Australian businesses are spending tens of millions a year on freelance workers in India, Pakistan, the Philippines and the US via a budding online work industry that analysts expect to grow five-fold by 2018.
Data provided to Business Insider Australia by oDesk and Freelancer.com reveals that Australian businesses are spending about 10-20 times more on online job exchanges than Australian freelancers are bringing in.
oDesk, which counts Pitney Bowes, Dropbox and Oracle among its enterprise clients, today reported that its Australian freelancers earned more than $US1.75 million in 2012, while local businesses spent about $US32 million.
Meanwhile, Australian freelancers earned $383,742 via Freelancer.com, while local businesses – including Macquarie Bank – spent $4.6 million.
Australian businesses spent the second-most behind US companies on both online job boards and tended to prefer workers from Australia, India, Pakistan and the US on Freelancer.com, and the Philippines, India, the US and Ukraine on oDesk, the companies revealed.
Sydney-born specialist job site DesignCrowd also named the US as the biggest source of crowdsourcing jobs, although Australia was among the top 5 markets for both designers and clients of the site.
Cheaper and more plentiful labour
oDesk head of international Matt Cooper acknowledged that Australian workers tended to be more expensive than overseas labour, thanks to a minimum wage that is about double that of the US ($A16.37 vs $US7.25).
Australian business leaders like Myer’s Bernie Brookes have complained of high local labour costs for some time. QBE recently opened a large Manila office to benefit from what boss John Neal described as “labour arbitrage”.
Freelancer.com regional director Nikki Parker said the site had saved global companies – particularly startups – more than $1.1 billion in total by providing a “cost effective and easy solution” to recruiting for projects.
But Cooper denied that the minimum wage was solely to blame for the freelance trade deficit, arguing that businesses tended to recruit freelancers based on cultural fit, time zones and skills, rather than price.
“It’s less about cost and more about quality, particularly for technology,” he said. “There’s a historical imbalance between supply and demand. About 60% of earnings on oDesk come from technical work.
“Tech skills such as web programming, web design and mobile app development are skills most sought after by Australia businesses, due to the local tech skills shortage.”
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