 12:34 PM  

    
    
19. Money Magnets said,

    Awesome Maria!
    Great job. Thanks for sharing your experience.

    on October 17, 2012 at 12:48 PM  

    
    
20. Business Cash Advance said,

    Great Post, loved it will be waiting for your future posts,the internet would be a much better place. Please keep it up!

    on January 3, 2013 at 6:24 PM  

    
    

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