Should you expect a lower hourly rate for remote engagements?

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Most of us would love an engagement, from time to time, that takes us off the road.  The benefits of work life balance and increased time at home with family is significant. Not to mention being able to work in your pajamas, if you so choose, is enticing to some.  The question I hear often is why the hourly rate is so much lower for a remote engagement.  Below are my thoughts on what you may be facing when looking at remote project support roles.

Let’s start with the basics associated with the sales side and bidding on business and negotiating bill rates.  When positioning cost to the client, firms take many different aspects into consideration.  These include; skill set needed, level of expertise, years of experience, specific deliverable expectations, duration of contract, location of contract, required margins, and yes…is there remote opportunity.  From a sales perspective firms take these requirements and look at market value while trying to find opportunities to be competitive in their pricing.  The idea of working remote saves the client on costs related to travel for sure.  Knowing that working remotely is also appealing to consultants gives the firm another option to reduce cost to the client by cutting professional service fees as well.

Positioning the up side of working a remote project often falls on the recruiter.  They also have the challenge of getting you to agree to a lower hourly pay rate.  Just like a full time job at your local hospital, your annual compensation would be reduced as you are not traveling long distances every week and away from home during off time.  The answer to the question is simple, your hourly rate takes travel and time away from home into consideration.  You can expect an average of 10% reduction in hourly pay for remote work…which really isn’t bad at all.  So if you are used to making $95, you’ll likely be offered $85 for remote work.

Not everyone has this happen to them.  However, I believe it’s become more the norm to meet the demands of the client.  Take a look at the example below to see the big picture.

EXAMPLE

Candidate Requirements – The client is seeking a certified Epic OpTime analyst to assist with their Refuel project for the next 3 months.  They require a candidate with a minimum of 3 years of build experience and prefer they also have anesthesia certification, but it’s not required.  They are located in San Francisco with several facilities throughout Northern California.  They are open to remote work, but need to understand the cost benefit.

Average Cost – Let’s assume the average market rate for an OpTime analyst with 3 years’ experience is $140 an hour.  Then let’s take the cost associated with weekly travel and lodging in San Francisco for 3 months.  Professional fees would come in at $67,200 and expenses would fall at about $16,000.  That’s $83,200.

Opportunity for Savings – The firm knows that client will be enticed just by removing the cost associated with expenses.  But they want to also lower the professional fee since the work is all remote.  The firm has been successful by typically offer about a 10% discount on remote efforts.  By doing so the new cost to the client will be $60,480 in total.  That’s a whopping 25% savings with a guarantee on same quality and delivery from the firm.

There are a lot of opinions on what is impacting project costs when using an outsourcing firm.  Without a doubt, as quality of delivery becomes a major focus for firms, clients will continue to look into remote options.  The trust of quality is there.  Moving forward you’ll see more opportunities presented to you that will be remote, but like come with a lower rate.

 

Have you take a lower rate for remote opportunities?  Leave your comments below.

 

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