I used to work in a call center in Canada, and I just got news today that it’s closing down. It’s no surprise really, they’ve been hemorrhaging workers for a long time and the rise in the Canadian Dollar hasn’t helped them either.
It’s one of the Catch-22′s of outsourcing:Â Outsourcing overseas works better when there’s a strong US dollar.
Most of us instinctively know why, but just in case someone’s been paying all their attention elsewhere I’ll give a quick rundown on the details. Everyone pays for their daily needs in their own currency, and prices are a lot less volatile than exchange rates. So when the US Dollar is high it provides people overseas who’re paid in US Dollars a lot more purchasing power than when it’s low. This also means US companies can get more work done for less money because the dollar goes further. It works well because everyone’s taking advantage of the interface between the two economies.
With the economics lesson over let’s look at the call center I mentioned at the opening of this post. When they opened the Canadian dollar was hovering around 68 to 70 cents US. Now the two currencies are running pretty close to par. Think about that for a moment. The drop in the dollar means that even if all costs remained equal in terms of Canadian Dollars, the parent company’s costs would have increased by close to 50%. That’s before increases in average wages and site costs are figured. They just can’t afford it so they’re pulling back to the US.
What does this have to do with you?
Quite a lot. What the lower dollar has done is help level the playing field. Outsourced coders and writers have to charge more in order to make the same amount. After all, what really matters to them is how much local currency they have to pay their bills, not US currency they have to convert.
The big benefit for US providers is that since foreign providers have had to raise rates to maintain their existing income levels, US providers automatically become more competitive without lowering rates.  It doesn’t affect your earning power, because most things are traded in dollars anyway, so relative prices stay the same.
All it does is give the advantages of dealing with a provider in the same country a lower cost.
I want every provider in the US to see this for the opportunity it is and take advantage of it. Use the situation to your benefit.
Right now, foreign providers are less able to leverage a lower cost of living into lower bids and rates. That makes it easier for domestic providers to win jobs, and it’s a lot easier to get a second job from the same buyer than it was to get the first.  Take the job now, and when the dollar goes back up you’ll be less likely to get passed over for someone cheaper because the buyer knows that you’re worth the money.
You’ve also become more affordable to foreign buyers. Not only oDesk, but many other sites work in US Dollars regardless of location. That means that as far as foreign buyers are concerned you’ve just become that much cheaper without having to lower your rates.
Freelancers are sellers, and a weak currency is always good for sellers just as a strong currency is for buyers.
Man, I hear you and like the optimism, but I’d be happier if the US dollar was stronger from a global economy point of view. As it stands, we’ve been knocked from the #1 position to #2 in economic strength by region (EU went from #2 to #1), and while it will be nice for a while, it will eventually lead to inflated prices here and general bad effects elsewhere in the long run.
Right now, I’m all for taking advantage of it, though, so your advice is still very prudent. Let’s just hope it’s a temporary condition.
I understand where you’re coming from, but I’m also looking at it from the perspective that while I’d like the economy to rebound I also think it’s vital to see how one can take the current situation and turn it to advantage. Freelancers have to be flexible.