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.

Freelancing in India

Many young people from India are writing to me asking about freelancing. If you are also ‘bitten’ by the freelance bug – and you are thinking of writing to me, read this before you shoot that email to me.

I believe self employment will take off in a big way in India in the next two to five years – therefore, there will be lot of scope for people to be on their own. There is a need for specialized knowledge, speed and flexibility in our industry. Many people are now well connected, well travelled and they know their bearings well. All this means that the situation is ‘cooking’. It is the right time to jump in for the early mover advantage.

However, freelancing is a difficult thing to make it work – anywhere in the world, and especially in India. It is not going to be straightforward.

First, let me dispel a few myths – freelancing is not financially lucrative in the long run. People who work as freelancers do so because they love to be independent, have some time on their hand to pursue various other interests and generally be the trailblazers. It is not a road to make wealth. If you are a Peter Drucker – it may be different, but even for Drucker – he would have made lot more money if he started his own company or worked for some other big company.

There is never any ‘job’ security if you are on your own – it is always a struggle to find the next project, and do it well and have some regular income.

There are a few tax advantages – but the overall expenses far out weigh any tax advantages. For example, you have to invest in your own training, and in your own career. If you work for any large IT-Company, they take care of all your training needs. If you work for a large IT company in India, this amounts to about 50K per year (including the training expenses + the salary you get even though you are attending training). Similarly, there are many other expenses if you are on your own. These days many IT companies provide many perks – which are tax free incentives, you don’t get anything more if you are a freelancer.

Part time job, second income is completely different from being on your own. There is no comparison at all.

There is also a big difference between contracting and consulting. One is getting some work and executing it, and the other is lending your expertise to produce results. These two ways of engagement work very differently.

So, think carefully before making a move. You can always get the first couple of contracts – but can you get business for the rest of your life? I do not want to discourage anyone – but only trying to throw some light on a few dark areas that people generally don’t see.

Now, here are a few tips:

To be successful you have to:

• Establish your credentials – credentials are not your resume, but your expertise and demonstrating that you can deliver. What you can do is to first try and get some work from internet. There are now some websites like rentacoder.com, elance.com etc., - which help freelancers find work across the globe. You can register yourself on these websites. It works pretty much similar to e-bay. Some companies post their requirements – and you can bid for projects, execute them from home. I suggest that you find out more about sites like this, and see if there is some work there that fits your skills and what you are looking for.
• Transition from ‘a skilled person’ to ‘an expert’ – you have to develop certain techniques, a way of doing your work that establishes your expertise. You have to learn to write well, communicate well, publish some papers, have a website of your own and carve out for yourself a niche. There are tons of open sources projects these days – if you participate in these projects, you get to learn the world class standards that are used today, and also you get to meet other people who are freelancers and create a network of your own.
• Have a network of contacts, friends and others from the same area. If you are working in a company – even though you don’t realize, you are part of a community which ensures that you get to know a lot of things from the environment. If you are a freelancer, you have to cultivate different kinds of relationships. There are many ways of accomplishing this – membership in professional bodies, attending conferences, teaching in universities, making contact with a group of people who work in your area (see point no: 2).
• Understand how consulting works. There are some excellent reference books on this subject. Flawless Consulting by Peter Block, Consultant’s calling by Bellman, Soloing are some books that I recommend. Read them, understand them and then think about how to go about it.
• Read a lot. You have to read many different kinds of books – not just technical books. The general thumb rule is that you have to be able to read at least 500 pages of material every week and absorb it. If you claim to be a knowledge worker – you have to have knowledge. Right? Some books I suggest to begin with: Gerald Weinberg’s books on Software Engineering, Quality Software Management and his books on consulting. Also books on agile techniques. Books on systems thinking, history and some poetry. Definitely you have to know a great deal about accounting, managing your own finances and legal aspects of self employment.
• Invest in your own career. This means that you have to have a definite idea of how much free time you will have, and how you will use the free time. If you do billing work all through the year – you will become stagnated very fast, and you can’t get business the next year. Our field evolves very fast, and for a freelancer it is very important to be on top of the technology. Therefore, it is mandatory that you have a definite plan how to stay ahead – this will include, reading a lot, attending workshops and training programs, write and communicate, teach and so on. In financial terms, you have to invest at least 30% of your revenue in your own learning at least in the initial years.

That’s pretty much it. If you are committed to it – it is not hard. Believe in yourself, make a small begining, do it well and don’t give up. That’s all there is to it.