See our story here.
oDesk is a start-up that provides a marketplace for companies to hire developers online and then keep near unprecedented control over them remotely.
The Palo Alto company has just raised $8 million more in venture capital.
Benchmark Capital, a Silicon Valley firm known for its backing of auction site eBay, led the round. Bechmark has now invested in numerous marketplaces, including LogoWorks, eBags and Ingenio.
oDesk has some momentum, with revenues growing at 10 to 15 percent a month, says chief executive Gary Swart.
What surprised us, when Swart demonstrated the product for us, is the sheer amount of surveillance and communication tools that oDesk provides to employers. When an employer selects a developer for a project, oDesk gives the employer screen shots of the developer’s computer six times an hour, at random times. It takes camera shots of the developer at work, to verify he is at his desk. It tracks their key strokes, and provides you access to the code they’ve produced — all in an effort to make it even easier to manage workers “than if they are in the same office,” as the company puts it. Before you select a worker, the marketplace dashboard gives you all sorts of metrics about how a developer has performed in the past, tests passed, how much they cost relative to others, and so on.
Check out the tour here.

The software is significant because one of the complaints so far about outsourced work is that it can be unreliable. Companies are comfortable only negotiating small projects with workers in Asia, Eastern Europe or Africa. They set a price for the project, and hope that it works out. But for bigger projects, setting a price is difficult, because project can take innumerable turns, and both sides get unhappy. Companies don’t want to pay by the hour, because they don’t know how productive the workers are. oDesk solves that problem. If a developer doesn’t sign on to oDesk’s system and work, they don’t get paid.
This is the second round of funding for oDesk. Benchmark made an aggressive offer of funding, even before oDesk had started looking for funding, Swart said. Benchmark did quick diligence, offered a nice bump in valuation, and did not disrupt oDesk’s team in the process, which Swart said made it easy take the cash. Benchmark’s Kevin Harvey has experience in the marketplace area, having invested in Ingenio, a company which provides software customer support via a marketplace.
The market for outsourcing is growing because online tools such as oDesk give employers easy access to the cost differences of developers between nations and regions. Technology allows more people to stay at home to offer their labor through these sorts of marketplaces, and has bolstered “pay-for-performance” models.
Harvey said the product impressed him after some companies Benchmark has invested in tried out the product and liked it.
There is heavy competition out there. Big players like Infosys and Wipro dominate the market, but oDesk is trying to undercut them — targeting smaller and medium sized companies who haven’t dared to outsource yet. There are players going after smaller companies, such as Elance and Rentacoder.com, too, but they don’t provide the same level of surveillance. (We first mentioned oDesk here, when they raised $6 million last year.)
Sigma Partners and Globespan are also investors, and participated in this round. Until now, Google ads have been the main way the company has acquired users.
The workers in oDesk’s marketplace includes programmers, system administrators, web designers, technical writers and QA engineers — and they reside in more than 50 countries, the company said.
3 Trackbacks
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VentureBeat Wire » oDesk, marketplace for developers, raises $8 million said:
[...] See our story here. VentureBeat Community [...]
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Hitchhiker’s Guide to 650 :: When a Marketplace is not a Marketplace Afterall :: October :: 2006 said:
[...] I was going to title his post Marketplace 2.0 (you know like software 2.0, enterprise 2.0) but I realized I dont want to create another empty bandwagon Anyways, last week, oDesk raised a good chunch of cash from an investor that know more than anyone about building marketplace businesses - Benchmark. Which reminded me of one of the most important things I learned in the 2000 B2B craze. As much as most people think that the value created my market places are from counter party discovery (aka search), capturing that value rest solely on providing transactional settlement services. [...]
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oBlog » Blog Archive » Hungry for Tech & T-shirts? Join oDesk this Friday for [Late] Lunch 2.0 said:
[...] We raised $8M from Benchmark Capital [...]
One Comment
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Freelr said:
Check http://www.freelr.com which is a new Social Networking site for webmasters and Programmers.
While sites like elance, guru, rentacoder, odesk all charge for connecting webmasters with programmers Freelr is a free alternative which is easier to use and creates a more exciting user experience. With Freelr users can interact freely with each other in an open-market, which is impossible with the other sites mentioned…..
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3 Trackbacks
11:03 pm
Hitchhiker’s Guide to 650 :: When a Marketplace is not a Marketplace Afterall :: October :: 2006 said:
[...] but I realized I dont want to create another empty bandwagon Anyways, last week, oDesk raised a good chunk of cash from an investor that knows more than anyone about building marketplace businesses - Benchmark. [...]
7:17 pm
SocialTake.com - social networking & web 2.0 tech news » oConomy offers an easy way to see outsourcing statistics said:
[...] reported on oDesk in 2006, when the Menlo Park start-up raised a $10 million second round of funding. [...]
3:58 pm
ODesk raises $15M to manage remote employees » VentureBeat said:
[...] round was actually unsolicited, Swart says, because oDesk still had around $3 million of its $8 million second round in the bank. (In fact, oDesk controls costs by using its own technology to manage 41 contractors.) But [...]