outsourcing costs

The Revisionist National Income And Product Accounts

The Bureau of Economic Analysis has revised the National Income and Product Accounts all the way back to 1928.  With the release of Q2 GDP, Gross Domestic Product magically added $559.8 billion to 2012 GDP in current dollars.  Additionally the chained dollar base year was changed from 2005 to 2009, a very funky year where some deflation from 2008 was still present.

Study Says Outsourcing Not Big Savings

There is a new study on offshore outsourcing I.T. contracts which says instead of saving money by labor arbitraging workers, the costs can actually increase by 20%.

While staff costs may be 40 percent lower in offshore locations, Compass research found these savings were undermined by a 60 percent drop in productivity in operations where the full lifecycle of application development has been outsourced.

"This means that the decision to migrate development, when you include additional management control, increased infrastructure spend, employee attrition, language, and cultural issues, can end up costing up to 20 percent more than current in-house operations," said the consultant group.

PC World: