Tuesday, June 30, 2009

IT Software Freelancing - Choosing a right buyer

We see numerous articles, blogs over the internet where people have written how to choose and select the right provider for the job.

Here is something opposite, its from the provider perspective on how to choose right buyer and their projects. I have been freelancing for over 5 years now and have applied and got projects from number of freelancing sites like odesk, guru and rentacoder.

If you have done your homework well, have good skill set and bid competitively and selectively then there a good chances of success in this fragmented world of software freelancing.
Speaking of success, what is general success rate?
My experience on bidding on project shows that if you qualify as a good freelancer, good success rate would be anywhere between 5 - 10%. Now that seems low, but actually it is not, here is a bit of breakup on where you bid goes:

  1. Buyer selects you 5 - 10%
  2. Buyer selects someone else 10 - 25 %
  3. Bid goes waste 70 - 80% (yes that is right!!!)
The third includes - job expired, project itself canceled or project itself did not start after buyer selecting a provider.
There has been lot of profiling done on providers, their demographics, their competence, but seldom or never has the buyers been profiled (also because buyers profile unlike the providers is not publicly available).

Who is this typical entity on the other side of the fence (whom we would never meet, as most of the projects are transacted online with people in different geographies)?
Possible answers:
  1. Would be a small company how does not want to go through the troubles of having physical presence in a different geography.
  2. Would be a startup (but incorporated) company working on a new concept and has plans but not enough cash to hire full time employees.
  3. Would be a stealth startup (not incorporated), taking a long shot on something, would be a one man show who is still busy in his full time job.
  4. Would be a middle man trying to hire someone cheap for the local market to work on his clients projects.
  5. Would be an individual like the provider, trying to get something done or taking a long shot at some concept.

As we see that 70 - 80% of the bids go waste, so unless buyer belongs to first two categories described above, there is a pretty good chance that your bid would end up in waste.

Freelancing market is still fragmented, there is still no sign of organized biggies of the IT and software world (Microsoft, Google, Amazon, Facebook etc.) entering this market. They either have their captive units in local or offshore markets or enter into defined contracts with offshore vendors for their IT needs be it support or development or services work.

I continue to believe that the startups that would be big tomorrow would still be the ones that have an energetic team physically located and working together at one place. Something like Google or even Facebook or Twitter cannot happen using offshore freelancers. So we as providers cannot hope for many long term, big budgeted projects and would have to bid regularly on small to medium size projects. Thus with all this background there comes a need to know where to bid, as actual projects are scarce and competition is high.

Here are some pointers that may help to choose the right buyer or project:
  1. Every good freelancing site has steps to verify or review a buyer, like the payment verification, contact details verifications to know the entity is real. They usually stamp such buyers along with the projects they post. Look for these. Usually buyers under category one or two would have these.
  2. Next comes the project description itself. There would be well defined scope of the project or well defined criteria for providers needed for that project. This shows they have plan and again buyers under category one or two would fit these. Ignore projects with clone of this or clone or that or where from the project description it is not clear what the buyer wants. Avoid projects with generic descriptions, which are so general that there would be many bids and in the end project would never take off.
  3. Projects have clear guidelines on the time estimate i.e. duration, hours per week, no of providers needed or tentative budgets. Again buyers under category one or two have to go through this process for every project because they are incorporated and budgeting is needed for planning. Avoid projects with open or unsure budget duration. These would seldom take off ending your bid in waste.
  4. Many freelancing sites give a brief work history of the buyers posted projects. Like how many projects he posted, how many got started, size of the projects etc. If someone has posted many projects but none took off you can assume he falls under the category 3 - 5. No point wasting your bid on that.

Thus by understanding the online freelancing world better and profiling the buyer better, you can improve your strike rate and spend more time working on right projects than bidding on waste projects.

Hope this helped!


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