India's invisible billion-dollar economy




MUMBAI: Online marketplaces like RAC ( offer enough reason to generate effusive prose. It's the kind of place where 110,000 software programmers from across the world log on to earn a living. Of these, roughly 50,000 are Indians—all the way from Srinagar to Bhatinda, and Surat to Nagercoil.


Put the 70-80 marketplaces like RAC together and a picture emerges of approximately one lakh Indian software programmers who generate about a billion dollars every year.


At sites like RAC, small and mid-sized American companies hoping to outsource their IT requirements post details of jobs that need to be executed. Interested programmers bid until the contract is awarded to a lone ranger in some part of the world. The bids aren't worth writing home about. On the lower side, a small tweak here and a line of code there can fetch $45. Larger projects can rake in as much as $3,000. It's the rare project that fetches anything more.


Until very recently, online marketplaces like RAC were dominated by programmers from countries like Russia, Ukraine, Hungary and Romania. Then India, with more than a billion people in her womb, got wind of yet another opportunity to deploy thousands who were straining at the leash. Like Vikas Sethi.


An engineer, he gave up a fairly cushy job at HCL Comnet five years ago. He now works out of his home at Paschim Vihar in New Delhi. He works, and he works. Then he works some more. Sethi wakes up at a rather unearthly 4:30 am every day—that's when his clients in Australia get to office. By 1:30 pm, people from UK and Ireland start calling. Then he catches a oneand-a-half hour siesta, by the end of which the Americans start trickling in. Clients find the $15-45 he charges for an hour's work irresistible. A comparable programmer in the US would charge anywhere between $45-100. At about midnight, Sethi calls it a day. That's why RAC ranks him at 129. That's also the reason Sethi is booked for projects until end-2008.




Not all happy with Indian freelancers


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Indians have made a dent in online marketplaces, too. Sham Yemul, an engineer, gave up a job at SKF Bearings in Pune and went back to school for an advanced degree in computer science. Having done that, he headed home to small-town Solapur where he set up Intellisoft Consultants on a loan from his father. But Solapur isn't the kind of place where tech companies have much to do.


Exasperated, Yemul turned to the internet and registered at 40 online market places, RAC included. The first couple of months were painful. The pipeline that carried work was both thin and irregular. On his father's insistence, he persisted. To cut a long story short, things changed. Yemul now ranks 179 on RAC and six people work with him, all of whom have no time for local projects in Solapur.


Unfortunately, this is where the effusive prose ought to concede way to some rather unfortunate numbers. Sethi and Sham operate in a saturated ecosystem. The numbers of engineers online conspire to create hyper competition where only the best or the cheapest survive.


Which is why, undercutting is routine. Many Indian programmers end up offering their services for as low as $2-3 per hour, perhaps the cheapest anywhere in the world.


This kind of undercutting drives the average wages down to $5 an hour. Working at any McDonald's outlet in the US for minimum wages can net marginally more at $5.15 to the hour. If new legislation goes through, $7 next year!


But Abhay Mehta, CEO of Mumbai-based SecureSoft has no sympathies. He routinely outsources projects on eLance, a marketplace similar to RAC. "I pay as much as $50 an hour to top-notch Ukranian and Romanian programmers. But I don't touch Indian programmers," he says. His experience with outsourcing to freelancers in India has been a bitter one. ``Either they don't understand what I want, or if they do, they either don't execute it well or don't deliver on time.


Sethi and Yemul agree. They point to long lists of Indian engineers on RAC who bid aggressively, but don't deliver. ``The Chinese make the cheapest goods. But not too many people associate them with quality. It's the same thing with us in software. We are the cheapest, but not necessarily the best,'' says Sethi.


Worse still, one missed deadline or a job badly done, and the records stay there forever like a tattoo from a broken relationship. On RAC, for instance, if a programmer doesn't deliver, the administrators make sure it shows in the rankings. Lower ranks translate into slimmer chances for successful bidding.


The pressure compelled Vijoy Varghese, a Kochibased engineer to look for a more routine job with an internet services provider (ISP) closer home. Varghese started scouting for business online as a student five years ago. But those times were different. With barely a few thousand people offering their services, getting a gig was easy.


Then the numbers ballooned and things changed. ``And at home,'' chuckles Varghese, ``nobody could figure out what I did for a living. So, there was no respectability either.'' Ostensibly, Indian fathers shy away from giving their daughters' hand in marriage to silicon potatoes who work out of home. But India refuses to relent. She keeps throwing more people at the job. There is a reason why. Assuming -- and this is a middle-of-the-road assumption -- the $5-anhour average bloke works 7 hours a day, 300 days a year, he earns $10,500 a year. Not bad in a country where the per capita income stands at $285.


Collectively, therefore, these 100,000-odd people generate a shade over a billion dollars. Call it Mother India's way of creating an unorganised Infosys of sorts!