fantasy land

Back to developer fantasy land, you’re making $40 an hour. What if you could find someone to do the same work for $5 an hour? What if they were available 24/7 and could work while you were asleep? How much would your time be worth then?

If you could find someone to do the same work for $5 and you were charging $40. You would make $35 an hour right? That’s the common assumption for the starting Project Manager (your new title).

How much time would it take you to find the programmer, explain the project and check the work. Usually from my experience (for a one hour job) only about 10 minutes. So what is your total pay? $35 for ten minutes of work. We are still in fantasy land, so after you have hired someone for $5 to complete your $40 job you go to the next client on your list.

Another $40 project appears, you spend $5 and 10 minutes. This keeps going on 6 times. So in one hour you have made $210 ($35 X 6) as opposed to your previous $40 an hour.

You have just given yourself a 525% percent raise.

One thing to remember is that we are in outsourcing fantasy land where each programmer does exactly the right work; it is always completed on time and to your exact specifications. This of course does not happen all of the time. You will have some programmers cancel, others not respond and some might complete the work incorrectly. If you leave 20 min out of each hour to review and handle these issues, you are still making $140 / hour, 350% raise.

The best part is that outsourcing not only allows you to be more productive and profitable while you work, it also provides these benefits in the time your off work.

Let’s say you work just 8 hours a day, and no more (in fantasy land). This means that you are unproductive (on work issues) for 16 hours of every day. These 16 hours can start making you money. Let’s take a look at the numbers:

Stated before the average project that takes only 1 hour of your time can be done for $5 and 10 minutes leaving 20 minutes of every hour for exceptions. As you will be planning ahead for the next 16 hours this will take some additional time to prepare the work. Let’s give each project an additional 5 minutes to setup. This means each project takes 20 minutes: 10 to find explain and check work. 5 to plan ahead and 5 to cover mistakes. These 20 minutes are split between when you leave work and arrive the next day. We are going to outsource just 6 projects, which means this will take just one hour before you leave work and one hour when you arrive in the morning the next day.

Taking a wage of $35 per project this translates into $210 for 6 projects outsourced while you sleep. After this we need to deduct the $80 of time spent (2 hours) preparing the work and your total profit each night is $130. Over a year (without holidays) this is a $30,000 raise.

Of course the above example is just an example. I wish it were as easy as breaking down projects into 15 minute segments, and each segment only took 15 minutes. Also it’s important to note that no one is a machine. Unfortunately as your work increases, so does the number of people you need to manage. Without a reliable management structure in place this would also increase the number of delays and chance of error. Then there is the waiting list of wealthy clients, which for most developers, doesn’t exist.

So if you could be making $210 an hour during the day, and right now you are only making $40, not outsourcing is actually costing you $170 an hour of lost potential.