Israel and the US moving ahead on banking information exchange agreement

(Reposted with permission from Rachel Berger, Director of Employment at Nefesh B'Nefesh) Israeli business newspaper, Globes, has recently reported that the Ministry of Finance is in late-stage talks with the US Department of the Treasury on a reciprocal agreement to transfer information concerning foreign resident bank accounts. Under U.S. tax law, U.S. persons (including American citizens living abroad) are required to report and pay taxes on income from all sources.Israel decided to seek an agreement with the US, under which the Israeli banks would have no contact with the IRS, but would be subject to the Israel Tax Authority. In addition, in the event of a fault, the Tax Authority, not the IRS, will impose penalties. This is good news for the banks, given that the US authorities are known to be aggressive in their penalties.

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What Does a Shoe Store Have in Common with a Technical Writer?

Normally not much, but there is one shoe store in Florida that does. Technical writing is a niche business, and in Israel many of the more successful technical writers have created a niche-within a niche.

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Which Writer Cost More?

In theory, a technical writing company can provide clients with a wider range of expertise and save writers from business related tasks, such as marketing and billing. In practice, the structure of the industry has created a situation where most successful writers prefer to work directly rather than through technical writing companies.

This leaves technical writing companies with inexperienced writers or those who have not yet managed to build up a direct client base.

During the hi-tech recession, technical writing companies were often able to find experienced subcontractors, but once the economy picked up they were unable to hold onto them. Companies wanting to update documentation for a new release or a product based on the same technology often can't use the same writer and are forced to pay for a new writer to learn what the previous writer already learned.

Why? The difference between the rate received from direct clients and the rate received as a subcontractor is often so large that  direct clients are far more profitable, even clients who pay a significantly lower rate than they would pay for the same writer via a technical writing company. In the meantime, both the company needing the work and the writer are prohibited from working directly for 6 months to 2 years, depending on the cooling off period in their contracts with the technical writing company.

Which Rates Are Higher - Independants or Tech Writing Companies?

Despite what many people think, companies and direct contractors charge very similar rates, with most hourly rates in the $35-$40 range (based on April and July 2007 statistics). Low-end writers and those just starting to work independantly charge as low as $30/hr. Some companies are willing to charge these same rates in return for high volume or lesser skill sets, such as formatting, proofing and grammatical corrections. Hourly rates for high-end writers and companies can easily reach $45-$50 and above. Surprisingly, or maybe not surprisingly, many of the independant contractors with long-term full-time clients (160-200+ hours/mo) charge $40/hr or above and a small, but growing number work on a retainer or global monthly basis.

Which Cost More - High End Independant or Low-End Tech Writing Company?

Let's take two technical writers and do some simple math. One writer is an experienced freelancer charging a high-end rate of $45/hr, the other a team of writers supplied by technical writing company charging a low-end rate of $30/hour.

Which Looks Cheaper?

The TW company then uses 3 writers, one experienced and two trainees. If each of them put in 200 hours the TW company bills $18,000.

The 200 hours of work performed by each trainee is unlikely to produce the same quality/quantity as 200 hours of an experienced writer. So that time should be billed at $6,000 or a percentage of that amount?

Well, at least the 200 hours of the experienced writer's work is worth $6,000, right? That is $3,000 less than that of the independent freelancer that wanted $45/hr. So at first glance, the client is really paying $4,500 for each trainee's time. Or so it appears.

What about the time that the experienced writer is actually training the trainee? Explaining how to do something better, reviewing and rewriting copy that is the result of inexperience. Often the client pays for that time?
Let's take a conservative estimate of 50 hours per trainee. That means that the client is actually paying $60/hr for the experienced writer's time ($6000/100 hrs).

Furthermore, part of each trainee's time was actually spent on training, either directly with the experienced writer or reviewing his comments that were related to inexperience. Again, let's take a conservative estimate of the same 50 hours. Once we take this into consideration we see that the client is really paying $6,000 for 150 hours of each trainee's productive time. Since we have determined that the experienced writer's productive time is really being billed at the rate of $60/hr we can no longer discount the time of the trainee. So basically the client pays $18,000 for 400 hours, 2/3 of which are for trainees or entry level writers.

Now Who Really Is Cheaper?

Let's assume that the independent freelancer is as good as the experienced writer of the TW company, but no better.

In the above scenario, 100 hours of the independent freelancer's time is definately needed to do what the TW company's experienced writer did, plus a percentage of the time spent by trainees.

If the trainees were working on routine tasks, an experienced independent freelancer should be faster at these tasks, but may still need 2/3 of the time taken by the trainees, i.e. 200 hours instead of the 300 hours needed by the trainees.

100 + 200 = 300 hours @ $45/hr = $13,500.

This is $4,500 less than the amount that it would have cost to use the low-end technical writing company. Not only that, but this is only the tip of the iceberg. The above calculations don't  account for the developer time that is wasted when an inexperienced writer does the interviewing and when the developer needs to explain the same things a second or third time.

So Why Use Technical Writing Companies?

Technical writing companies can often put together a team of writers that can provide more writer-hours than an independent writer. In the above scenario the technical company can complete the work in one month, while the independent needs 1.5 months.  


This article is open for comments. Feel free to add your experiences, opinions, agreements and disagreements.


List of Tips רשימת טיפים

On the 5th and 20th of every month, Eitan Reuveni will give us tips on how to manage more effectively and Gail Ellis translates them into English. Eitan is not only an expert on effective management, but he has turned managing people into an art form (I have seen him change the way people work). Due a technical problem, the Hebrew versions will be posted as PDF files.

10 Ways to Work Smarter  שרה רעיונות שיעזרו לך לעבוד חכם יותר - ולא קשה יותר

Achieving Goals and Objectives  השגת יעדים ומטרות

Great Force   כח עצום

Scheduling Saves Time  לבחור זמן זה לחסוך זמן

Emotional Attachment   קשר רגשי לחברה

Make Meetings More Effective  טיפ ניהולי - קל ליישום ואדיר בתוצאה

Do You Project a Winning Attitude? (in English only)