I had a few talks that I had recorded and needed transcribing. I headed over to Elance to see how cheaply I could get it done. After looking through some listings of transcriptionists, I would up selecting Jenifer Toussant (jenifertoussant.elance.com), who's based in the US. I asked her how she survives while competing with $3/hour off-shore transcriptionists and here's what she said:
I do run into lots of people who use an offshore transcription service for about 1/3 of the price that I offer, but that has drawbacks for those clients, both tangible and intangible. I know I cannot compete on price so I must stand apart in quality, both the quality of my work and the quality of my relationship with my client. To this end I also provide broader, one-stop services as far as article writing, editing and proofreading - skills that require an amount of critical thinking or artistic flair. I can build a larger network by offering higher-end freelance services than I could by just marketing to people in my local area, which is still depressed economically.
This is exactly how I think that info pros can also address the challenge of offshoring or outsourcing. Offer tangible value that an off-shored person can't offer, and you'll keep your clients, and your job.
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