|By||http://e27.cohttp://e27.sg/2012/10/19/independent-online-work-the-next-entrepreneurial-bpo-trend-in-the-philippines/||| Oct 19, 2012 | Featured|
There’s a storm brewing in the technopreneur ecosystem in the Philippines. And it’s not made up of teams wanting to build the next big thing. Rather, it’s a slew of independent contractors offering their services online to employers around the globe.
A report by Reuters’ Jeremy Wagstaff speaks of online freelancers remaking the outsourcing industry. Jeremy writes that this commercial crowdsourcing of content is “already disrupting traditional outsourcing – from preparing tax statements to conducting research on pediatricians.” A World Bank researcher says “[n]ow you can farm out your work to anyone in the world.”
The enablers are the usual suspects: services like oDesk, Freelancer.com and Elance. Armed with a capable computer and a decent Internet connection, contractors from around the Philippines (and other countries) can bid for projects ranging from writing short articles, web design, programming, transcription, accounting, and a whole lot more.
The main advantage here is cost. Compared with established BPO companies — majority of which are call centers — clients have direct access to contractors, and can therefore deal with lower costs per transaction.
For instance, an oDesk contractor can start at something like $1.50 per hour, progressing to a higher rate as one becomes more experienced. oDesk says the average contractor gets 190% growth in earnings after three years using the service.
But is independent online work the silver bullet that can help address poverty and unemployment in the country? Let’s consider a few factors.
Knowledge of English. Filipinos speak English as a second official language. We have an advantage over other fellow Asians because of the more or less neutral nature of our accents, and our familiarity with western culture. However, not everyone can write or speak English well enough to warrant writing or taking calls for a living. This is where services like Kalibrr that addresses this skills gap can help.
Low barrier to entry. Services like oDesk would usually require access to the Internet. For a contractor, this means a desktop or notebook computer and broadband. Folks who cannot afford to buy their own computer and pay for broadband service can work from Internet cafes or such shared workspaces.
Quality of work. Freelancing services like oDesk are a mixed bag. While I have chanced upon a few potentially big projects, a majority of projects on freelancing sites pay very low per-unit prices. A contractor can perhaps earn well enough with volume, but getting paid $0.50 for a 500-word article sounds like highway robbery!
oDesk says that Filipinos mostly work on blog and article writing and data entry. Research and graphic design closely follow. This is a stark difference to India, Indonesia and Pakistan, where the bulk of work is in web programming and web design.
Security. Online freelancing sites always come with concerns on scam projects, which may include non-paying employers, bogus projects and even illegal work. Independent contractors should be on the lookout for these issues.
Filipinos have already established a strong presence on freelancing services, where one can do outsourced work without having to commute to work in the ungodly hours of the day. But while traditional BPO companies have support from the government and other stakeholders, independent contractors don’t always enjoy benefits. For instance, we already mentioned health benefits and social security.
Employment benefits. The benefits of freelance work are mostly monetary. Not being connected with a local company, contractors do not enjoy health benefits and employer contributions to social security. Independent contractors don’t enjoy status as employed individuals. How do they go about with contributing to social security, PAG-IBIG or PhilHealth? Contractors don’t have paid leaves for illness, vacation, maternity and the like.
What about taxes? Bangladesh has already declared online income to be tax-free. The Philippine government does not tax income by overseas Filipino workers (OFWs). As independent online contractors bring in — and spend — dollars in the country, shouldn’t they be also subject to the same exemptions?
For instance, independent contractors are at a loss whether to pay taxes as self-employed individuals. Most are not even aware of the processes involved, which includes applying for a business permit and registering a trade name.
Institutional support. The industry is comprised of individuals independently offering services. As such, there is little organization and stakeholders usually have to fend for themselves. Perhaps being better-organized will enable independent online workers to enjoy better support and protection.
In the recently-concluded PhilDev Economic Forum, Google vice president for infrastructure, Dr. Eric Brewer, had a goal for the Philippines, which was the ability to develop software from any island in the country. To some extent, we’re already doing this, although in a different form. Filipinos can be productive from any region, any province, any island, for as long as there is an Internet connection decent enough to find and submit work.
There are countless opportunities out there, and Filipinos don’t even have to wait for a BPO company to set up shop in town. But we can only do so much from the corner Internet cafe running a 1 MBPS DSL connection, or from a low-powered netbook computer connected through a mobile broadband stick.
What can we do to better catch and benefit from the next BPO wave?
Feature Image Credits: Shutterstock