Over the next two years businesses will spend over $50 billion on offshore and near-shore outsourcing.
Despite the growth of this industry, however, a surprising number of companies entering into such contracts are not only not reaping the type of cost savings they anticipated, but are often losing money through outsourcing contracts.
According to a report by consulting firm Gartner, the failure of such contracts is typically due to some rather predictable causes. Among these are unrealized cost savings because companies fail to account for hidden expenses such as infrastructure, training, and travel costs that would not be as high if the work were kept in house. Additionally, companies often fail to account for the effectiveness of in-house domestic workers. They assume, rather naively that outsourced workers will be per capita as efficient as domestic workers, an assumption which typically is not true. The work also outlines an additional three components often overlooked by those entereing into an outsourcing contract


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Read More: Gartner: Five reasons why offshore deals go bust