The number of freelance workers is predicted to be 50% of the American population in 2020.

That is an extraordinarily large number of people.

It’s obviously not just the US, England aren’t far behind and in India things are really kicking off…

On Elance, India is ranked as the second-highest freelance earning country. The hiring of Indian freelancers is growing at a healthy +46% annually.

What Does This Mean for Digital Nomads?

If you’re currently earning your living off freelance work then there is good news and bad news.

The bad news is that competition for clients is going to get more fierce. Millions and millions of people fighting for the same jobs means only one thing. The fight for cheaper work.

As Seth Godin has predicted “There will be a race to the bottom“.

In other words, whoever bids to work for the lowest amount will get the job.

It is already happening now, but it’s still easy enough to charge more to western clients even when you’re living in Thailand. Many a’ digital nomad knows this and unfortunately a few base their entire living off of it.

The obvious problem with this type of game of racing towards working for cheaper and cheaper? You might win!

How does a designer living in New York, Paris or Sydney earn a sustainable living when competing with somebody just as qualified and talented living in the Philippines or in India?

The Collapse of Western Society

You may have noticed the increase in documentaries named ‘the collapse of western society’. Most of which are unwatchable actually with too many exaggerations and unanswered questions aimed at a category of people you most likely don’t belong to. It is interesting food for thought though.

More and more people are demanding work-from-home jobs and extra flexibility. Fair enough, I don’t blame them. The long term consequence though is that companies will be pushed into giving people what they want and will start only hiring on a freelance basis. The age of global competition then can really start to show it’s head.

It isn’t my place to say if this is a good thing or bad thing. It will no doubt balance the world’s economy a bit instead of the lob-sided west / east situation we have today.

If you are basing your business on the lob-sided situation of today, then unfortunately you will be the ones to feel it.

You Said There Was Good News!

Indeed I did.

The good news is, I’ve given you six years notice to change your fate.

While everybody else is ‘racing towards the bottom’, you need to decide what you will be doing instead. Six years is a very long time to get extremely skilled at something.

I won’t go in to the effort of writing all the things you could become great at in six years, but it is safe to say there is enough time to master something which you know absolutely nothing about right now. There is that much time.

Our Advice

Make sure you are spending the majority of your working time towards things that matter. Not only what matters now, but will continue to matter in six years time.

Finding yourself on twitter two hours each day trying to get the odd client? I doubt that will make the slightest bit of difference in a few years time. Building up your personal website, giving out lots of useful information and helping people with their problems so they keep returning to you – that’s more likely to help you in the long run!

You can have everything in life you want, if you will just help other people get what they want – Zig Ziglar

I’m going to keep this post short as I really just wanted to throw this at you and to see if it is something that people had been considering and planning for.

This is actually a large topic which we will be talking about more on our new website. Remember to sign up below and we’ll be sure to keep you updated with how that is going.

How do you plan on adapting when the competition rises and people are no longer willing to pay fair prices? Is this something you have been planning for already? Let us know in the comments!

 

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Comments

  1. I feel like you are being awfully pessimistic. Sure, the number of freelancers increases year after year but so does the number of organizations willing to hire them. It doesn’t matter if there are five, ten or a hundred times as many freelancers if the pool of employers willing to hire freelancers expands similarly.

    All increasing international competition means is that the people who do the best work will float to the top while the mediocre will struggle to continue extracting money from clients once they are no long the only game in town.
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    • Dave Browne says:

      Hey!

      I admit, it does sound quite pessimistic, but it doesn’t make it false.

      If you are the best, then of course as you say, the best will float to the top.

      But not everybody is the best. At the moment you can still get away with being average, unknown and getting work by charging less than folks back home.

      Global competition means more organisations in the US will realise that they can pay people in Baht and get the same job done. It won’t work both ways, there won’t be many Thai companies paying US freelancers.

      Then you have the two options, which I discussed: You can compete on price and work for the lowest Baht to make sure you get the job. Or you can work hard to increase your worth and continue to charge Dollars.

      Being able to charge more takes a lot of work in becoming great at what you do and making sure the right people know how great you are.

      But six years is more than enough time so nothing to worry about, ay! :)

  2. Interesting stuff!

    I personally don’t agree with the “race to the bottom” concept. I feel like the business world, as well as consumers in general, are experiencing a “quality renaissance”. We have been dealing with a poor jobs market as well as a Walmart mentality for long enough that I think the world is beginning to understand the difference between cost and value. Look at Etsy for example.

    I think it will be awesome – I just hope I am right!

    • Dave Browne says:

      Hey! Thanks for stopping by!!

      I think it will continue to split down the middle and go two ways.

      If you’re basing a business on being unique and delivering quality then you’re right, it will be awesome. Etsy isn’t a part of the race to the bottom and people on there won’t have to worry about it.

      But the businesses which are based on being able to offer services cheaper than their competition are definitely a part of it and will find it hard.

      An example is people offering pretty average, low standard, non-unique web design for around $100. At the moment their business model is pretty solid. There is always customers willing to take the risk and go for the cheaper option to try and save themselves a bit of cash.

      The designers low price markets itself, 10 gigs a month, each gig not taking him too long and the designer has enough money to pay for his trip through Asia. Sound.

      The problem arrises when somebody does the same for $80. and then the next guy is happy to do it for $60. As the original designer wasn’t offering anything unique and hadn’t spent the time to increase the quality of his work, he is easily replaced.

      He either joins the race and lowers his price until he wins the bottom price. Or he gets better at designing websites and charges much more for a unique design that only he can pull off.

      There is always somebody willing to work harder and longer than you are for the same or less money, just because of the lopsided economy. Quality doesn’t really play a factor here. The people working for less are no less talented, the quality of work given is exactly the same, only the price is different.

      The only way out is to step out of the game altogether and work hard to ensure that people associate you with quality and not with a bargain.

  3. Another option is to work hard on establishing an excellent relationship with your solid clients at present, so they consider the work history, familiarity, excellent working relationship, ease, high quality of work, etc. worth hanging onto when it is only a matter of several dollars an hour in question. Also, if possible, find more exclusive types of work, e.g. in which being a native English speaker is essential, or outstanding writing/editing/grammar skills are necessary (or spend the next six years proving to solid clients that such standards are what they need, without question).

    Of more concern to me are changes in currency rates that make the adage “Earn from the West, spend in the East” no longer viable; or changes in political and/or visa regulations that work against digital nomads.

    • Dave Browne says:

      Hi Joe,

      I agree, having an excellent relationship with your solid clients at present should be a top priority. That, and building up your personal brand to attract new clients who see you as an authority and who wouldn’t question your prices.

      As far as the currency rates go, I think about this a lot too. We have already seen quite a large change in Australian dollars from when we first left Australia. Even though we are getting the largest interest rates in Australia, the money is becoming worth less and less when spending overseas.

      Increased global freelance work will definitely help bridge the gap between east and west. It had to happen sometime. Just being aware of it and knowing not base your business model on it probably puts you in a better position from the start.

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