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Startups Look to Philippines for Low-Tech Help

The renovated San Francisco warehouse that serves as the headquarters of tech startup Thumbtack, replete with exposed timber and an inviting open kitchen, was all but empty one recent weekday afternoon. The company has raised $48.2 million from investors including Sequoia Capital and Tiger Global Management to build a local services company to compete with the likes of Craigslist, Yelp and Angie’s List—but a good chunk of its workforce is in the Philippines.

Thumbtack employs nearly 500 people in the Philippines through an arrangement with the outsourcing firm oDesk. It’s just one of the many startups using services such as oDesk, CrowdFlower, Amazon Mechanical Turk, TaskUs, Freelancer, Guru, Job Stock and Cloud Crowd to hire workers around the globe.

Many companies are reluctant to discuss their use of virtual workforces, in part because they don’t want to be branded as outsourcers. (Spokespeople for Facebook, Twitter and Pinterest did not comment for this story.) The debate around outsourcing has mostly focussed on big companies moving their IT operations to firms such as India-based Infosys, but moving low-tech work overseas can also feed concerns that the tech boom isn’t producing enough jobs.

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“We’ve been continually challenged in generating new jobs and better jobs that will keep unemployment rate down,” Mr. Lawler said.

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“This woman in the Philippines beat an American at an English test,” recounts Jonathan Swanson of Thumbtack. “This was the jaw-dropping moment for us—whoa, we can get quality and effectiveness at a totally different price point.”