oDesk and Their Misadventure Into Minimum Wages

Previously I wrote about my displeasure with oDesk. For those of you not in the know, oDesk is a site where you can hire online contractors for all kinds of work. In concept it’s great, but unfortunately they simply don’t know how to run their business properly.

In my last rant I was mostly going off about how their system helps contractors rip off employers. Basically they leave so many loopholes open knowingly as they rake in profits from contractor theft. Most of those loopholes could be fixed quite easily, but it would likely result in a loss of profits, at least in the short term anyway. Perhaps the problems were so widespread that it would be significant. So oDesk chose profits over reputation and morals.

New Guaranteed Feature

This past week I happened to need to hire a contractor for low wage work. The first thing I noticed is that some applicants were now marked as ‘guaranteed’. This was a welcome surprise and gave me some hope that maybe oDesk was going to address their issues. When I looked into it further I found out that it was only a beta program only offered to some clients. Also it was only applicable during the first 2 weeks of a project and had various other limitations. So while it’s a step in the right direction, it’s way too limited.

It makes me wonder why only specific contractors get labeled as guaranteed. I couldn’t find any info about how a contractor qualifies for this label, but I see contractors with similar work history and ratings without the label. If anything this new feature makes me more wary of doing business with the other contractors as if oDesk has detected something that makes them less trustworthy. It’s their way of acknowledging that they have a lot of unreliable contractors on their site but they’ll give you a half assed guarantee if you go with who they deem to be the lowest risk.

The Minimum Wage Fail

After wading through job applications, work history, feedback ratings and work samples, I finally found a contractor to hire. We came to an agreeable price and I was looking forward to working with her. Then oDesk reared their ugly head.

When I tried submitting my job offer I was getting a weird error message. It was saying that the hourly rate offered must be 4 times as much as I had agreed to pay. Since no additional information was provided I assumed it was a glitch or maybe an incorrect setting on the contractor’s profile. There was no way I was going to pay 4 times the agreed upon price.

First I tried searching their help section but couldn’t find anything about minimum hourly rates. Luckily they had a live chat module where I was able to report the issue. Not so luckily I was soon shaking my head at how oDesk operates.

The explanation I was given was that oDesk was doing a lengthy test with minimum hourly rates although it apparently only affects some people. Ummm, why am I just learning this now after I had someone ready to hire?? Why is the system letting other contractors bid below that rate??

I can guarantee that someone reading this is thinking I must be super cheap and that I’m taking advantage of people. That is so far from the truth though. The wage I pay the contractors is good money in their country and I never force anyone to accept a wage. I employ some contractors long term and gradually give them raises and performance bonuses. I’m just not willing to pay much higher rates when someone else can do the same job for a significantly lower wage and still do a good job.

So back to the contractor that I couldn’t hire at the agreed upon rate. Due to oDesk’s secret test she is going to face a serious uphill battle to get hired on jobs there. Instead of being able to bid at a price that reflects her experience and ratings, she’s forced into a higher tier competing against more experienced contractors. It reminds me of when McDonalds wouldn’t hire me in the first year out of college figuring that I wouldn’t stick around.

It doesn’t take a rocket scientist to figure out that oDesk is trying to phase out the lower wages, which in turn boosts the amount of profits they get from each contract. It’s not as if they care so much about the contractors that they want everyone to be paid more. The casualties are any contractors who fall way under that minimum hourly rate. Maybe they’ll still find someone to give them a chance, but if that employer had been outsourcing that task previously they’ll have certain expectations for a certain hourly rate. That might result in losing contracts and getting negative feedback ratings.

While they may have been watching how minimum wage increases affected employment in various countries, more likely they are just trying to emulate their biggest competitor Elance. On Elance there is also a minimum hourly rate although it is 25% lower than what oDesk has been testing. This minimum hourly rate is likely a big reason why Elance generally has higher quality contractors. The lower priced ones just can’t get their foot in the door.

Maybe in the long run this is a good move for contractors, but it’s going to increase expenses for a lot of employers who outsource. Even if they don’t employ the cheaper contractors, there may be a trickle down effect as other freelancers increase their prices to not be at the lowest price range.

My biggest problem with this all is the implementation. If they’re going to sneak in a test at least provide a link to some kind of documentation. Don’t force people to dig into options and help pages for something that you could just be upfront about. Why not tell the contractor? Why not tell the employer?

What’s your opinion of this move by oDesk? Do you think this will ultimately help or hurt the lower end freelancers?