BusinessWeek The Changing Face of Offshore Programming

" After nine months of exposure to the overseas outsourcing market, I'm ready to give an update on the realities of outsourcing for small businesses. This is an emotionally charged issue for a lot of people in the U.S., so let me start by saying up front that the results are mixed. Like a lot of larger businesses, I've discovered a number of hidden risks and costs. While I don't think those issues will end the trend of sending jobs to cheaper labor markets, I do think the wholesale enthusiasm for outsourcing overseas is quickly waning."

redux [12.17.03]
Salon Moving to India is not a luxury. It is a necessity

"Chiruvolu has jumped headfirst into the fray. In March 2003, he wrote a column for Venture Capital Journal with the provocative title "Tech Startups Should Be Entirely Built in Asia." But then, in November 2003, after his firm and its start-ups gained more experience in India, he wrote another column that toned down his previous proclamation, headlined "About that India Recommendation ... Ahem ... It's a Lot Tougher Than Expected.""

""I have a lot of nationalistic pride, but it's bogus to say I will only hire Americans. It's hypocrisy." He told Salon why outsourcing is harder than it looks on paper, but becoming essential for new companies that aim to compete in a global marketplace."

redux [11.20.03]
Seattle Post-Intelligencer Offshoring may be risky move

"U.S. companies sending information-technology work overseas merely to cut salary costs may find their savings are either disappointing or short-lived.

The reason is that the unexpected costs of moving IT jobs to India and China, including skyrocketing salaries, are changing the financial equation of offshoring just as U.S. executives are rushing to adopt the practice."

News.Com Outsourcing not always a money saver

"Nearly 20 percent of companies that farmed out IT work did not achieve any cost reductions, while 9.2 percent experienced an increase in costs, according to a survey by people3, a Gartner company."

""There's an assumption by many companies that they can save a large percentage of their budgets by outsourcing some or all of their IT capabilities, however the true savings are not always as promising as one would expect," Lily Mok, a consultant at people3, said in a statement. "Many companies often neglect to factor in all costs associated with managing the outsourcing engagements, which average 4.5 percent of the total contract value and can be as high as 15 percent.""

Businessweek The Hidden Costs of IT Outsourcing

"On paper, it looks extremely attractive. A Russian programmer charges 80% less than an American. But when you parse it all out, the total cost of offshoring a given IT job is generally comparable to getting the work done domestically, says Tom Weakland, a partner at management consultancy DiamondCluster. It's just that few companies are aware of these real costs. "Most companies can't accurately measure their productivity and costs prior to and after outsourcing," says Weakland. "Most look just at wages.""

Network Computing How Offshore Outsourcing Failed Us

"Another lesson we learned the hard way is that fixed-bid offshore projects tend to misalign the vendor's interests with ours by placing undue emphasis on cost and time line while sacrificing quality and customer focus. Because we care about what the code looks like (this vendor's on-site liaison and account executive admitted to me that they do much better with fixed-bid projects when the customer doesn't inspect their code), we would have been better off using a time and materials arrangement, which would have given us more control over every part of the process."

redux [10.23.03]
Wired News The Case for Coolie Labor

"In this way, offshoring, far from being bad for the United States, creates net value for the economy. It directly recaptures 67 cents of every dollar of spending that goes abroad and indirectly might capture an additional 45 to 47 cents--producing a net gain of 12 cents to 14 cents for every dollar of costs moved offshore.

The total possible wealth creation does not, of course, ease the plight of people who lose their jobs or find lower-wage ones."

redux [07.17.03]
ZDNet India group: Outsourcing saves U.S. jobs

"Citing statistics from market research firms such as McKinsey, the body said the United States stands to save over $300 billion over the next six years by shifting some business operations overseas."

""US banks, financial services and insurance companies have saved $6 billion to $8 billion in the past four years owing to IT outsourcing to India," Nasscom claimed. "Helped by these savings, companies have prevented layoffs and instead added 125,000 more jobs.""