Geo-arbitrage means earning your money in one economy and spending it in another due to favourable economic conditions. When using it in conjunction with business, the internet has opened up many possibilities for geo-arbitrage because we now access other markets offering the same thing at cheaper rates. Here geo-arbitrage means using the difference between prices for the same product or service in two separate markets. This is great if you’re thinking of outsourcing aspects of your business.

It is all about hiring quality staff at a discount due to currency and economic differences. For work which would cost $50 an hour in the Western world, you can get for $15 or $20 an hour in a developing country. People from Russia, India or the Philippines will have the same skill set you can find in the Western world, but you will be paying a lot less. Because of the difference in currency, they will still enjoy a comfortable standard of living outsourcing articles with the money you are paying them, but it will be a lot less than you would need to pay someone from Australia, for example.

You can of course hire people much more cheaply than this from developing countries. It is possible to find people who will work for you for $4 an hour. This sounds very attractive, but if you do this, you will undoubtedly be compromising on the quality of work. There is really no saving to be made if you pay such a low hourly rate and then get very poor quality work. This will affect your business very negatively and is not the way to go.

There are many different elements you can outsource in your business. Website development done by someone from a first world country would cost anything from $3,000 to $10,000. Taking advantage of geo-arbitrage, you could expect to pay someone from a developing economy about $200 to produce the same standard of work. Graphic design, such as logo design would cost at least $500 and  up to $2000. For $50 a designer from say, the Philippines will produce a logo of a high standard.

You can get 500 word articles written for $5 in a developing country, where it would cost at least $50 in a first world country. Customer support is another great thing to outsource. There is no real value to customer support in terms of dollars in your pocket, but it is an excellent way to keep your clients. Fun work such as flowers, vacations and diary management can also be outsourced.

Understanding geo-arbitrage is a good first step to understanding how to outsource in an online business. You can use services like JobStreet and vWorker to find A players who will complete the work you ask in a very satisfactory and timely manner. Start out with a small job and see how easy it is to find suitable people who you will only need to pay a fraction of what you would expect to pay someone from Australia or the US. Once you find a good A player, you can start to give them regular work and slowly build up your virtual bench.

Understanding geo-arbitrage is a good first step to understanding how to outsource in an online business. If you need assistance every step of the way with starting up and growing your small business, then Melbourne SEO Services has some great resources, tips and advice and a good place to start is at our YouTube.com/theseomethod channel.

Share This