Is online freelancing the future?

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The internet has been changing our lives for a quarter of a century now, and it does not look like that will stop. In fact, the pace will increase and change the way we are used to doing things. One new phenomenon is online freelancing, which will change how companies work.

Azlina Abdul Jalil has always had a passion for languages. In July 2011, she got to know about Elance and decided to try her luck as a translator. It took her four months before she got her first job from Mascus, an Australian machinery and transport company. “My background in Mechanical Engineering helped me,” says the 36-year-old mother of two. She translated its website from English to Malay, and received a high rating of 4.9/5.0 for a job terrifically well done.

This led her to become a full-time freelancer. Besides translation, she also transcribes, proofreads and writes short articles. In a good month, Azlina can earn up to RM2,400. Earnings depend largely on job availability; as a work-at-home mum, she has the flexibility to work according to her own hours. “It helps pay the bills,” she says.

The online freelancing platform allows individuals to market their skills to prospective hirers and present themselves as quality talent. It removes the boundaries of nation states and leverages on the global market. Anyone with internet access is part of a global pool of talent that companies can easily tap into. Azlina is just one of the many who have been leveraging on online freelancing websites such as Elance to earn a living. While still in its early stages of adoption, online freelancing has given companies an alternative model for business process outsourcing (BPO). Other online freelancing platforms include oDesk and Freelancer.com.

Hirers are not subjected to the foreign labour laws of a country, neither are they subjected to pay minimum wage to their employees. Under typical conditions, these freelance workers personify underpaid and overworked employees. Yet freelancers have more deciding power than normal employees. They choose the job they want (and, intrinsically, the pay as well) and have the flexibility to do it anytime of the day.

Rich Pearson.

The dawn of online freelancing starts with similar incentives as in BPO. The point is to cut operating costs. In fact, 53% of businesses surveyed in Elance’s Global Business Survey 2012 mentioned that cost savings drive online freelancing. It has already made a dent in the BPO industry, where simpler tasks such as data entry are awarded to freelancers rather than to BPO companies. The BPO industry is further impacted as US companies are opting to conduct IT services in-house or within the US as the benefits of cost arbitrage in countries such as China and India diminish.

Nonetheless, the BPO industry is still set to grow in sectors that can maintain its cost advantage. Organisations with established brand names using BPO still have an edge over individuals using online freelancing websites.

The situation in Malaysia

According to an Online Employment report released by Elance, in the third quarter of 2012, 58% of projects done came from the US. Although a majority of the work still comes from Western countries (the UK, Australia and Canada are next in line), some Asian countries are within the top 25 list (see Table 1), with Malaysia ranked 22nd. Eighty-eight per cent of the jobs posted by Malaysian companies are in the IT and creative fields.

There is no dearth in job postings from Malaysia-based companies. Golf + Leisure Magazine recruits a sales and marketing team to approach branded products to advertise in the magazine. A general manager based in Malaysia looks for an online assistant to manage administrative matters such as phone calls, email and data entry. A web designer seeks a search engine optimisation expert to increase his visibility on Google Search.

Freelancers in Malaysia have also been participating in online freelancing; Malaysia ranked 15th among registered online freelancers by country in Elance’s Q3 2012 survey. Malaysians also have a variety of talents to offer. One Malaysian user for example had clocked 4,817 hours on oDesk as of January 2013, developing mobile applications and doing programming work. Another freelancer does voiceovers via the same web platform. Others offer project management, translation and data entry skills.

Malaysia has a surprisingly young online freelancing workforce. Sixty-five per cent of Elance workers are below 30 years old, and 24% are between the ages of 30-39. “This is much younger than we see in most other countries, but only slightly younger than others in Asia,” says Elance’s chief marketing officer, Rich Pearson, in an email interview. Malaysians who have yet to take part in online freelancing have similar opportunities. Sites such as oDesk and Elance have online IT, writing and translation tests that can be taken to give credibility to a freelancer’s skill. Online freelancers can also enter online contests for logo designs at 99designs and Freelancer. com. Those with IT skills (programming and web application development) are much in demand by companies worldwide.

 

 

This isn’t limited to just programming skills, however. Scriptwriting, legal work and marketing are very much wanted in this world market. Scriptwriting saw a 16% increase in jobs posted on Elance in the third quarter of 2012 as compared to the previous quarter. “The key is to have self-motivation,” says Azlina. This self-motivation propelled Azlina to join Elance directly as a “mobiliser”. Elance mobilisers are tasked with helping people get started as freelancers and providing ongoing support and resources.

Many hirers that find freelancers on web platforms only have one criterion in mind – to lower costs. This drives down the market rate and frustrates freelancers wanting to earn a decent income. Nonetheless, not all hirers are of that category. Some hirers base their decision on track record, giving security to freelancers who produce quality work. Case in point: income for Malaysia Elance freelancers has increased by 10% in 2012 as compared to the previous year.

Malaysians are actually at an advantage in the online freelancing industry as compared to developed countries. Cost of living and the salary scale in Malaysia are comparatively low. A freelancer in Australia may charge US$30 an hour for a programming job, while Malaysians can charge US$15 an hour and still deliver quality work. Malaysians, however, are also competing with freelancers in developing countries such as India, Philippines and Indonesia who can charge rates that are even lower.

Interested companies

Companies that use BPO services can also seek contract workers via online freelancing platforms. Benefits include reduced costs, trained workers and fast completion speed. Instead of hiring fresh graduates and training them for months, companies can go straight to oDesk or Elance to find a freelancer who best suits their needs. Sixty-nine per cent of businesses state that the quality of an online task force is equal or better compared to local talent, according to the Elance’s Global Business Survey 2012. Online freelancing platforms also allow clients to compare the testimonials freelancers received for their past jobs.

Sole proprietary or small businesses benefit from this setup. This is seen in the number of SMEs that uses Elance. “In the past 12 months, 500,000 SMEs hired (freelancers) on Elance,” says Pearson. It also allows for quicker expansion with less capital.

Payment is made via Paypal, credit card and Escrow. Hirers using Elance and Task Army have to make a deposit in Escrow before assigning the job as guarantee of payment. Most online freelancing platforms take a cut from the payment, ranging from eight per cent to 10%.

Of course, this doesn’t take into account potential cultural clashes between clients and freelancers from different countries. Jason Widjaja, a Melbourne-based entrepreneur, needed a programmer to develop a website for his new business and hired a programmer based in Pakistan via Freelancer.com. Although the programmer was competent, Widjaja and the programmer did not see eye to eye regarding the timeline of the project, and the engagement soon fell through.

Conclusion

Online freelancing will inevitably affect the Malaysian labour force in the near future. Malaysia has roughly one million SMEs1, which can benefit from using freelancers for jobs like computer programming, translation and videography. As a result, we may start to see the beginnings of a kind of hybrid company, one that uses both traditional employees and online workers. Companies or individuals seeking to establish themselves beyond Malaysia can list their skills on these web platforms and gain international experience without even leaving our shores. Individuals with extra time and who want extra money can of course list their services online, but need to be prepared to face the competition that is the global workforce.

The opportunities are there. Last month, for example, a company posted a task on Elance, searching for a freelancer with Photoshop skills, and is offering up to US$50 per hour. Any takers?

Elance can be contacted through Azlina Abdul Jalil at aabduljalil@mobilizer.elance.com

1 Anne Wong, “SMEs to account for 41% of GDP by 2020”, The Edge Malaysia, July 5, 2012.

Ooi Pei Qi is a research analyst at Penang Institute. She is interested in global trends that affect Penang.



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