What's The Real Cost of Your Offshore Operations?

Can the cost savings from offshore development offset the inevitable loss in productivity? Not entirely, says John Parkinson. But practice makes perfect—or at least better.
Last week in this space I looked at the loss of productivity that occurs when the members of a software engineering team aren't fully co-located and immediately accessible to each other all the time. If all the dispersed resources cost the same as local resources, it simply wouldn't be worth the dispersion (except for situations when an essential resource is in the "wrong" place and can't move).

Even if you could completely overcome the productivity loss with infrastructure investments (you can't, but you can come close) the additional cost would be significant.

Unfortunately, global sourcing means that some of those dispersed resources come at a lot lower cost than the local resources. So we have to ask ourselves if the (real) loss in productivity, plus the (real) additional cost of communication and collaboration, is offset by these lower costs.

To answer this requires us to look a lot deeper at the changing performance you get over time as dispersed teams get used to working together and the absolute difference in cost and productivity that occurs.

Click here to download a PDF of our story mapping trends in outsourcing and a map of global outsourcing hot spots.

This article was originally published on 02-08-2006
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