Can feds harness the global workforce?

Steve Kelman wonders if vendors offering vastly lower prices thanks to global competition would capture the government's attention.

global

The rise of a global marketplace may make services much less expensive. Steve Kelman wonders if government can take advantage. (Stock image)

Last week's Economist tells a story, in an article entitled "The Workforce of the Cloud," about a private company that needed to hire somebody to translate a video.

"For translating a 22-minute video from English into Spanish at short notice, 7Brands Global Content, a professional translation firm based in New York, quoted 'approximately $1,500,'" a fee the article states is in line with the going rate for established translation companies.

The customer then decided to try two online "talent exchanges," Elance.com and (the largest of the firms in this space) oDesk.com. Both companies have a large stable of freelancers available to bid on various kinds of tasks (Elance has 2.5 million people registered, about a third in the United States and the rest abroad). The customer screened the bids to weed out those with little or no experience or without good customer ratings, and found quoted prices of as low as $22. (That's $22 as a fixed price for the whole job, not per hour.)

$1,500 vs. $22? Does that get your attention in these tight budget times, government agencies?

These new online marketplaces are taking advantage of the spread of freelance work, by part-timers and young people, and the rise of a global marketplace (finalists on the bid in the article were from Argentina, Brazil, Indonesia, Mexico and the Philippines). As the article notes, as these markets mature, and good freelancers start getting a lot of work, the rates for reliable people are likely to rise – but there's a lot of room between $22 and $1,500 for customers to benefit.

These online markets have customer rating schemes and manage the payment process for the buyer. Odesk.com also has a method for monitoring whether work is being done when it is claimed to be done for those working on hourly rates (by taking pictures of workers at their screens at random intervals).

The federal government buys hundreds of billions of dollars of services a year. Clearly, this kind of marketplace for freelancers is inappropriate for the vast majority of these buys. But if the government can get these kinds of savings on even a tiny, tiny fraction of services purchases, this can add up. There must be fairly routine, low-security, non-mission critical, low-dollar buys (perhaps many of them under the $3,000 micropurchase threshold where customers could simply use this service directly, with no further ado) where the government should try this method.

If I were an agency, I would start very small, see if this works, and go back to people who have done a good job the first time. (We call it "past performance.") Translations – the first example cited in the article in The Economist – come to mind, but there must be other kinds of clerical work for which this would be good as well. And if an agency only wants to use U.S. labor, there's of course nothing to prevent considering bids only from Americans.

This is an example of innovations out there in the commercial marketplace that the government – especially in these tough times – should be exploring. Who wants to try?

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