International Collaboration
International Collaboration
(OP)
My question is, has anyone requested work to be done by consulting engineers in other countries where the currency exchange rate can be successfully hedged to offer more competitive rates locally.
The consulting market in South Africa is currently going through a bit a of lull and I was wondering if it would be a worthwhile endeavor marketing engineering services to other countries? It may be a win-win situation where good quality work is procured for relatively inexpensive rates. The US Dollar to Rand is currently trading at around 1 : 12.
Looking forward to your thoughts, comments and opinions.
The consulting market in South Africa is currently going through a bit a of lull and I was wondering if it would be a worthwhile endeavor marketing engineering services to other countries? It may be a win-win situation where good quality work is procured for relatively inexpensive rates. The US Dollar to Rand is currently trading at around 1 : 12.
Looking forward to your thoughts, comments and opinions.
_________________
Jones & Wagener
www.jaws.co.za





RE: International Collaboration
You are in South Africa and you are trying:
1)Gain an advantage over your competitor by hiring engineers from another company at cheap rates to do projects in South Africa
or
2)Do engineering on projects in other countries (ie United States) because the exchange rate is to your advantage and you can therefore do the work cheaper than someone with offices in the US?
RE: International Collaboration
I wouldn't dispute the possibility that this could be done in some circumstances, BUT, I can see a few difficulties from here, which would act in opposition to a cost advantage.
- Many projects require knowledge of local codes and standards, and many of those projects must be done by a locally licensed engineer. You may have to obtain a license in the location of where you want to do the work - and get very familiar with all the local codes and standards AND how they are locally interpreted.
- Many projects require at least some level of local supervision. The local guy can travel to the job site with minimal cost and delay. You can't. The local guy will be staying at home every day with the wife and kids and dogs. You'll be paying to stay at a hotel.
I've worked at places where mechanical design got subcontracted out because our own design/engineering department "couldn't get it done in time", or was "too expensive" (!) and this didn't even involve subcontracting out to someone in a different country. Every single time, was a disaster. Every. Single. Time. It was NOT worthwhile. It didn't stop management from trying it again, of course, but it was a disaster that time, too.
RE: International Collaboration
There is really nothing unusual about expanding your consulting business out of your home country. I find that (at least in Oil & Gas) that while [too] many companies treat employee engineers as interchangeable cogs, they tend to hire consultants more on merit than on cost.
The exchange rate really doesn't matter much since I find companies all over the world tend to accept invoices either in U.S. dollars or in the local currency. I've talked to a couple of companies outside of the European Union that are [reluctantly] willing to sign a Euro-denominated contract, but they don't like it. I'd be shocked if a company in Paris (for example) would sign a Rand-denominated contract.
David Simpson, PE
MuleShoe Engineering
In questions of science, the authority of a thousand is not worth the humble reasoning of a single individual. Galileo Galilei, Italian Physicist
RE: International Collaboration
Of course you will have to get around the closed shop mentalities of the locals, that's always fun.
Cheers
Greg Locock
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RE: International Collaboration
Building your business model primarily on the currently favorable exchange rate seems risky unless it's easy to do & undo.
If you can do equivalent work (including required knowledge of local codes, licensure...), at lower overall cost to customer then that's a value proposition.
What is Engineering anyway: FAQ1088-1484: In layman terms, what is "engineering"?
RE: International Collaboration
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RE: International Collaboration
I really do believe that the exchange rate can have a significant effect on the decision process of the potential client.
For instance, a senior engineer (15 years experience) in South Africa is probably sitting with a charge out rate of ±R1200-R1500/hr. This equates to ±98USD - 122USD/hr.
In terms of dollar rates, is this note a competitive price? I've no idea of US engineers rates.
_________________
Jones & Wagener
www.jaws.co.za
RE: International Collaboration
I think you are mistakenly assuming that your exchange rate is reflected in the labor rate; it's not. Labor rates are primarily tied to cost of living, or external demand. Some less fortunate countries have cheap labor, but that's because there a lack of demand for labor, regardless of the exchange rate. If, on the other hand, some company decides to make a manufacturing plant there, labor rates could shoot up, while exchange rates might remain unchanged. China, for example, forces their exchange rate to be fixed, even though labor rates have tripled in the last 10 years.
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RE: International Collaboration
It's really hard for a local engineer to get new architectural clients - I really believe it would be almost impossible for an engineer from another country to 'wine and dine'.
And of course I'm a bit put off by your plan to turn engineering into a low bid industry. I'm not taking it personally or anything but aren't you turning a profession into a commodity?