Not a Lot of People Know Where It Is: Liabilities of Origin in Online Contract Work
Abstract: Apart from conventional outsourcing and offshoring between firms, work is now also sourced from individuals working as online contractors through platforms such as Odesk. We examine what implications this new form of organizing has to the nature of the work, focusing on how online contractors’ geographic origin influences their work experience. Online contracting could potentially greatly increase the earnings of skilled workers in low-income countries. But extending the concept of “liability of origin” to the individual level, we suggest that online contractors’ earnings are also influenced by buyer-side and seller-side cognitive biases. Drawing on interviews of 140 online contractors, we hypothesize that contractors whose countries of origin are well-known to buyers earn higher rates, and that contractors’ local wage level influences their online contracting rates through an anchoring effect. Analyzing records of 4,817 projects on Odesk, a leading online work platform, we find strong support for both hypotheses. We suggest that online contractors are especially liable to country-based biases because they lack organizational affiliations and because the platform limits other identity cues. We posit that platform-based employment practices favor heuristic over formal decision making, exacerbating geographic and other biases.
"It’s much easier getting jobs when you’re not from Kenya. If I could change anything, I’d change people’s perceptions. It feels demoralizing that people think that you're unskilled if you're from the third world. Third world people are only offered low-skilled jobs."
Gradus is a Kenyan who completed two years of an actuarial degree before financial constraints forced him to abandon his studies. He started doing online contract work in pursuit of the promise of “virtual migration” (Horton, 2010), but soon realized that as a Kenyan, he was not getting any of the more lucrative, skills-based contracts. As a result, he invented an Australian identity, spending long hours online to develop the necessary background information on aspects such as his hometown and suburb. Assuming a false identity is against the rules of the online platform, but since then he has been able to get a steady stream of contracts writing content for financial blogs for about $5/hour. It is not enough to allow him to move out of the informal settlement where he, his partner and their two children live, but he can make sure that his family does not go hungry.
There are now over three billion Internet users, most of whom live in low-income countries (Graham et. al. 2015). Personal computing and developments on the Internet have opened opportunities not only for organizations to do business across the world, but also for individuals. One of the many implications of Gradus’s story is that global business – including global business conducted online – does not take place in a “neutral” context where only skills and capabilities matter. Individuals who are doing work online are moreover experiencing quite profound changes in what work is and how it takes place. Institutional worker protections that have been developed over time are tenuous for online contractors from across the world. We argue that this
vulnerability is particularly severe for contractors from low-income countries of origin, even when they are as skilled as their counterparts from high-income countries.
We anchor our paper in the “liability of origin” concept (Pant & Ramachandran, 2012; Ramachandran & Pant, 2010). This concept was first developed to explain some of the challenges of emerging-market multinationals, but we argue that one of the characteristics of the emergence of new forms of work is that such liabilities are now directly experienced by individuals. When emerging multinationals struggle to navigate the global economy, they have a substantial resource base that they can use to provide them with advice and support. Individuals engaging with a “global” marketplace via the internet lack not only institutional protections, but typically also the kind of resources that organizations can draw on. These individuals are therefore particularly exposed to liabilities of origin, although we argue that the nature of those liabilities also changes somewhat from the organizational to the individual level.
We analyze six months of transactions on the largest online contracting platform at the time, Odesk (now called Upwork), supplementing it with interviews with active online contractors from three South East Asian and three sub-Saharan African countries to understand how they make sense of the online marketplace. Our evidence suggests that contractors suffer from two types of biases, the first on the side of buyers who assess potential contractors through the lens of the general reputation of contractors’ countries of origin, often resulting in negative attribution. The second bias is on the “supply” side, a cognitive maladjustment on the side of contractors that stems from their work experiences in their own home country. Together, these two biases mean that what contractors from lower-income countries can earn online is depressed relative to the earnings of contractors from higher income countries.
The implications of our paper are sobering. Online contracting essentially involves “piecework” and is governed by far fewer worker protections than traditional work. Moreover, imbalances between low- and high-income countries do not disappear online. Some contractors from low-income countries (such as Gradus) had managed to craft solutions to some of the challenges of online work, but such strategies hardly diffused. Instead, most of the contractors from low-income countries experienced a real liability of origin, and found themselves unable to take advantage of the higher wages that could be earned online.