Recently, I gave a 50 per cent raise to the Bangladeshi who helps co-ordinate our back-end website management services. He earns $1.50 an hour.
Through the same service (odesk.com) I agreed to pay about $35.00 for someone to solve an urgent problem because of my sloppy crashing of a bit of computer code. The contractor solved the problem in 15 minutes, and so, for a guy in a third-world country (I’m not sure where) he should have made a small killing. But wait. He hasn’t processed things so that I can actually pay him. The job remains “open”.
More recently, with the maternity leave of our exceptionally competent administrative person, who earns reasonably good North American wages (with bonuses and benefits approaching $20.00 an hour), we hired a substitute. She’s a good worker but (in part because she is new at the job) cannot handle the volume and speed of our competent employee. We also had been working with an off-site employee who charged us about $15.00 an hour for data entry tasks, who recently resigned.
I saw another opportunity.
Could this work be moved offshore — and for how much?
I was expecting quotes about $1.00 an hour, but right now, less than 24 hours after posting the opportunity, I have received 277 applications — some willing to work for 25 cents (that’s $0.25) an hour. Several of these extremely low-cost responses indicate they have five-star ratings from previous satisfied clients.
What is happening to our world? What does this say for the career opportunities of North American data entry clerks who are not fortunate to have jobs in bureaucracies or businesses which (perhaps for security reasons) need to keep the work on-shore. What does it say for businesses who refuse to “go offshore” for nationalistic reasons (and who do not have specific high-value reasons to keep the work in-house?)
I don’t have easy answers here. I mean, 25 cents an hour — all-in (including all the capital, electricity, computer, office and other costs associated with the work) . . .
The following observations are not scientific, but may provide clues about how I think we should respond to these trends and issues:
- Project rather than “hourly” pay continues to pay best, both here and in the third-world. If I defined the job as a contract with a fixed price, I probably would pay more for the same services. The same applies in North America. If we set our billings on an hourly schedule rather than on the overall value of the service we provide to the client, then we will earn less. The best incomes go of course to those of us who can reliably provide services on a true contingency fee basis — pay only when we deliver results, or at least, guarantee the quality of our results.
- Virtually every business should consider testing and evaluating whether some operations/systems can be turned into commodity services and sent offshore. You need to factor in some risk here — things can go wrong, and there is little recourse — so obviously you don’t send sensitive or confidential stuff offshore (without exceptional and potentially expensive safeguards). However, if there are routine, rote and other chores that can be done remotely, the money saved can enhance your bottom line and/or add more value to your clients with a packaged offer involving services and skills that require higher levels of accomplishment.
- You can evaluate your own morality about these things. Yes, there have been tragic deaths and horrible abuses in sweat-shop factories in third world countries such as Bangladesh. I would have trouble sleeping at night with that type of employee or contractor relationship. I don’t have so much trouble paying rock bottom prices, however, to someone sitting in front of a computer for data entry work.
- Most importantly: You need to be careful to separate the “commodity” from the value you offer and, while you back-source the commodity stuff, focus on the client’s real needs and value — recognizing that if you are simply brokering a commodity service (arbitraging the low cost labour offshore to undercut or simply enhance your profits for an on-shore client), you could eventually be caught out in the act, and then pushed aside.
We won’t fire our competent and able administrative employees, who can handle many tasks other than data-entry. But I don’t think I’ll be hiring a new employee soon as a “data entry clerk” — not when I can get someone to do that work for so little money that we could employ an offshore worker for a day for less than the cost of a cup of coffee.