“Several important factors involved with their failure include: Too much competition, little service provider differentiation besides price, high service provider fees, no locality of services, ambiguous project descriptions, cheap Indians, as well as cheap Indians, and last but not least, cheap Indians.

Lets start from the buyer’s perspective. I think I made a pretty decent example. I’m a company CEO (or to dumb me down, startup founder) and I needed a business plan made and my website programmed from the ground up. I go to Elance.com, I submit a project that says I need these things done and I want to work directly with the service provider to make it happen. 50 Indians bid on my project, each going cheaper than the one before him, and I realize that they all suck. They don’t know what I’m looking for, so how can they adequately do my project? I want them in front of me so that we can plan the process out easier, but they’re in India and have a language barrier. Great. Now that I’m frustrated, I leave Elance and wasted over $200 in bidding fees for the service providers who bid on my project.”

Good point! Since post a project on elance is free. There are too many fake or dummy projects out there. Some buyers post projects simply to get an idea of the cost or to try to find free work. But bid on project is not free. Service providers will soon find it is waste of time to use Elance.

“From the service provider’s perspective, let’s say that I’m an Indian. I know that I’m good at programming, I know that I’m good at business, and I know that I speak perfect English. Mr. American goes ahead to post his business plan and programming project request for a really stupid idea. I look at it, nod, and make my bid. 49 other Indians bid with me. Mr. American is thinking, where the hell do I even start? How do I know that Mr. Indian can speak perfect english when I have to interview all 50 of these guys to know which one is right. Too many choices isn’t a good thing. Mr. American doesn’t buy from me, I wasted a lot of time and some money on a lost lead.

Of course, all of this is a problem for both the buyer and seller. The lack of quality service providers steers away the quality leads and buyers. Few buyers means fewer qualified service providers. At this point, the marketplace has failed. Elance has been treading water for the past 7 years and haven’t changed their model at all. They went into enterprise software for a few years, but that didn’t go very far.”

Very good point. The lack of quality service providers steers away the quality leads and buyers. Since most of the bidders on those sites are  typically freelancers, self employed and work at home. The reliability and quality of service are highly unpredictable. Elance is just middleman or marketplace so they have no control about the bidders at all. More and more dispute happened on elance. Serious business can’t depend on freelancers for outsourcing.

Some real life experience about elance users:

http://highfade.com/2008/09/27/elancecomterribleexperience/

http://www.complaintsboard.com/complaints/elancecom-c55889.html

http://www.lawguru.com/cgi/bbs/message.php?i=265026830

The main challenge for HR professionals, said James Huang, CEO of BPOVIA Ltd, is how to manage a large number of people at a very short time. A HR professional has to handle heavy pressures in the BPO sector as the requirement needs keep changing on an hourly basis. With the help of some parameters, such as the certificate launched by NASSCOM, it’s neither difficult to choose top-level managers nor freshers. HR policies should also be customized to brand building, for human resources are becoming human relations with more emphasis on emotional bonding.

Compared with India, China’s BPO industry is not fully developed, but is catching up in many aspects. BPOVIA Ltd is just one of the competitors, who are taking an active part in Chinese business development.