There is a new study on offshore outsourcing I.T. contracts which says instead of saving money by labor arbitraging workers, the costs can actually increase by 20%.
While staff costs may be 40 percent lower in offshore locations, Compass research found these savings were undermined by a 60 percent drop in productivity in operations where the full lifecycle of application development has been outsourced.
"This means that the decision to migrate development, when you include additional management control, increased infrastructure spend, employee attrition, language, and cultural issues, can end up costing up to 20 percent more than current in-house operations," said the consultant group.
Staff attrition related to moving application development to offshore locations, particularly the loss of functional expertise, will have having a "negative effect" on productivity.
In other words, throwing away highly skilled and experienced tech people has a tendency to return crap on software development and I.T. services.
So, why, one must ask, is the offshore outsourcing of I.T. as well as all Science, Engineering, Technology and Mathematics so prevalent?
Could it be sales, marketing, who you know and plain ole payola?