The jury has been ‘in’ for a while with regards to whether the offshore experiment actually worked or not. Years ago, we heard from a senior IT executive that he had figured it out; had he included all the cost elements for his offshore projects, it cost more. A lot more.
He went back and burdened his offshore costs with actual management time to account for the extra oversight management that was required, along with the incremental time they had spent to ‘over spec’ the requirements so they could be understood, added in the extra time spent in QA compared to in-house projects, and realized that he was spending more to go offshore than to do his projects in his own shop.
And, he was paying the quality ‘price’ because what came back, always late and always over budget, barely resembled what he thought he asked for initially.
In fact, we were once retained by GreenPoint Mortgage to evaluate what had come back from offshore compared to their initial requirements to determine whether or not the deliverable could be salvaged. It had taken so long that no one remembered exactly what they asked for, and could not figure out what to do with what had been built. We saw this story play out over and over again in countless IT shops, only to be swept under the rug because the CFO was demanding lower rates, lower rates, LOWER RATES – at the expense of the overall costs to produce the software.
Another long time client told me that even if he KNEW that the overall cost would be three times more to do it offshore at $20 an hour than to do it in-house at his then-current shop rate of $70 an hour, he was compelled to go offshore by his CFO. That’s just plain wrong.