Diasporas and Outsourcing: Evidence from Odesk and India

33 Pages Posted: 20 Oct 2012 Last revised: 16 Oct 2014

See all articles by Syed Ejaz Ghani

Syed Ejaz Ghani

World Bank

William Kerr

Harvard University - Entrepreneurial Management Unit

Christopher Stanton

Harvard Business School; National Bureau of Economic Research (NBER)

Multiple version iconThere are 3 versions of this paper

Date Written: October 2012

Abstract

This study examines the role of the Indian diaspora in the outsourcing of work to India. Our data are taken from oDesk, the world's largest online platform for outsourced contracts, where India is the largest country in terms of contract volume. We use an ethnic name procedure to identify ethnic Indian users of oDesk in other countries around the world. We find very clear evidence that diaspora-based links matter on oDesk, with ethnic Indians in other countries 32% (9 percentage points) more likely to choose a worker in India. Yet, the size of the Indian diaspora on oDesk and the timing of its effects make clear that the Indian diaspora was not a very important factor in India becoming the leading country on oDesk for fulfilling work. In fact, multiple pieces of evidence suggest that diaspora use of oDesk increases with familiarity of the platform, rather than a scenario where diaspora connections serve to navigate uncertain environments. We further show that diaspora-based contracts mainly serve to lower costs for the company contacts outsourcing the work, as the workers in India are paid about the market wage for their work. These results and other observations lead to the conclusion that diaspora connections continue to be important even as online platforms provide many of the features that diaspora networks historically provided (e.g., information about potential workers, monitoring and reputation foundations).

Suggested Citation

Ghani, Ejaz and Kerr, William R. and Stanton, Christopher, Diasporas and Outsourcing: Evidence from Odesk and India (October 2012). NBER Working Paper No. w18474. Available at SSRN: https://ssrn.com/abstract=2164598

Ejaz Ghani (Contact Author)

World Bank ( email )

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Washington, DC 20433
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William R. Kerr

Harvard University - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Christopher Stanton

Harvard Business School ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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