I was at the Twilio conference this year and there was a talk from Tim Lytle who only uses oDesk for his clients. He claims to have a pretty good client base and is busy from the work.

Twilio also endorses oDesk as a platform for people to find qualified programmers http://www.twilio.com/blog/2011/06/twilio-partners-with-odes..., maybe the answer is to specialize and differentiate to become more successful when competing against $10 per hour international outsourcers.