A new form of service outsourcing has emerged, namely the global online job marketplace for freelance contractors. Such platforms are currently the closest proxy to the idea of a global labour market where everyone competes for jobs regardless of location. In this article, we examine how competition manifests itself on one such global online platform, namely oDesk. We present a comparative analysis of the relative wages and the rewarding of skills and expertise of contractors from selected countries and investigate whether, via labour arbitrage, wage convergence takes place between Western and developing countries. We find that wage convergence is noticeable but experience and skills hardly translate into better remuneration. While service outsourcing (or microwork) via global online marketplaces provides new employment opportunities for freelancers around the world, the intense competition and the inherent restrictions of this type of marketplace limit the financial gains for most contractors.

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Critical concerns have been raised about the quality of employment in the offshore service sector in developing countries, suggesting that many activities have an inherent paradox of highly educated workers performing low-skilled jobs. Based on empirical data collected in the offshore service sector in Baguio City (the Philippines), this article analyses the knowledge and skills acquisition of workers using the concepts of employability and generic skills. The article demonstrates that offshore service sector work is part of a longer-term career planning of workers and an opportunity for strengthening their employability on the global labour market. The early stage of development of the offshore service sector provides workers with opportunities for local upward labour mobility. The article argues that the sector should be looked at from an employee-based perspective that emphasizes their employability and generic skills acquisition in order to understand the longer-term benefits of the sector for developing countries.

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