By Tarun George
“So really, when you get down to it, what is the actual cost of outsourcing?” The fact is that many buyers perform price calculations based on easy and quantifiable metrics that yield pretty graphs, but don’t give the total cost picture of what they’re getting into. And so they often receive nasty surprises six months into their outsourced project, when the numbers add up to more than they budgeted for.
If you’re a buyer who thinks your sourcing decisions should be based on the hourly wage rate, we’re here to tell you different. Labor arbitrage is an important component, but not the only component. Here are some of the main factors that contribute to the Total Cost of Outsourcing.
Is the True Measure of Outsourcing’s Value Really About Productivity?
February 19th, 2010By Kirk Laughlin
When companies outsource work to another country there is an implicit understanding that total delivery costs will be lower than they are in the host country. But a much more interesting question is: What is the value of my spend? Or, in other words, what is the nearshore or offshore provider yielding in work produced over a specified period?
For companies, especially those that are relying on outsourcing providers to supply IT services like software development and testing, it’s a crucial question. This was one of the key topics that came up in a call I had today with Jeremy Beck, VP of Business Development at Scio Consulting, a specialty product development and IT services firm, specializing in software-as-a-service applications, with an development facility in Morelia, Mexico. (Based on Jeremy’s description, Morelia definitely qualifies as an up-and-coming …
