When we hear about worker exploitation, we usually think about early industrialisation, sweat shops, mining corporations, commodity dumping prices, and the like. We imagine underpaid workers sweating away under hazardous conditions in stuffy factories. I am not saying that this is a thing of the past -unfortunately it is not- but times have changed. Exploitation has arrived in the info age. Cheap labour is not only available in the low-tech sector anymore, but also in a growing number of skilled services. The Internet makes it possible.
Web sites like rentacoder.com or elance.com specialise in service contracting on the cheap. Interested buyers are offered a variety of professional services including programming, design, web services, and professional writing. These websites function as a global market for service buyers and service providers. The business model is simple. The buyer posts a description of the work and providers submit bids for these projects. The offer is awarded to the most attractive bidder (which often means the cheapest) and the contracting website acts simultaneously as a broker and escrow agent. A fee is charged for the mediation, usually a percentage of the contract amount, which is paid by the contractor.
On the bright side, this creates opportunities for professionals who reside in low-income countries. The majority of service providers, especially in the IT field, are located in Southern Asia and Eastern Europe where IT salaries are low on average. However, there is also a dark side. The competition in this low-cost market is becoming fiercer every day. I recently stumbled across an RFP posted by a Bulgarian web development company for a project that was budgeted at $500. The company expected the project to be completed in one month, provided that the programmer would work 6 days per week 10 hours a day. This comes up to an hourly rate of just about $2 for which apparently even Bulgarian programmers don’t want to work.
If you wonder whether there were any biddings for this project, the answer is yes. There were plenty of them. Seemingly it is always possible to find someone who is willing to work for less. This leads to a situation where programmers churn out as many lines of code as possible in a given amount of time, just to stay competitive. It also creates a playing field for hobby coders, unemployed writers, students, and other amateur contenders. Needless to say that this occurs at the expense of quality and professionalism.
What is more concerning, however, is that it also creates new niches for economic exploitation. The victims are -as always- the economically underprivileged. This emergent problem has not yet been addressed properly by any of the large freelancer websites.