Cheap labor is not always cost effective

How hiring cheap online labor can cost Entrepreneurs more time & money

Hiring cheap online labor is not always cost effective. Here’s why and what to do instead.

 

…We’ve tried ‘tele-commuting and virtual offices’ before and the work starts out okay, but declines after a few weeks.

Yikes.

I responded back to this potential client’s email and asked why he thought this had been his experience. Here’s the rest of my response:

One of the most critical elements to making a relationship with a VA successful is communication. If any of these prior VA’s spoke English as a second language then I know (from experience) it can add another element of challenges. Combine a language barrier and poor communication from both parties and the results are cringe-worthy.

When you hire from online/freelance job sites where you can find cheap labor ($2-$5/hour in some cases), it’s been my experience that you get what you pay for. Look at this job posting – someone is hiring for an Editor to proofread a LEGAL document. The average pay rate? $3.76 for a LEGAL DOCUMENT.

How can an entrepreneur/solopreneur expect someone, who is willing to work at such a low rate, be fully invested in their business? Cheap labor = you get what you pay for.

Case in point – I worked for an owner of a tech company who needed a designer. His budget: $50. I posted the job online for him and sent him over the contractors that applied. He chose the lowest bidder who had a decent portfolio. Sounds good so far, right? I must add that there were a few contractors who countered the bid of $50 at a higher price. When I looked at their portfolio and their online profile, it was easy to see why they were asking for more money. Guess who he chose? The lowest bidder.

The contractor was kind and able to turn the job around in the specified time frame with the minimal directions she was provided. The job came back and his response was, “Ew. This looks like crap. Let’s give her one more chance.” So, I went back and sent her his comments (minus the above statement). The project came back. He was very unhappy with the results. He told me to pay her and close out the project.

He got exactly what he paid for. And? He had to go back and find someone else to do it. So, he was out $50 when he simply could have paid the higher bidder who clearly had a better portfolio and got the job done, and done right. Like I said, you get what you pay for.

Here’s what to do

Let’s say you want to hire a Virtual Assistant, but their rate is $25 per hour. That’s four times more than someone who charges $5 per hour. First, what’s in your budget? Second, how many hours do you need someone for? Third, are they willing to negotiate on their fees? Probably not, but you can always ask.

Here are some other questions to ask yourself if you’re considering hiring someone:

What’s the quality of work are you looking for?
Are they able to communicate fluently in your native language?
What systems do they have in place to manage your projects?
What’s their response time like?
Do they have a portfolio to demonstrate their work?
(Relevant if you’re hiring for design related work)
Are they willing to provide old-fashioned references if asked?

If you can answer yes to any of the above questions, chances are you have a quality contractor on your hands.

So, instead of awarding work to the lowest bidder and running the risk that you will have to hire a completely new person to get the job done to your specifications, consider paying someone who can clearly demonstrate that they can deliver what they say they can.

If you’re struggling with your business, leave me a comment or send me an email. I’ll be happy to help!

1 comment on “How hiring cheap online labor can cost Entrepreneurs more time & moneyAdd yours →

  1. Amen! As a web developer I couldn’t agree with this more. I’ve been approached multiple times by clients who had sites built by the lowest bidder, that require fixing because the quality was low or the project was left unfinished. They usually end up paying more in the long run because of this.

    The list of questions to ask yourself when thinking of hiring any outsourced help is a great start for business owners.

    They could also ask: what type of quality do I expect at this budget, and how much time am I willing to invest in finding it?

    It’s rare, but sometimes you can find someone who does great work but WAY undercharges. Unless you happen to get lucky, you’d have to sift through tons of lower-quality applicants to find them. Could that time and energy be better spent elsewhere?

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