oConomy
February 2, 2009 by Amit Bakshi

Are you sick of hearing dreadful news every day about the U.S. economy?  40,000 job cuts here, 15,000 layoffs there.  Unemployment potentially rising to 10% in this recession.  Fortunately, we have some good news for Americans today.

We see over 11,000 jobs posted every month, and historically many of those jobs have gone offshore to lower-cost countries.  But, oDesk is a free market, and over the past year we’ve seen a resurgence in homeshoring, or U.S. companies outsourcing to U.S.-based talent. Why is this the case?  While rates are higher for U.S. providers, feedback scores tend to be higher, too.

Work done in the U.S. grew at a rate of 367% from 2007 to 2008, 50% faster than oDesk’s overall rate of growth.

United States Hours by Week

This growth was faster relative to other countries known for outsourcing, like India and Russia.

Growth in New Hires - US vs India vs Russia

One driver for offshore outsourcing has been the lower cost of living in other countries like the Philippines and Ukraine.  Software developers and other skilled professionals in these countries require less income than their counterparts in the U.S.  As seen in the chart below, the U.S. average hourly rate is more than $6 higher than our average.

United States Hourly Rates vs oDesk Average

In fact, when we break U.S. rates into job categories, we see that they are actually rising in skilled categories like software development.

United States Hourly Rates

So then why are businesses choosing to outsource their jobs to U.S.-based providers?  One possible explanation is that there are more U.S. providers today, providing buyers a wider variety of U.S.-based skills and experience, than ever before. In December alone, over 20,000 new U.S. providers signed up on oDesk, the largest monthly percentage increase (over 40%) that we have seen since 2005.  Other possible reasons could be better ability to co-ordinate due to time-zone differences or fewer language and cultural barriers.  Regardless of the exact cause, the chart below shows that U.S. providers’ average feedback score has been consistently higher than the oDesk average:

US Average Feedback vs oDesk Average

It seems that customer satisfaction on work done by U.S. freelancers is playing a key role in this promising new trend for talented U.S. professionals.  It goes to show that outsourcing is not just about finding the lowest price, and that’s why U.S. professionals are able to command higher rates.  We will keep monitoring this trend and keep you updated on our findings.

Amit Bakshi

Vice President of Marketing at LawPivot

Amit Bakshi is the Vice President of Marketing at LawPivot. He formerly served as Product Marketing Manager for oDesk.