Written by Alex Goldfayn
Chicago Tribune•May 29, 2006

My Web site, TechnologyTailor.com, has just been completely redesigned by a programmer I never met. I have only spoken with the company two times–once before the project started about two months ago, and once for an interview for this story.

That’s because my programmers live and work in Gurgaon, India.

Gurgaon is a suburb of New Delhi, and it’s where Rajesh Agarwal, 40, runs a company of 16 people called Web Development Factory (www.webdevfactory.com).

My Web site project entailed a complete graphic redesign, the implementation of a searchable database for my articles and radio shows, and a back-end word processor-like content management system so I never have to worry about programming in HTML.

A complex, time-intensive project like this would easily come with a five-figure price tag with a top domestic Web site firm. I know because I’ve paid it in the past.

My cost with the Indian-based Web Development Factory: $750.

I found Agarwal and his talented group of programmers through a Web site that I believe to be the best-kept secret on the Internet: Elance.com.

It is the second Web site project I’ve done through Elance. My first provider, two years ago, was based in Romania. I did not speak to him once.

Here’s how Elance works:

You can post your project requirements in nearly any business category–including Web design and programming, copywriting, accounting, translation, etc. Think of it as a mini-request for proposal.

Service providers from all over the world then bid on your project. My Web site project received 10 bids that came from India, Great Britain, Ukraine and Pakistan.

I was able to review examples of each provider’s past work in their portfolios on Elance. Also, feedback and ratings from past customers is available for review, much like it is for eBay sellers.

I was able to exchange messages with each provider and ask questions within Elance. I took several of the conversations to Yahoo Messenger for instant messaging. I negotiated issues like the deadline and payment terms. Once I selected my provider, everyone else was notified of my decision automatically.

I even pay Web Development Factory with a credit card through Elance.

Here’s the kicker: All this costs nothing except the price of the project.

Elance makes its money from the service providers, of which there are about 50,000, according to Fabio Rosati, the company’s chief executive.

“We charge a transaction fee of 8.75 percent for each project,” Rosati said. “And a subscription fee of $10 to $100 per month, depending on the size of the provider.”

The fees include handling credit card processing for providers.

“The purpose of Elance is to aggregate demand for business services, typically from small and medium companies, and distribute that demand to qualified providers looking for work.”

Last year, about 100,000 projects were listed, and about half of those were completed and paid for successfully.

Rosati estimates that nearly half of Elance service providers are based overseas, but that number is much higher for Internet programmers. And 60 percent of projects listed on Elance are Web design and programming.

“But if the project is to build a Web site,” said Rosati, “it’s hard to compete with a Romanian- or Indian-based programmer.”

Think of it as overseas outsourcing–and the accompanying savings–for the little guy.

Still, there are some issues when working with a company half a world away: The large time difference means changes requested today will most likely be completed tomorrow. And, on a Web site, don’t expect a creative visionary. You’ll be doing a lot of hand-holding, getting the site exactly as you want it. But my experience has been that providers will work until you’re satisfied, without watching the clock.

Agarwal, who runs Web Development Factory, has been using Elance for about five years. In that time, he estimates he has generated about $180,000 in business directly through the site.

In the past year, Agarwal said, about $50,000 has come through Elance, either directly or via referrals. That’s about half his annual revenue.

All of which means a whole lot of small projects.

Today, Agarwal is working on 15 jobs concurrently.

He bids on about 120 projects monthly, and is selected as the winner on about six.

“I could do more if I priced them more aggressively,” Agarwal explained. “But I’m on Elance bidding every day.”

The average programming project involving a database runs about $1,500. A more complicated job built on Microsoft’s .NET platform averages about $5,000.

Seems like a whole lot of work for not a lot of money; but for overseas providers, it’s big money.

Agarwal’s overhead is low. His 1,000-square-foot office space costs him $800 per month. It’s where his 16 employees spend their days, sitting side-by-side like students in a computer classroom.

His programmers’ compensation runs about $300 per month if they have one year of experience and $500 per month if they have two years’ experience.

Of course, on price alone, U.S.-based firms–which can charge more than $100 per hour for Web programmers’ time–simply cannot compete. That’s why companies like Geneva-based Networks Consulting Resources Inc., which designs and programs Web sites, feel they do not compete with overseas firms.

“I don’t view them as competition,” said Matthew Kaseeska, the company’s managing partner. “Their angle is price alone. My angle is value. It’s interacting with the client. It’s sitting down across from our client and understanding what they want to accomplish.

“All this time and effort translates into a potentially higher cost. But I can’t beat their labor rates.”

As for Agarwal, who handles all client communication, project management and even some of the more complicated programming, he makes between $2,000 and $3,000 monthly.

But because of the number of projects he undertakes and the time difference between him and his clients, Agarwal has to work hard for his money.

Eighteen-hour days are standard. Luckily, his wife is understanding.

“I’m not like a lot of American husbands who can do household work. I do not do any household work,” he said. “But my wife still gives me breakfast in the morning, so I am happy.”

I am happy too.

My new Web site is scheduled to launch Monday. I got exactly what I wanted at a nearly unheard-of price.

– – –

U.S. companies on Elance

You don’t have to be based in Eastern Asia to do business on Elance. Here are two companies based closer to home that build their business using Elance:

– In Northfield, Goran Paun, 29, runs a graphic design firm called Art Version (https://artversion.com). He designs logos mostly. On Elance, he charges about $1300 per logo, compared to about $1375 if the client comes from the offline world.

“On Elance, because of service providers located outside of the U.S., we have to be more competitive,” Paunovic explained. “So we charge less.”

Paunovic makes about 100 bids per month on Elance, and wins 5 to 10.

“I’m really happy with it,” Paunovic said. “I thought we’d get more one-time jobs from Elance, but really, we’ve received a lot of multiple orders.”

– In Los Angeles, Steve Soto, 26, operates a graphic design company called Studio Soto (www.ssgraphicdesign.com). He has been using Elance since 2001 and has generated $157,000 in revenue through the site. That number accounts for 60 to 70 percent of his revenue.

He charges $150 to $200 for the design of a new logo.

“Let’s say you go to a design firm,” Soto said. “They’d charge $400 or more.”

He gives clients unlimited logo options until he comes to one they’re happy with.

Is there a more effective way to find business?

“Not for me,” he said. “Elance is the only way I know how to do it.”

Read Original Article: Global outsourcing for the little guy