Engineer Fired For Outsourcing Himself To China
January 17, 2013 3 Comments
If you’ve read the 4-Hour Work Week, you know that one of the key concepts is outsourcing routine or repetitive work to Virtual Assistants. Timothy Ferriss calls it “geoarbitrage”, which is a fancy way of saying that you can benefit from the fact that what costs $60 dollars an hour in the US is $12 elsewhere.
In the book, Tim suggests that geoarbitrage is a great way to build a lifestyle business — one that can eventually free you from your day job.
Well, here’s a
brilliant guy who has taken this idea to the next level. His name is Bob (not his real name), but get this: Bob is believed to have outsourced his own full-time job to a Chinese sub-contractor.
With his free time, he surfed the web and took it easy.
According to this article on The Register, Bob caught got because his company noticed that he was regularly logging in from Shenyang, China.
They probably thought, WTF? (I’m thinking WTF — is this story true!?)
Allegedly, Bob is said to have FedExed his two-factor authentication token to a Chinese programmer, and was paying 1/5 of his 6-figure salary — freeing Bob up to spend the rest of his time taking it easy.
Believe it or not, here’s Bob’s typical schedule:
- 9:00 AM: Get to work, surf Reddit for a few hours, and watch cat videos
- 11:30 AM: Eat lunch
- 1:00 PM: Spend time on eBay
- 2:00 PM: Do some Facebook updates, visit LinkedIn
- 4:30 PM: Send an end-of-day update via email to management
- 5:00 PM: Leave the office
Apparently, this was working out pretty well. Bob’s performance reviews showed him as a top engineer for many quarters.
It gets better. It turns out that Bob had also taken jobs with other companies, and had outsourced that work as well. Allegedly, he was netting hundreds of thousands of dollars in profit.
Wait, Does This Really Work?
OK, so I’m a nerd, but stay with me for a moment: let’s put aside the legality of what Bob did, and just take a quick look at the business model:
- Let’s imagine Bob’s salary is $120,00 p/year, or $57 p/hour. Let’s assume that’s $40 after taxes.
- Let’s imagine the Chinese programmer’s hourly rate is $12 p/hour.
- This yields a p/hour (after tax) profit of $28 p/hour — a 70% profit margin.
- In a year, Bob takes home $83,200, and out of that, pays $24,960 to the Chinese contractor so that he can spend time surfing the internet. He’s left with $58,240 to compensate him for his ingenuity.
And finally: Let’s imagine that Bob somehow figures out how to get hired at one other company (oh wait, Bob did do that) for the same yearly salary of $120,000, and puts the same process in place.
Assuming all other things are equal, he nets $58,240 from this gig as well, bringing his total yearly take-home to $116,480.
I must say I’m dubious of this story, as I cannot substantiate that our friend Bob actually did this. But what if it’s true?
Question: Legal issues aside, what do you think of Bob’s scheme? Is it stupid — or brilliant?