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John Jonas on Cost of Outsourcing

  1. They are super loyal and honest.
  2. Their primary business language is “American English”, and they speak it very well.
  3. They are “super-cheap” (John’s words, not mine)

He says you can find good people for $2.50 USD per hour. That’s just $400 USD per month for full-time work. Does that sound right do you? Does it sound exploitative?I decided to dig into the numbers. Let’s start at the beginning: - $1 USD = 46.40 PHP (Philippino pesos) - $400 USD = 18,560 PHP per month - $4,800 USD per year = 222,720 PHP per year

$4,800 per year IS “super-cheap”, but is it exploitative? The numbers don’t tell us anything about the VALUE. How much can $4,800 USD buy in the Philippines? We can figure this out (roughly) using the Big Mac Index, which is an international measure of buying power. The theory behind it is that McDonald’s wants its food to be affordable wherever they sell it, so they vary their prices accordingly. On average, it takes 13 minutes for someone in New York, New York to earn enough to buy a Big Mac. In Milan (a city in the Philippines), it takes an average of 88 minutes for someone to earn enough to buy a Big Mac. 88 divided by 13 = 6.7692 This means a New Yorker has 6.7692 times more buying power than a Milanian. Put another way, a person in New York to can pay a person in Milan 6.7692 times LESS money, and they will have almost identical buying power / standards of living. Put yet another way, $400 USD is worth 6.7692 times that much in Milan, or $2707.68 USD per month. That means if a New Yorker pays someone in Milan $4,800 USD per year, that person will be living as well as someone making $32,492.16 USD in New York. So, yes, you CAN hire people super-cheap in the Philippines, AND it is not so cheap as to be exploitative, BUT you’ll be hiring people who are willing to work for the equivalent of $32,000 per year. In other words, don’t expect to hire lawyers or MBAs or senior programmers for $400 per month. That being said, if you’re looking for extra help on your start-up, you can get a pretty good bang for your buck in the Philippines. John Jonas will teach you how to do it, and free up your time over at his site: ReplaceMyself.comThere, he’ll teach you everything you need to know in order to start living the 4 hour work week. Just click the banner below and listen to his free introductory mp3. I did, and it was totally inspiring. Banner

Tim Ferriss made us realize that the 4 hour work week IS possible. John Jonas tells us HOW to implement the automation part of it.