Now, outsourcing gets personal

NEW DELHI: It's the latest buzzword in outsourcing and soon it may touch your life personally. For outsourcing is fast transforming itself from being a multi-people oriented activity to an individual one.

And the new word for it is PPO or person-to-person outsourcing. Already, it's generating revenue worth $250 million annually worldwide, and by 2015, it's expected to be worth $2 billion.

Interestingly, in India, PPO generates revenue worth $65 million annually, but it's expected to touch $500 million by 2015. An eight-fold increase in nine years at a cumulative growth rate of 26%. Although still in its infancy in India, PPO will take another 3-4 years to establish here.

So what's PPO? It consists of those services that are offshored by individual entrepreneurs who are trying to bootstrap their new organisation as efficiently as possible. With technology advances and the growth of the Net, small offices, home businesses and freelancers can utilise PPO services and generate business.

The new trend has been captured by Alok Aggarwal, chairman, Evalueserve, a global research and analysis firm, in his latest paper, 'Person-to-Person Offshoring - Offshoring of Services Reaches Small Businesses and Homes'. Aggarwal says it's simply a different level in offshoring and not the 'next level' or 'previous level.' "This trend shows that because of lower phone tariffs and internet costs, even freelancers can get on the offshoring bandwagon and make money."

Currently, PPO includes services like online tutoring, website development, graphic designing, software development, writing and translation services, accounting and tax preparation services, architectural services, etc. A paper by Alok Aggarwal, chairman, Evalueserve, a global research and analysis firm, predicts as the trend catches up, more and more consumers will be able to offshore jobs at fairly low cost and deliver on time.

At the moment, there are around five lakh vendors and freelancers from various low-cost countries in the PPO space. Out of these, approximately 30% are from India.

India is also facing competition from traditional outsourcing countries such as Philippines, Russia, Ukraine, Romania, China, Vietnam, even Thailand and Sri Lanka. But we have an edge over others. "The reasons are the same — good English-speaking and analytical skills, etc," says Aggarwal.

As of now, PPO is being done under two business models worldwide. First, direct interaction model where the individual client signs a contract directly with the vendor, who in turn either hires people on a full-or part-time basis or sub-contracts the job.

Although payments can be made through cheques or wire transfers, as the cost of the project is fairly low, clients usually pay through credit cards.

The second is the online marketplace model. Here, vendors enrol in an online marketplace by paying a monthly subscription fee, plus a fixed percentage of the revenue if they win the project. When an individual posts requirements for a new project in the online marketplace, that's communicated to the selected vendor/freelancer.

The client then awards the work to the appropriate person. Aggarwal estimates that currently, there are over 90 online market places.

"Unlike manufacturing, where large companies like Wal-Mart or Target could import from low-wage countries like China or India, inexpensive internet and phone call costs have created a level playing field where even the common man can take advantage of low-cost, white-collar labour around the world," he says. A sign of people power.