Face to face with globalization

Globalization has been a hot topic for many years. In rich nations, people vaguely recognize that it’s mostly a good thing: more choice, lower prices, etc. Yet, they also worry about losing their job to a foreigner who will do the same thing for much less pay. For now, this seems mostly a distant and faceless threat (that is, unless one works in manufacturing).

Well, the other day I came face-to-face with globalization. I ended up both scared and fascinated, even though I’m a skilled professional living in a middle-income country.

My encounter took place in a site called Elance Online. Basically, it’s a market place where firms put up for bidding small, independent projects that need to be done. Independent contractors from any nation can participate in the auction. Most are software-related, but there is a wide variety including editorial work, accounting, etc.

Take a look at this project for translating 51,000 words of English text to Spanish (and other languages). My wife has worked as a translator for over 10 years and she told me she would charge around US$ 3,000 for a job like this. Her rate is not low, but it is competitive for high-quality work. Now look at the bids: nearly 20, from places in Russia, India, the U.S., Argentina, Uruguay, Britain and Portugal, with the lowest at US$200 and the highest at US$ 1,450 (the average would be around US$1,100).

Obviously, it’s difficult to evaluate how serious some of these proposals are. However, many state that they include proofreading and quite a few have positive reviews for previous Elance projects.

I’ve seen many other examples. On average, qualified U.S. contractors’ bids were nearly three times higher than those provided by Indian and other foreign sources. Needless to say, quality and language are important issues that may justify higher prices, but the differentials are pretty large.

Frankly, I don’t know how big or how far this trend will run. Clearly, only fairly simple and straightforward projects can be contracted out now and it’s hard to tell if this will change. Nonetheless, this means intense competition for independent professionals everywhere. But it also has the potential to make life much easier for start-ups by enabling them to contract out non-essential functions (accounting, design, etc.), spurring growth and innovation. This will benefit everyone in the long-run, but it’s bound to be a bumpy ride for many.