Online Outsourcing: How Can Developing Countries Benefit?

By Elizabeth Melampy

In 2014, 40,000 Kenyans were registered on Elance, an online platform coordinating virtual employment for people living continents apart from their employers. With internet accessibility increasing worldwide, this kind of employment is becoming a more attractive possibility for the 201 million people unemployed in 2014.

McKinsey and Company wrote a report in 2013 suggesting that the internet could play a key role in economic development, especially in Africa. Africa’s iGDP, the internet’s contribution to the overall GDP, is currently 1.1 percent. This study estimates that by 2025, Africa’s iGDP will rise to somewhere between five and 10 percent. While only 16 percent of the continent has access to the internet today, estimates based on the rapid dissemination of mobile technology say that Africa has the potential to dramatically increase that number to almost 50 percent by 2025.

A visualization of a portion of the internet maps connectivity that spans the globe.

A visualization of a portion of the internet maps connectivity that spans the globe.

The internet is crucial for economic growth in today’s global economy; McKinsey says that up to 10 percent of the total GDP growth in China, India, and Brazil in the past five years is due to the growth of the internet. Developing the internet in Africa, as well as in other developing regions in the world, could inspire similar growth. Beyond merely increasing internet access for economic growth, big names in global development are thinking about how the internet can transform the job market. The World Bank and the Rockefeller Foundation just published a study on online outsourcing.

Online outsourcing has two major components: “microwork,” a process in which companies contract virtual workers from around the globe to complete low-skill “microtasks” online; and “online freelancing,” where companies can hire out more complex, professional services via a virtual platform. The main differences between those two types are the size and difficulty of the tasks. Microtasks, appropriate for people with limited training and basic literacy, might include image tagging, data entry, or text transcription. Workers are paid per task. Online freelancing requires greater skill and is more lucrative; this might involve graphic design or web development. There are many platforms already coordinating this type of outsourcing (cloudfactory, CrowdFlower, and UpWork, just to name a few). Continue reading