|An interesting sign of the times can be found on Web professional services marketplace eLance. Of companies bidding on IT related projects on eLance, a vast majority are small Indian software services firms and staffing companies.
Thats not too surprising. What it does indicate, however, is the extent to which, despite an effort by the larger Indian IT players to move up in the value chain, there is a massive segment of Indias IT sector that remains closely tied to the classic low value contract consulting business.
One company, Synapse, has apparently earned more than $20,000 since February simply bidding on contracts over eLance. This is a modest sum, and it is questionable what kinds of margins these sorts of small companies can hope to maintain in the face of rampant competition in the marketplace. eLance clearly serves as a relatively inexpensive channel for such firms.
There will always be a market for low value IT work outsourced to India, but its practitioners have an uncertain future especially if they find themselves among throngs of others bidding on eLance for work.
For now the real beneficiaries of this market are eLance (which charges a service fee for the right to bid for projects) and its customers, not to mention the various other professional services exchanges on the market like HelloBrain, for example.
(Earnings updated Apr '02 $140,000 on Elance)