Outsourcing things like call center work and data entry to developing countries has been a trend for a long time, but those are mostly low-skill, low-paying jobs.
But what if talent in those countries was harnessed to learn more difficult, highly compensated work? It could change lives and lift people out of poverty, and that's what a Danish-based operation called CodersTrust is trying to do in Bangladesh.
CodersTrust, which has a partnership with microfinancing organization Grameen Bank, started by Nobel Peace Prize winner Dr. Muhammad Yunus, provides microloans to students to help them upgrade their coding skills to compete with tech talent around the world.
"People here understand that they can make money abroad in the freelancing market," says Jan-Cayo Fiebig, co-founder and CFO at CodersTrust.
Much of the work currently available in Dhaka, Bangladesh, where Fiebig is located, is poorly paid garment work or data entry, and wages get slashed to cut-rate levels because of competition and underbidding.
By learning sought-after coding skills, coders can make five times more than the low-wage jobs: "All they have to have is a laptop and willingness to learn."
Supply and demand
The demand for coding has exploded worldwide, and there's not enough talent to meet it. It's expected that by 2020, even if every programmer in the U.S. were working, there would still be a shortfall of over one million programmers to fill international need.
Demand makes coding one of the best-paid jobs in the U.S. where programmers make between $74,000 to $120,000 a year or more, according to the Bureau of Labor Statistics.
Economists predicted long ago that low-cost Indian and Brazilian coders would flood the coding market to meet demand, but that hasn't happened. Part of the reason is that a career in coding requires a certain amount education, exposure to technology and the ability to have options in one's life, and that rules out many people in developing countries.
On top of that, programming is difficult work that requires a certain aptitude. Some studies show that between 30 and 60 percent of university computer science intake courses fail the introductory programming course.
Morten Lund, noted Danish venture capitalist who has helped start over 100 high-tech startups, including Skype, co-founded CodersTrust because he had a hard time finding qualified coders on Elance-oDesk, the popular freelance outsourcing site where millions of coders vie for jobs.
The founders saw a big opportunity in the developing world to train highly skilled coders, and created their microfinance organization to give low-wage workers a chance at a better career, starting with a test group of 100 students in Bangladesh.
Coding for cash
CodersTrust identifies promising programmers on Elance-oDesk and offers them a chance to upgrade their skills in their online course module. Students get a microloan of $1,320 in monthly increments. The courses take place online, and as students pass classes, the payments increase.
The online training starts with an intense six-month kick off and continues for up to three years. Once coders make it past the six-month mark, they can compete for jobs on Elance-oDesk while they study and earn money.
One in 4 people in Bangladesh make less than $2 a day, and 39 million live below the poverty line.
Shahnaz Jahan, a 23-year-old in Dhaka, is one of the first 100 CodersTrust students. She graduated from Northern University in Bangladesh, with a degree in computer science. Jobs are hard to come by in Bangladesh, she says, where there are many educated young people and good jobs are in short supply.
She estimates that with her training she will eventually be able to make $1,000 a month, which, she says, "would be enough to happily support a family." Many people in Bangladesh make as little as $100 a month, she says, which is not enough even to support a single person.
Six months into her training, she has already been offered one job on Elance-oDesk. The job is for a company in Tennessee and pays her $10 an hour for seven hours a week. Before she might have worked for as little as $3 an hour.
Room to scale
The program is still in its first class, and there are bugs to be worked out. CodersTrust is conducted online, but it is looking into live classes as well because it is sometimes hard for instructors to see and understand a problem a student is working on, says Jahan. But she says that has already increased her skill set significantly.
Bangladesh is the home of Grameen, and the microfinance group has given loans to 24 million women in Bangladesh for things like chickens and small businesses. The introduction of CodersTrust potentially takes microfinance into much more sophisticated work with a much higher payout.
As in the United States, computer science is still largely the domain of men in Bangladesh, and Jahan was one of only two women in her program at university. She's also one of only two women in her CodersTrust cohort. She was attracted to coding, she says "because she loves to solve problems; it's like a game," but also because the pay is much higher than teaching or government work, which were her other options.
CodersTrust is a test program for now, but Fiebig and the co-founders hope to get 100,000 people on the platform by 2017 and expand to other cities. As the first graduates pay back their loans there will be even more money in the pot to invest in other up-and-coming coders, says Fiebig.
"Everything moves online," says Fiebig. Maybe even the solutions to poverty.