Thursday, December 28, 2006

Freelancing in India – The oriental carpet shop

According to an ancient saying in India, the secret of long and fulfilling life lies in avoiding four types of people at all costs - bankers, doctors, lawyers and police. There is only way to avoid these four types – don’t earn too much, take care of your health, don’t get into disputes with anyone, and don’t commit any crime. This must be true in most countries, but here in India - this is the most practical thing to do.

In India, the laws are very favorable to the weaker party - it is impossible (at least legally) to fire an employee or avoid payment. But, the unfortunate part is that if you go to court - only your great grandson may hear the final ruling. This practically rules out any legal recourse for many people. Therefore, any legal documents that you sign are practically useless - at least as far as YOU are concerned. The advantage is you don't need to consult a lawyer. But, the disadvantage is you are on your own. You have to evolve your own way of getting your payments on time, getting your deliverables accepted and work out the complexities of the inner workings of your client organizations.

First, let me tell you a couple of stories from the field. The first story is about the need to read carefully all legal agreements and more importantly the price of arrogance and individualism that one pays for in this country. The second story is about the need to understand the subtlety of the eastern mind.

I know of a consultant who worked for a billionaire. There was a disagreement between them on some issues - the issue was not about money, but the working styles of the client and the consultant. This particular consultant was very arrogant - one day he had a major fight and walked out of the assignment. According to the agreement he signed - he could leave with one day notice, so he thought everything would be fine, and at best his client wouldn't release the pending payments.

Two days later, a battery of lawyers descended on his house - and practically sealed everything - his wristwatch, cell phone, microwave, TV, credit cards, computer - and practically every single tiny electronic item he owned was sealed. The reason: he signed an intellectual property document, and the document says that in the event of termination of the assignment, the client has a right to verify that no confidential data was stored in any electronic medium!! Technically even a wrist watch is an electronic medium.

This poor chap couldn't even make a phone call, and his client was out of contact for a week. Finally, he had to swallow his pride and beg for pardon.

The important lesson is that be careful of the documents you sign with your clients. Any condition in the agreement must be something that you yourself should be able to establish.

The second story is my own first hand experience. In India, your clients will never dispute anything - especially about payments. They fully agree that they have to pay and they will always tell you that they have every intention to clear all the pending payments as soon as they can. They will never get into an argument with you on payments. If you ask about payments - they will talk to you for two hours, tell you how much they value your work and relationship, take you out for lunch, make you very comfortable - but they always find some way of delaying the actual payment. In the west, people are in general have an 'on your face' attitude, but here it is very subtle. It is like going to an oriental carpet shop and negotiating for price - everything is discussed except the price.

Once, I completed my assignment, and sent all documents to my client, and sent them the invoice. There is a thirty day period for all payments - so, I waited for about three weeks. Nothing happened. I contacted the finance department - they told me that they did not receive any approval from the VP, Engineering - who is the person in charge for my consulting work. I met him again - he apologized profusely for the delay for about half an hour, and in the meanwhile asked me to 'help' them with a few small things and so on and so forth. I obliged - it took another one week. I sent the invoice again to the VP and the finance department. This time, the VP took a printout of the invoice - and he wrote on it the three magic words: "please pay" and signed. I handed over the invoice to the finance department. The accountant gave me a charming smile and said everything will be done in a week's time. Well, nothing happened for another two weeks.

Again, I met the VP. This time he cursed their finance department - he said they are always very slow, don't do their job on time etc., etc. He again took a printout and again wrote the three magic words and signed. I took the invoice to the finance department. This time the accountant asked me to wait - he wrote the check and gave it to me within half an hour.

I asked the accountant that why they did not clear my payments the first time the bill was passed by the VP. The accountant said "Sir, the first time he cleared your invoice, but wrote it in blue ink. That is an instruction to us not to pay. If he writes it in green ink, then it means send the check after two weeks, and if he writes it in red ink - it means that we should pass it immediately".

This is how subtle the process could be here. I use some simple rules to deal with the eastern complexity and it works.

First, I always do one week of gift work before I formally engage with any clients. I don't charge for the first one week, and I work without any formal contract. This allows me to understand several things - most importantly I get to understand the problem I am expected to solve, I get to assess whether I could do it or not, whether the team is capable enough to solve it themselves - how much guidance they need from me and so on. Most importantly, I can estimate the culture of the organization. Metaphorically speaking - I get to know in which color the invoice has to be signed!!

A consultant has to deal with three different people in the client organization. The person who employed you, generally it is a senior manager - most often, the head of development, delivery or technology. The second person is the one who actually needs you and works with you - generally it is the development team, represented by a project manager, and finally - some one from the finance department. These three people can form a nice little triangle and play a perpetual football with you.

