Acism's Offshore Outsourcing Guide > Benefits of outsourcing

The advantages of outsourcing come primarily in:

The Price Advantage : In the US, a local contractor hired for software development would charge somewhere from $80 to $120 per hour, depending on the location and the exact stream. An equally skilled contractor at offshore will work for $20 an hour, thanks to the lower cost of living in India. The costs are reduced to one fifth! However, there are some inefficiencies in the process, and a reduction to one third of the overall cost is a more realistic target. Yet, it still means a saving of 66% which offers a great price advantage.

The Skill Advantage : Outsourcing is already a big trend. Not only the Indian outsourcing companies, the world leaders like Microsoft, Sun, IBM to name a few – all have huge offices in India. A career in software development is a great career option for Indian students, and attracts the best of the lot. Secondly, a lot of information is available freely in today's Information age. Thirdly, In the last 15-20 years the Indian industry has acquired a great deal of maturity in doing the software development projects. Many have developed expertise in business verticals (which is another name for specific domains). When you start working with the right offshore partner, all this skill and expertise becomes available to you.

Reduction of Risk : You are not stuck with an inventory of resources which becomes a liability in the long run. The offshore vendor can instead take up that risk. Your offshore team can also scale up easily as per requirement without impacting the budget a lot.

Apart from the above mentioned reasons, companies in some places find working locally quite inefficient because of local labor problems or bureaucracy. Outsourcing is a boon for them.