Diasporas and Outsourcing: Evidence from oDesk and India

Ejaz Ghani, William R. Kerr, Christopher T. Stanton

NBER Working Paper No. 18474
Issued in October 2012
NBER Program(s):   DEV   LS   PR

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).

download in pdf format
   (345 K)

email paper

This paper is available as PDF (345 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w18474

Published: Ghani, Ejaz, William R. Kerr, and Christopher Stanton. "Diasporas and Outsourcing: Evidence from oDesk and India." Management Science 60, no. 7 (July 2014): 1677–1697.

Users who downloaded this paper also downloaded these:
Blinder and Krueger w15287 Alternative Measures of Offshorability: A Survey Approach
Holmes and Thornton Snider w14856 A Theory of Outsourcing and Wage Decline
Amiti and Wei w10808 Fear of Service Outsourcing: Is It Justified?
Foley and Kerr w17336 Ethnic Innovation and U.S. Multinational Firm Activity
Liu and Trefler w14061 Much Ado About Nothing: American Jobs and the Rise of Service Outsourcing to China and India
NBER Videos

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email:

Contact Us