Problem: Finding professional staff to help grow the company Solution: Using the Web to let overseas talent bid on projects Payoff: With good teams in place, revenues triple in four years
In 1998, soon after Rafael M. Lopes expanded the services offered by the Envien Group, his Los Angeles-based consulting firm, he realized he needed to find cheap programming help -- and fast.
Envien was pitching business-development services with an emphasis on marketing over the Web but was being continually underbid by computer whiz kids who, Lopes says, offered none of Envien's project-management and business-development expertise. Moreover, Lopes wanted to expand beyond the United States and sell the company's services in Latin America and in other overseas markets, but he couldn't do so without hiring skilled workers to help him. At the same time, clients that Lopes had already cultivated and helped to move online were ready to graduate to more sophisticated Web sites that offered E-commerce and database integration.
Lopes's fledgling firm couldn't afford to pay for even a part-time programmer with that kind of expertise. So in June 1999, Lopes started to explore bidding out projects piecemeal over the Web. He turned to eLance Inc., a company that allows its customers to post projects and review bids from independent contractors around the world online.
Lopes has now assembled an international team of programmers, designers, and translators, which enables him to add streaming media, database integration, and Flash animation to the menu of features that his clients can choose for their Web sites. Now Envien can offer more competitive prices and win more projects. As a result, Lopes's jobs are getting more ambitious, and he's expanding his client base deep into Latin America. What's more, his firm's revenues have tripled. In 1998 the company had gross revenues of $40,000. In 2000, Envien billed $84,000, and this year Lopes expects the business to bill $120,000. Although Lopes won't disclose his net income, he happily reports that profits have risen steadily along the way.
According to Lopes, eLance has made it effortless for him to find affordable talent in such far-flung places as Brazil and Ukraine. After he receives bids for a job he's posted, he reviews contractors' profiles on eLance.com. Then he checks the company's five-point rating system to see how previous clients have graded the contractors he's interested in. ELance doesn't allow Lopes to E-mail a contractor directly until he selects a winning bid. Still, he says, he has always had enough information to be confident about the bids he has chosen.
And once the project is finished, Lopes has no trouble paying his international workers. When he first started using eLance, he had to send payments by Western Union. Now the site has a built-in payment system. After receiving Lopes's authorization for payment, eLance bills his credit card and pays the contractor for him. So far Lopes has posted 11 jobs on eLance.com, and he hasn't paid a dime to do it. Service providers pay eLance a fee of 10% of the cost of the awarded project. And if Lopes wants to work with contractors again, he signs them up directly.
For example, a Mexico City-based contractor whom Lopes found on eLance is now working as a partner with him on a new venture: Mercadotecnia.com, a Web site named for the Spanish word for market.
While Lopes reaps the rewards of hiring international talent, he doesn't believe that he's exploiting his overseas workers. "The Web allows people in third-world countries to use their technical skills to make money that's above average for their markets," he says.