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People are willing to work for less

Last week, I wrote a post about my experience with oDesk. The purpose of the post was to share my experience, so other entrepreneurs can learn from it, and provide feedback to oDesk and contractors in general. While some people found the value, I got some pretty angry comments on reddit. It is worth clearing up some of the issues discussed there.

First, it should be clear that I am not bragging about my actions or how I managed to exploit a person. As I wrote in my post, from my communications with Max (the service provider), I believe he was happy with the deal and will work with me again at similar conditions. The job itself didn't take 2 full days as my post implied. It took about 6-7 hours of work over the course of two days.

We can all agree that $37 for 7 hours of work is low salary. QA people at western countries are probably deeply shocked by these numbers. Well, it's not just their problem, it's everybody's problem and it is called Globalization. Look at the crumbling European economy. Jobs are migrating east as unemployment in the west grows. You can fight it, you can resist it, but you cannot deny it. If geographic location is not an issue, there are plenty of people willing to work for less. In some cases, it's not enough for them to get by, so they will remain poor working for low wages.

The question is: should you hire them at such low wages?

If you have a job and they are willing to do it for a low price, why not?   It might seem obvious to some, but it is not a simple question. First, you need to stay on the moral high ground. I would not hire a 12 years old QA person, not matter how low the price will be. Sweatshops are another examples of how to exploit workers and nobody should support them (chances are, you paid for products made is such facilities, but let's not go there). A notable example is the recent wave of suicides at the Foxconn factory in China, the same factory which makes iPhones and iPods. It created a negative backlash, eventually reaching up to the CEO level and resulting in salary raises.

So, we can all agree: if you have some decency, you will not hire any person for any price, even though you can. But where do you draw the line?

Personally, I would like to have a good QA person which I can trust and I'm willing to pay him a reasonable hourly rate. Reasonable means reasonable according to his local standards. But it is not that simple because:

  • I really don't know if the person I'm hiring is any good at what he does. If he has some feedback, it helps mitigate this risk.
  • I don't trust the person I'm working with. If he says he was working for 5 hours, was he really working for 5 hours?
  • I need someone productive. Even if he was working for 5 hours, how is his productivity?  If I estimated the job will take 5 hours and it took him 20, that's not very helpful for me.

From all those reasons, it is easier for me to start with smaller tasks that have a well defined budget. Low budget, because I might not get the results I was hoping for, so I want to minimize the risk. I hire people with no (or minimal) feedback and credentials. It is much like using an intern, a student or a new college graduate. Once we get comfortable and build trust, we can move forward and change the terms. Perhaps, once they get good feedback they will decide to move on to a more lucrative offer which they can now win. This already happened to me with a previous QA person and I'm really happy I could help him get a better job and move forward.

That's how the employment market works. Experience and credentials will get you a better salary. You start from the bottom and you work your way up. Note that I didn't get any offers from people with well established feedback. Perhaps because they can find better offers.

Final note to the potential employer: you can continue using the services of the cheaper guys, but you will still have all the risks. Or, you may establish good working relations with a few good providers, minimize the risks and get better results with less "hand holding" from your side.

Published at DZone with permission of {{ articles[0].authors[0].realName }}, DZone MVB. (source)

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