As I continue with the experience sharing, here is another one which I face on a nearly daily basis. Why are your rates higher when we can get it at $5 per hour!
Case 2: $5 per hour – Classic Case of Fraud.
I recently was talking to Chris, who head a 10 people company in Belgium and wanted to outsource his Coldfusion development work. After the initial exchange of information, he was hesitant on the price at which I quoted. He felt it is way off than what he was getting in the freelance forums and freelance websites. Chris had been 4 years in business and this was the second outsourcing arrangement which he was trying. His first stint was when he was just starting up and could afford only freelancers who charged much less and it had worked out for him. However, this client was pretty big and if it worked out for him, it could well mean that he would employ as many as double the number of people for the next 3 years. He was looking at an outsourcing option and had been to all the freelancing websites and somehow stumbled upon my website, thanks to Google. He had also looked at the prices of the bids which went on as low as $5 an hour. Mine was a lot higher, but I had solid reasons why.
There is nothing wrong with sending over work to freelancers at dirt cheap rates. And there are reasons why freelancers can work at these rates. First, they dont pay taxes. Second, they are individuals who work may be part-time or full-time and their commitment levels vary. Third, freelancers dont work as a team so their ability to work on large-size projects is limited as it is hardest to communicate and maintain work status update working with 5-7 or more freelancers. Fourth, if freelancers fail, they dont have anything at stake. More can follow..
An organisation, on the contrary, cant afford to fail, because each failure sets the brand of the organisation backward. Since organisations already have processes in place to help mitigate risks, with project management processes – it helps risk mitigation. The can-not fail attitude of an organisation ensures high commitment levels.
When to freelance?
When you have a small project which can be done by 1-2 people, and when you have the flexibility of time – (so that you can do it correct a second time, if the first time goes wrong), and when you dont have much at stake with the project, you can go ahead with freelancing.
When not to?
When everything you have or are going to have depends on the application being developed, when your idea is a breakthru idea which if leaks out into the market can remove the first mover advantage you might have. When you are doing it for your organisation and the success of the product would impact your brand.. Stay away from $5!