The Cost Issue in Outsourcing

Filed in archive Outsourcing Issues on September 24, 2007

The main reason why outsourcing was implemented in the first places was of course, for the cost-savings. Though that is the case, companies should still be cautious of the other expenses which could be actualized in outsourcing.

Some companies are surprised when they see additional expenses in outsourcing. They do not expect such cost because they view it as a "miracle" rather than a business strategy which would need time and money so that it would be effective and could gain more returns.

This article tackles this issue stating that:
"That's still substantial savings, to be sure. But it takes years of effort and a huge up-front investment. For many companies, it simply may not be worth it. "Someone working for $10,000 a year in Hyderabad can end up costing an American company four to eight times that amount," says Hank Zupnick, CIO of GE Real Estate. Yet all too often, companies do not make the outlays required to make offshore outsourcing work. And then they are shocked when they wind up not saving a nickel."

I think the bottom line here is that if you are outsourcing, be prepared and I mean really PREPARED.