Geoarbitrage: The Live Here, Hire There Approach

The Live Here, Hire There approach is the third type of geoarbitrage I want to cover. This will be a short post since I have little experience with this approach myself. So…

This approach takes advantage of the fact that pay rates vary drastically around the world. Data gathered by the Gallup organization a few years ago illustrates what I mean. It shows that in 2013, US citizens reported a median income of over $19,000 per person. Meanwhile, people in the Philippines were reporting a median income of $478 per person!

Add these facts:

  • There are millions of well-educated, English-speaking people in low-wage countries like the Philippines and India.
  • The Internet makes it possible to work with distant people extremely inexpensively.

The result is the outsourcing movement from the end of the last century.

Corporate Outsourcing, the Predecessor to the Live Here, Hire There Approach

The outsourcing movement is where I got to see the potential (both good and bad) of this form of geoarbitrage. I was working as a manager at a startup during the dot-comm boom. While I didn’t hire software engineers, my company did. Somehow I got tasked with reviewing contracts, including one that involved outsourcing work from our company in New Hampshire, USA, to some small engineering firm in India.

Without giving away any proprietary details, I can say that the engineers in India were being billed to us at something like one-fifth of what we were paying our own local people. It was crazy, and more than a little scary. Fortunately for our local guys, the people managing the project screwed it up and we gave up on outsourcing. But the potential savings were enormous.

About now you’re probably saying, “Yeah great Bill. Another war story from decades ago. Why should I give a damn?” The reason you should give a damn is that this kind of geoarbitrage or outsourcing isn’t limited to just businesses hiring businesses. You can hire people in other countries to do work for you too. There are a few ways to go about it.

Working Through an Outsourcing Firm

And you don’t have to be looking for engineering help or similar techie skills either. There are companies like BrickWork India that provide what they call remote executive assistance. In addition to hardcore techie services, they offer virtually any service that can be done remotely across the Internet.

The Live Here, Hire There Approach

The Live Here, Hire There Approach is a form of personal outsourcing.

If you need someone to monitor your Outlook Inbox for you, or do some detailed research and analysis, companies like BrickWork can get it done for you. Rather than waste time and space trying to summarize their offerings in this post, I suggest you use the link above to visit their site and see for yourself.

Finding Someone Providing Specific Types of Work

Another way to implement the Live Here, Hire There approach is to go to marketplaces where people offer the particular type of work you are looking for. One such marketplace is Here, people offer a specific service, usually at a fixed price. I’ve used them for gigs like translating an article to a different language, or recording short videos for marketing purposes.

You can find people to do the kinds of things that BrickWork India and similar companies can do for you. But at Fiverr you are generally hiring a specific individual for a specific short project for a specific low price. It used to be that all the stuff at Fiverr was $5 (a fiverr) but now they are more flexible.

The other difference with marketplaces like Fiverr is that you are exposed to service providers from all around the world. Whereas BrickWork India provides you with people from India, anyone from anywhere on Earth can offer a service on Fiverr. You could end up working with someone from India, or anyplace else, including your own back yard. It is more of a coincidental geoarbitrage play.

Get People to Bid on Your Specific Projects

Here you go to a network like Upwork and post a specification for the work you want done. People then bid on the job and you get to choose who you work with. I have used their service both as a buyer of services and as a provider.

In my experience, the lowest-price bidders are likely to be from low-paid countries like India, rather than from places like the USA or Europe. But for the kinds of work I was involved with, qualifications were much more important than where a person was from or how much they were charging. As a result, the live here, hire there approach didn’t really come into play.

Pros of This Approach

Here’s your quick summary of the benefits of the Live Here, Hire There geoarbitrage approach:

  • You can often get quality work done for a lower cost using workers from “there”
  • The lower cost can make it practical to hire people for tasks that otherwise wouldn’t make sense

Cons of This Approach

While the financial benefits of this approach are clear, there are some non-financial drawbacks:

  • As I saw in the company I worked for, managing workers “there” can be difficult
  • With nationalism on the rise around the world, outsourcing work to foreigners is getting a bad reputation

Wrapping it Up

The Live Here, Hire There approach really doesn’t fit with my workstyle/lifestyle. Still, it is a viable way to do things. Outsourcing stuff at great prices can definitely make you freer tomorrow. If you want to explore this topic in more depth, I suggest you search for:

personal outsourcing

in your favorite search engine. You’ll find a ton of links related to the topic.

Have you tried the “Live Here, Hire There” approach? If so, leave a comment below and let us know how it worked out for you.