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Internet freelancers reshape Outsource Co.

LIPA CITY, Philippines -- Not far from the world of regimented cubicles and headset-toting call center operators, a quiet revolution is stirring in its slippers.

University librarian Sheila Ortencio, for example, was so poorly paid that half her salary went for child care, and her meals amounted to dried fish and one fried egg per day. Four years on, she juggles two daughters, a husband and two Pomeranians as she catalogues e-books online from her parents' couch.

In her freelancing job, she's earned enough money to buy land for a house nearby and make down payments on a condo in the capital.

“I have double the work but it doesn't bother me because it doesn't feel like work,” she says.

Ortencio is one of more than half a million Filipinos registered on freelance website oDesk.com — more than are currently employed by the country's growing business process outsourcing (BPO) industry.

While it's early days, proponents of so-called commercial crowdsourcing contend that a swelling army of global freelancers is already disrupting traditional outsourcing — from preparing tax statements to conducting research on pediatricians.

Driving this trend are a dozen mostly U.S. startups that let other small and medium-sized companies carve projects into chunks and then recruit individuals or teams of freelancers to do the work. By leveraging a faster, more ubiquitous and cheaper Internet, the startups can pluck the low-hanging fruit of IT and data-entry outsourcing that big BPO players such as Infosys and Wipro once considered their own.

Australian-U.S. startup 99designs, for example, has paid out US$40 million to some 180,000 graphic designers, with its largest user base outside the United States being in Indonesia. Elance has 266,000 freelancers in India who have earned nearly US$150 million. Odesk has 2.4 million registered freelancers and more than 480,000 clients — companies including Cisco and HP .

Crowdsourcing companies admit it's still an uphill struggle to persuade firms to experiment with outsourcing work to freelancers rather than keeping it in-house or sticking with established BPO players.

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