 Important alert: Jan 27, 2012 1:22:08 PM EDT.
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- We have rolled out another round of enhancements and bug fixes, including: changes to the posting policy, enhancements for on-the-job trials (crowdsouring/trialsourcing) and to the project pages, updates to Skrill payment information and the browse/search worker pages, and various other bug fixes. View the Site Improvements Blog for the complete list of changes.
- UPDATE January 20th on phishing scam: We've received new reports of a second phishing email (claiming to be a prize from vWorker and Julia Robertson). Click here for full information.
- We have published another story in our case study series, provided by employer Marco-Hans Van Der Willik (Zoe-X). Click here to read about his story.
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Is the World Really Flat? A Look at Offshoring at an Online Programming
Marketplace
David Gefen and Erran Carmel
Abstract
In a world that is flat, where all clients and providers can
easily transact with one another, offshoring represents the proposition that information
technology providers from low-wage nations can now underbid providers from high-wage
nations and win contracts. We examined a particularly flat "world"—an online programming
marketplace—and found that this profound tilt to low-wage nations is overstated.
We analyzed the entire history of transactions at one of the major online programming
marketplaces (vWorker.com), a marketplace for outsourcing small IT projects. The data spanned
38 months and included over 263,000 bids by over 31,000 providers from 63 countries
on over 20,000 small IT projects requested by over 7,900 clients from 55 countries.
Contrary to the world-is-flat proposition, the data in this
particular site show some client preference for domestic providers. However, the
largest group of clients, the American clients, are a marked exception to clients
in the rest of the world: they give relatively less preference to domestic providers.
In a sense, the American clients have a higher preference for offshore providers.
Among non-American clients, the preference for domestic providers is mitigated when
both client and provider are from an English-speaking nation. Relative bid price,
often very low already, also determines the winning bid, as does the ratio of purchasing
power parity (PPP) between the country of the client and the country of the provider.
Nonetheless, the strongest determinant of the winning bid is client loyalty: the
client gives very strong preference to a provider with whom there has been a previous
relationship, regardless of whether the provider is offshore or domestic.
Keywords:
Outsourcing, offshoring, online programming marketplace, agency theory,
bidding, PPP
http://aisel.aisnet.org/misq/vol32/iss2/10/
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