Value-of-Time Outsourcing Rule
Delegate suitable work below your effective hourly value and reclaim the difference
- Difficulty
- Moderate
- Time to result
- ~weeks to results
- Steps
- 5
- Confidence
- 98%
The Value-of-Time Outsourcing Rule begins after low-value work has been eliminated. Calculate effective hourly income from annual income and actual hours worked, then adjust the figure conservatively for taxes and other realities. Ferriss recommends assigning suitable tasks to someone who can perform them for less than that threshold. The comparison is meant to remove the excuse for retaining time-consuming work merely because it can be done personally. Delegation can also exploit time-zone differences, allowing research, spreadsheets, and other internet-based work to progress while the owner sleeps. The mechanism turns outsourcing from a vague preference into a repeatable economic decision while keeping elimination first: work that should not exist should be removed, not delegated.
Origin
Ferriss described using about 25 Indian MBAs in Bangalore at four dollars per hour to handle research, spreadsheets, and personal or business administration.
Core principles
- 01Eliminate unnecessary work before delegating
- 02Calculate effective hourly income from actual work hours
- 03Delegate suitable tasks below a conservative value-of-time threshold
- 04Use time-zone differences to move work forward while you sleep
- 05Set rules instead of responding to every apparent urgency
How to run it
- 1
Calculate effective hourly value
Divide annual income by the actual hours worked after accounting for time away. Use a conservative figure when taxes or other costs affect the comparison.
Pro tip Recalculate if additional income also requires additional hours.
Watch out Annual income alone can conceal a declining hourly return.
- 2
Eliminate first
Review the remaining work and remove tasks that do not need to be done. Keep only important but time-consuming candidates for delegation.
Watch out Delegating unnecessary work preserves waste.
- 3
Compare the cost
Estimate what a qualified person would charge to complete each candidate. Delegate when the cost is below the conservative hourly threshold and the task is suitable for transfer.
Pro tip Include supervision and correction time in the comparison.
Watch out A low headline rate is not a saving if the output requires extensive rework.
- 4
Define the output and rules
Specify the deliverable, constraints, and escalation conditions. Favor rules that reduce repeated urgent decisions.
Pro tip Use time-zone differences for work that can progress asynchronously.
Watch out Do not transfer sensitive or judgment-heavy work without appropriate controls.
- 5
Measure reclaimed value
Compare the time recovered and work produced with the total delegation cost. Retain, revise, or end the arrangement based on the result.
Watch out Reclaimed time has little value if it is immediately filled with more low-value tasks.
In the wild
Ferriss calculates that someone earning $50,000 annually while working 40 hours per week for 50 weeks makes $25 per hour. He then lowers the practical outsourcing threshold to $15 per hour to allow for tax mathematics and recommends assigning suitable tasks below that rate.
→ A general desire to delegate becomes a conservative numerical decision rule.
Ferriss describes a friend who sent a favorite ripped pair of jeans to virtual assistants in India. They arranged for people of his size to wear replacements and reproduce the wallet outline and worn-in condition.
→ The story illustrates the unusually broad range of clearly specified work that can be transferred.
Common mistakes
Using annual income as the only measure
A raise accompanied by longer hours can reduce relative hourly income even when absolute income rises.
Delegating tasks that should disappear
Ferriss places outsourcing after elimination so unimportant work is not merely transferred.
Keeping work to feel occupied
Delegation is intended to remove the ability to invent time-consuming tasks as a reason to remain busy.
Is it for you?
Best for
People with delegable research, spreadsheet, administrative, or recurring operational work that costs less than their effective hourly value.
Not ideal for
Tasks that require the person's unique judgment, contain unsuitable sensitive access, or cost more to supervise than they save.
From the transcript
“What I would recommend is that you outsource anything that can be done for less than $25 an hour.”
“Anyone that you can pay to perform a task for you for less than $15 an hour, you should assign this task to them.”
“So, any type of internet research, any type of spreadsheets, almost any type of work can be outsourced.”
From the episode
#548: The Lost Presentation That Launched The 4-Hour Workweek — “Secrets of Doing More with Less in a Digital World” from SXSW 2007