Online geek auction links coders and companies

Wired on Friday: Coders all over the world are now bidding for business in a novel online auction that matches buyers with sellers.

Ian Ippolito, chief executive of Exhedra Solutions in Tampa, Florida, set up the company called Rent A Coder because he realised a lot of programmers needed help getting projects done.

"We saw an opportunity here," Mr Ippolito said. "People need custom software developed."

He set up Rentacoder.com in January 2001 and it was making money by its second month. By March 2003, the site was facilitating 1,478 software projects per month and by last month that figure had risen to 5,628 completed projects.

The site is based on the eBay principle of individuals placing bids for projects. For example, a company that needs to outsource a software project will place details on the site and an estimation of how much it expects to pay. Programmers who have the required technical skills to complete the project can then bid on it. The Rent A Coder site matches the companies (buyers) with the programmers (sellers).

Mr Ippolito said, on average, companies receive 12 bids in 24 hours. At the moment, the site has 77,000 registered programmers from hundreds of countries and 28,000 buyers. Most hear about the site through word of mouth or find it on search engines. Last month, the top three buyer countries were the US, Britain and Canada. The Republic was eighth on the list. The top three countries for coders last month were the US, Romania and India.

"If a company has a project it wants completed, we send out a newsletter to our programmers telling them to come to the site and bid," Mr Ippolito said. "Typically, there's a fixed price per project."

Rent A Coder makes money by charging the programmer a 15 per cent commission on every project he wins.

Brian Chase of Brian A. Chase & Associates, a software design company in Dallas, Texas, looks at the 15 per cent commission as "paying a lead to people who are bringing you sales. If I get $100 (€82.70) for a project, I don't mind giving Rent A Coder $15," he said.

The buyers rate sellers and sometimes Mr Ippolito gives ratings.

"We encourage the buyer and seller to go to each other on the website and talk back and forth. If there's a dispute, we have an arbitration system and a whole set of rules for it. If we notice there is something wrong with someone's account and, after he has lost three arbitrations, then we knock him from the site."

When a project is approved, Mr Ippolito asks the buyer to put money in an escrow account to be paid to the programmer once he completes the project.

"This way the distrust between the coder and seller is removed because it allows the coder to know we have the money," he said.

About 89 per cent of Rent A Coder's business is repeat. While a few of its buyers belong to multinational companies, most are typically entrepreneurs with small staff or small companies that don't have the resources to find programmers. The reason companies use the site, Mr Ippolito said, is for the wide selection of programmers, the escrow account and instant bids.

Rent A Coder currently has more than 1,000 projects up for bid and lists anywhere 70-130 new projects on the site every day. Buyers place the projects in no more than five categories. Then, coders can choose to customise the site (and their email notifications) so that they only see projects in categories where they specialise.

There are 55-60 technical categories on the site. Luke Richey, president of Tometa Software in Spokane, Washington, who has used the site both as a buyer and seller over the past two years, says he can write code in 35 different languages.

"It's changed our business model completely," Mr Richey said.

There are four people in his company, all programmers. He bids on the larger projects - that is, those that pay $5,000 or more and could take two months to complete.

"Our company is ranked number three on the site due to ratings our customers give us," Mr Richey said. "It took some effort for us to get to the top 10. It's the first rating that's hard to get."

Most of his clients come from Britain or the United States.

When bidding, Mr Richey said, he can't see other coders' prices and so "it's a delicate balance between making money and not making money". All the same, he thinks it's a "great spot to get work and when we need to get work done". He takes a close look at about 10 projects every day. He gets accepted on one bid per week and hires someone to work on a project every two weeks.

Prior to Rent A Coder, it was possible to find programmers by making several phone calls and trawling through search engines on the Web.

"We were doing this," Mr Richey said, "but finding clients and coders was immensely more difficult."

While the site does have competitors, most notably, scriptlance.com, guru.com and elance.com, they are not as customised towards software development and don't have the critical mass.

"We've used other sites but we're not as happy with them as we are with this," Mr Chase said. "This is open and there is no risk for either party until you've signed the deal. Other sites want to charge a monthly fee whether they send business your way or not."

As a programmer for more than 30 years, Mr Chase said, he can help a company build an in-between system that will enable its Unix database and Windows QuickBooks to generate invoices. "My niche is going for a genre that's not marketed by Microsoft or Symantec," he said.

He limits active projects to two or three a month. "I decide how closely we match what we're looking for in a customer and the dollar figure," Mr Chase said.

Like Mr Richey he tends to go for the larger projects but will bid on a lower-paid project if it will open up leads to clients.

"Once you get in with a company, they'll request you over and over again," he said.

Mr Chase typically deals with a middle manager in the buyer firm.

Generally, all transactions between a buyer and coder occur electronically. On larger projects, "we're allowed direct communication over the phone and sometimes we use instant messenger to chat online," said Mr Chase, who thinks this type of business arrangement will grow in the future.