How to Compete Against Offshore Companies and Services?

Recently my company has been learning about Tim Ferris, the author of the 4-Hour Work Week. It talks about how one can outsource her life and business to others so they make the most out of their time. The concept is pretty simple: if you make $30/hr, then instead of doing 4 hours of mundane tasks yourself, you can do one hour of work, make $30, and pay 3 people with $10/hr. That way you did one hour of work, but you accomplished 4 hours of tasks. You now then have the rest of the three hours to do whatever you want (including make more money at your rate).

Our company is looking at ways to outsource and automate too. We want to do everything, but do everything only once (Robert Kiyosaki’s suggestion). Once we set up a system, we can slowly start to replace ourselves with someone who can learn how to do it. Michael Gerber often refers to this as “work on the business, not in the business.” We plan to build a money-making machine, and then automate it so we can develop more innovative stuff.

My company then decided to look at a few places overseas that offer offshoring services. Whew! Americans are going to be in trouble soon (if people don’t already think they are in big trouble from the financial crisis). Lets just say this very professional firm that has been operating for nine years with 180 engineers, who also happen to have built dozens of websites of large brand name firms that you have heard of in multiple countries. The keypoint: they charge 20% of what a service firm like this in the US would charge. Go figure.

Outsourcing doesn’t even just deal with engineering. Many are starting to oursource their personal life too: emails, scheduling meetings, making friends online, pay bills, make vacation reservations, buy stuff online etc etc. Tim Ferris even outsourced dating (well, arranging the dates; he still had to go to the dates himself). Even more exaggerated is that his friend AJ outsourced conflict resolution with his wife, as well as stressing out! No more worries about life for $5/hr. Not bad at all.

So what do Americans do about it? Is everyone screwed? Well, many are, but not everyone. The appealing thing about offshore technolgy development is the value/price ratio is extremely high. They would have the skillset of 7, but charge the price of 2. Clearly cost effective. However, there are still many entities that demand the absolute best. They are looking for the 10s, not matter how much it costs. They clearly understand that 1 good engineer is better than 50 bad ones, and the difference between a 9 and a 10 is the difference between failing and a huge success.

So the solution is simple: 1. be the best at whatever you do. and 2. brand yourself or your company correctly, and 3. network like crazy.

OK, all these are obvious, and all these are easier said than done. But that’s the reality: when there are more people competing in your space, you need to do the things that make you more competitive. Guess how much complaining helps? ?. It doesn’t even matter if your competition is from another country or not. When there are more skilled workers in the same space, you need to work harder and reach more people to stay in the field. That goes with any kind of shrinking market. If the economy is doing badly and unemployment reaches 15% (lets hope never), that doesn’t mean you are screwed. It simply means that you need to work your butt off and make sure you are part of the top 85% who does have a job.

Luckily, this force to be reckoned with at this point is mostly competing in the low-end market. The quality of the work is often problematic. The reliability is sometimes doubtful. Miscommunications happen often. The language barriers might get in the way. Timezone issues can be annoying. The skill levels might not reach what is required. All this means that as long as you are competing in the high-end market, you will be less affected. Some offshore firms have been doing a four-sigma (not six yet. Any Indian entrepreneur?) thing in making sure communication, reliability and skill sets requirements are held to a certain standard. That’s scary. But as long as you do great work and brand yourself in the higher end, there WILL be ample opportunities for you. Sometimes it just comes down to sales. A cheap Indian firm that I have no idea about vs a company that seems to gaurantee results and profits. You at least have chance.

In short: constantly increase your skills, brand yourself in the high-end, build interpersonable relationships with clients, and constantly strive to become more competitive. For those of you who don’t want to work hard, learn new things, be friendly to customers, sell yourself well, and all in all become a great engineer, you might be screwed. That’s how the world evolves: survival for the ones that can do more with less.

You must engage in the conversation!!