What I do is to try and break the triangle. I insist that one person from the development team - either a project manager, team lead or a programmer be assigned as my primary client contact, who will have all the authority to decide on the deliverables, to sign off on my time sheets and who has to ensure that payments are cleared. This means that even though the agreement is signed between me and a senior manager of the company, the agreement explicitly nominates one person by name.

The advantage is that - programmers do not switch off their cell phones, they do not go on extended foreign tours, and they don't have secretaries. You can always call them up and go for a lunch. And, they understand which color of ink their boss has to sign. Basically, I make my internal client contact run around to clear all my payments. Once they accept this responsibility - they are in general very sincere and prompt. Contrary to all generally accepted beliefs, I found that the finance department tends to be the most efficient and prompt of all other divisions of the organizations. Once they get clear instructions, they act very promptly.

The second part of my consulting agreement is to clearly identify three types of deliverables. In India, the clients do not draw a clear boundary between the consultant and the organization. The consultant - especially if he is a freelancer - is always treated as one of their own. This has several advantages and disadvantages.

The disadvantages:

  • The scope always expands.
  • No clear idea of what the deliverables are - the distinction between the work and the deliverable are always blurred. You are asked to do work but get paid based on certain concrete deliverables that you have to produce.
  • Confusion about who is owner for a certain area of work.

Normally, what I do is to identify three types of responsibilities and document them as part of my 'work contract':

  • Primary responsibilities: I have the primary ownership for these deliverables, and I have control on the project plan.
  • Collaborative responsibilities: My expertise is required for these deliverables, but someone else has the overall ownership and control on the pace of the activity.
  • Participatory responsibilities: Areas where my inputs are sought - but, I have a right of refusal to participate.

Finally, it is important to get the payments on time. Suppose I expect the payment to be done on 30 of the month. If I send the 'deliverable' document on 25th, I can never get the payment on time. This is because, the deliverable is not completed when I send it, but when it is read and understood by the receiver. So, if I want my payments on 30th, I send my documents on 10th of the month - and give them two weeks time to accept the deliverable, and also I use the two weeks to ensure that they indeed make the effort to understand it clearly.

I wish all of you and your families a very happy and successful new year. May the Lord bless you to find your heart's desire.


Kingsley said...

Great anecdotes - and thanks for the advice!

Wishing you and your family a blessed New Year - may 2007 bring you nearer to your goal...


Shah said...

Good one sir! I learnt few important things which i need at present!

SV said...

Hi Nagaraju,

It was so hilarious to read this 'Oriental Carpet' post and I could relate to it absolutely. I was thinking about some occasions where this has happened in my place of work. With all due respects to the consultant, here's are some cases.
- I have seen the consultant stuffed through the throat of VP-Engg because the consultant is a friend of COO. Now the VP not only has to accomodate the consultant, he/she has to 'agree' with the COO that the consultant is a great find and get things done, show results by using the consultant. And until the results are shown by the engineering team (capitalizing consultant's srevices) the VP may not be able to justify for the budget because he/she never anticipated consultancy the first place.So, the red ink, blue ink method is a great tool for the victim who is the head of engg.
- Again, with all respect to consultants, most of them that I have seen are out of touch with reality once they in freelancer mode for a long time unless they have been freelancing in the same domain consistently. I have met, for example, one consultant who was a security engineering head and who ventured into being a software engg consultant and then he accepted most opportunities in project management and PLC that came his way and at the end of 3 years he had lost that edge in his original core competency. But most organizations are sold to the jargon and degrees and they don't have methods to find out how current the consultant is. Now, how does one communicate this to the consultant later? The VP engg is in a dilemma. He has to arrange for payment to someone, for something he didn't do, for something he wasn't evaluated to do. The internal 'point of contact' will be too afraid to communicate this since the consultant has great pedigree.
- Another case that I have come across is that a consultant is signed up for a particular deliverable but there is impending reorg and restructuring that only the VP knows about and everyone has to wait indefinitely until the P&L is decided.

Just my two cents...beautiful article though.


Nagaraju Pappu said...

dear vid,
you are absolutely right. the point i was trying to communicate is the way the indian culture works - we associate a certain value in delay - for example, we notice long queues everywhere - and the queue is a way of generating a lot of economic acitivity. there is a value if the train takes 24 hours to reach the destination instead of zooming there in 5 hours. we take the action when the value in delay gives us diminishing returns (for example, when i became quite a pain in the back for the VP, there is no more value in holding the payments..). This is an interesting, self organizing performance principle lurking there - though it is not obvious at the outset.