Earn a San Francisco Wage From Anywhere in the World?
Rethinking geo arbitrage and time based earnings with a thousand distributed software teams.
The most discussed reasons for embracing remote work are to enable access to the >99.5% of developers outside of the US (or any one country) and to have employees be closer to where customers actually are.
However, the rise of remote work presents an unprecedented opportunity to rethink work. While tools have evolved and norms have formed around distributed teams, the core assumptions about work are generally unchanged.
Essentially all of work today pays for time spent working (Sales commissions and equity based compensation are notable attempts to compensate for value). And in most cases, where you are located impacts how much you make. But since the rules of remote work are still being written, we don’t have to keep these assumptions. We can try new ideas.
• We paid people for the value they create and not the amount of time they work?
• The most skilled workers, could earn the same regardless of where they lived?
How well could this work in practice?
Gigster has been running both of these experiments now for almost 5 years with a peak pool of 500 – 1,000 people from which we build on-demand distributed software teams.
So Far So Good
Value vs Time
The biggest challenge in paying software engineers for some deliverable or outcome is ensuring that you don’t underestimate the required work and end up paying them too little. Many of the 1,100+ software projects that we have delivered, were self-contained enough that we could scope them out and estimate effort. More so, many of these projects were similar and so we could learn from experience and improve our estimates.
As a result, over time we have been able to achieve realized costs that match upfront cost estimates on the majority of our projects while also driving up the satisfaction of network members. On average the discrepancy between our realized and estimated costs is about 5%. And just this year, our developer NPS is also up from 72 in February to 89 in June.
Paying for value instead of time incentivizes efficiency and attracts engineers who are confident in their ability to deliver value. Instead of a fixed salary every month, engineers earn more when they create more.
In the early days at Gigster, we paid a fantastic iOS developer an effective “hourly rate” of $650/hr for a specific set of tasks that he completed in significantly less time than was projected. As long as the work was first rate, we were happy to pay the full amount. In this case the incentives had effectively selected for someone who had the specific expertise and experience required to get the work done at the optimal mix of quality and speed.
Value vs Location
Gigsters on the network are spread across 40 countries with a majority (~70%) in the USA. A few of the countries with the highest earning gigsters are USA, Canada, Italy, UK, Nigeria, Brazil, Poland and Ireland.
Regardless of where gigsters are located we pay them as if they lived in San Francisco. In many cases the costs of living are 2-3X lower than the US and so earning a San Francisco wage is completely life changing. There are founders who on the strength of their Gigster earnings have gone from almost running out of cash to flourishing offices in the heart of their home countries with multiple employees.
In addition to improving the quality of life of developers in lower cost areas, making value based earnings work has implications for reversing brain drain. There are gigsters who have relocated to their home countries to benefit from the increased standard of living.
The idea of getting paid fairly anywhere in the world, getting paid for value and of being able to work flexibly may seem far out in the future. But the future is here. At Gigster, we continue to run these experiments every day. There are still a lot of unanswered questions and adjustments to make along the way. We are not sure what we’ll find but we’ll continue to tinker and we welcome your thoughts!
As Gigster’s technology sentinel, Debo anticipates software-driven transformation and connects Gigster’s data and insights to a framework for repeatedly achieving high impact outcomes for our customers. He co-founded Gigster while on leave from Cornell for a PhD in Physics.