Outsourcing only saves 10-20%

[Lao Tzu]

http://story.news.yahoo.com/news?tmpl=story&u=/nm/20040326/bs_nm/tech_outsourcing_survey_dc_2

But companies have lost the illusion of dramatic cost savings from outsourcing, the survey said, because managing far-flung international operations can be costly and difficult. They expect outsourcing to save only 10 percent to 20 percent of their costs, down sharply from 50 percent two years ago.


Jesus. what happened to all those 'computer programmers working for 5k instead of 50k in india' stories?

 

[MattTheSkywalker]

Rates go up, supply and demand. Indians can charge more.
Mistakes have to be debugged which is time and resource intensive.

Getting your business outsourced has high startup costs.


This is because silly companies outsourced as a cost saver not a quality improver.

Silly people don't understand that outsourcing is a two step process. And that's OK, it makes our business enormously profitable woo hoo.

 

[Razorguns]

even 20% on a million dollar budget is huge. That's $200,000 you can spend on marketing, xmas parties, ceo bonus.

Don't forget the TAXES and HEALTH BENEFITS you don't have to pay employees. That's 25-40% right there that gets actually used for a service. Not just handed to the government.

don't forget. sometimes these numbers are skewed when you realize the source it came from. bias's kick in.

 

[manny78]

10-20% is still a good save. The shittiest part comes when you must fix all the mess created by the poor customer-service/limited capabilities of your outsourced staff. Very common with ITs.

 

[Razorguns]

the Indian IT has generated BILLIONS over the past few years, and as a result -- they've HIGHLY improved their training and resources. So in the early years, it was fraught with horrible shoddy work. But nowadays, they've actually gotten real damn good.

Better be whe you realize your'e replacing 1 american programmer with 3 indian ones. Even if all 3 have 33% of the skillset of the american - it still equals out.

 

[mordy]

10-20% is make or break right now in many areas of the tech market.

 

[mordy]

Oh, your analogy isn't that great. Writing a program is like making a soup, where engineers are ingreedients. You need so many quality ones to make a good soup, but the more you add the less it tastes like any particularl soup. more engineers doesn't always solve the problem.

 

[Razorguns]

software development these days is freakin' easy. you don't need rocket scientists to pull data from a database, put it up on a screen, and write it back. Most IT simple shit is what gets outsourced to India.

Trust me, Microsoft ain't outsourcing their windows development, or Xbox games development to the Philippines. NASA ain't outsourcing stuff anytime soon either.

 

[mordy]

software development these days is freakin' easy. you don't need rocket scientists to pull data from a database, put it up on a screen, and write it back. Most IT simple shit is what gets outsourced to India.

Well, your right, most any monkey can do Visual basic programming. But OS, Game, Embedded, Realtime, etc. type programming developement is not easy and is not going to be any time soon.

 

[Razorguns]

Easy rule is : When the software is your company's source of revenue -- trust me, you ain't outsourcing it to the lowest bidder to a bunch of people you don't know or can barely speak english.

 

[Testosterone boy]

Considering that ROI (return on investment) is around 10% if they are lucky.............10-20% is HUGE!!!