Is it worth it?

It’s rarely a good deal to invest much cash into technology when you can easily hire more actual people to do the job in a cost-effective way. Sometimes the low-tech solution is the easiest and best solution.

I got a kick out of today’s XKCD comic strip. (Chart: “How long can you work on making a routine task more efficient before you’re spending more time than you save?”) It reminds me a lot of a conversation I had last Friday with an entrepreneur who’s trying to automate some, but not all! of his information business.

See, “Allan” gets a lot of documents that are not so well standardized, puts their contents into a database, and essentially gets paid by his client companies to let them know when and where they–or their subsidiaries–are mentioned. (There’s more to it than that, but this is the relevant part right now.)

So you’d think he wants an automated solution to pull columns of data out of a bunch of PDFs, apply artificial intelligence (AI) to figure out the semantics of the columns, and apply even more AI to see where the client companies might be mentioned by matching or near-matching or fuzzy-matching or substring-matching the subsidiary names. Right?

Wrong. Because, Allan says, all the data entry is done by his extended family in another country. Where $25 is a pretty good weekly salary, and American colloquial English is well understood.

Well that just turns the tradeoff on its head, now doesn’t it? You can spend $20,000 or more to get “artificial intelligence” into your business, or $25 a week for some real intelligence. What’s the payback time on that?

Sigh.

As a working person in a first-world country, part of me is… kind of pissed off. You know what I mean? The United States is a freaking expensive place to live, and we keep getting reminded that the world labor market is a world labor market even though we have to pay relatively high prices, in dollars, for everything from houses to medical care to education to transportation. It doesn’t seem fair that all kinds of skills get offshored for “competitive” reasons when so much of the cost differential comes down to foreign exchange rates and the cost of literally taking up space. (If this were a different blog, you’d see a few paragraphs about Henry George here. Short version: the “market” for land isn’t a market. It’s a racket that distorts all other markets.)

Nobody here can compete with $25 a week, no matter how hard they work and sacrifice. That’s so cheap even a computer can’t compete with it if you take into account the programming effort to automate the job.

But I digress.

Nonetheless, Allan’s outsourced the real intelligence because it’s more cost-effective than artificial intelligence, when it comes to parsing PDFs. That makes sense. What also makes sense is automating parts of the American-bound side of this business and giving the offshore workers a reliable way to manage the documents they’re working with.

I suppose one could run the numbers more rigorously than this, but a simplified analysis suggests that it’s rarely a good deal to invest much cash into technology when you can easily hire more actual people to do the job in a cost-effective way. Sometimes the low-tech solution is the easiest and best solution.

 

1 thought on “Is it worth it?”

  1. Hi Mark, I believe in economics this is referred to as the “margin of diminishing returns.”
    My 16-old is calculating “asymptotes” in his Algebra II class and the asymptote point is where you stop putting time and resources into a task.

    In many cases it’s probably not cost-effective to try to calculate a precise point of diminishing returns. You’re probably better off making judgement call based on how frustrated you’re feeling.

    I love the opportunity to flaunt my geekiness. Thank you!

Leave a Reply

Your email address will not be published. Required fields are marked *