Geoarbitrage is a concept popularized by Tim Ferriss, author of the New York Times bestseller The Four Hour Workweek. Arbitrage is a well understood financial concept where disparities between markets are leveraged to generate or broker a return. While securities in one market might carry a premium they could be obtained at a discount in another market where supply has driven the value down (usually for just a short time). Geoarbitrage builds on this concept and incorporates the notion that labor on an international scale has its own disparities that can be leveraged to increase the return on our time. Geoarbitrage is an art with the single purpose of outsourcing ones personal and business life to markets where labor is at a discount and thus freeing up the time of the busy professional or entrepreneur to focus on the highest and best use of their time, whether that be for personal or business use. A key concept in geoarbitrage is determining your hourly rate and comparing that to what you could pay a virtual assistant overseas to do that same task.
Outsourcing labor overseas is not a new idea. Businesses have been successfully doing this for years as the economy has become global in its reach. What makes the concept of geoarbitrage novel is that the focus is not on just outsourcing manufacturing or similar tasks overseas but rather seeking out other unique outsourcing opportunities. Geoarbitrage can entail something as simple as having virtual overseas assistants do research on an upcoming project or managing the email box of a busy professional. This can easily extend to one’s personal life in that a virtual assistant can act as a personal online shopper on your behalf or hunt down hard to find tickets or gifts. The real trick to successful geoarbitrage seems to be coming up with the types of activities that can be sourced to a virtual assistant and defining the rule sets to deliver to the virtual assistant to get the task accomplished. A real pitfall here could result if the arbitrageur ended spending more time identifying the outsource opportunities and rule sets than it takes to do the task them self.
Geoarbitrage can also extend to other disparities outside of labor costs. Real estate and COLA adjustments in given areas can result in geoarbitrage opportunities for entrepreneurs and employees alike if they can negotiate alternative work arrangements that leverage remote/home office or telepresence. If you can live in an area that has lower costs of real estate but is near a major airport so you can gain access to major cities for occasional meetings then an opportunity to own a home that might not be obtainable in more expensive areas of the nation can become a reality. Because of disparities in COLA adjustments in different parts of the nation it may also be possible to command a wage or contract fees that are 10-20% higher while working remotely from a location with a significantly lower COLA. Imagine living in the Midwest but making the salary or contract fees associated with jobs located in major metropolitan areas and you can begin to connect the dots to how this might work from a practical matter. These types of opportunities abound for those who seek them out and will become even more prevalent as our global economy continues to expand.