Introducing 3 main outsourcing strategies and cost comparison

Author: 
Jim Sun

There are 3 main types of IT outsourcing models that are often used nowadays: on-shore outsourcing, near-shore outsourcing and off-shore outsourcing. The meaning of each one is obvious according to the names, and the off-shore outsourcing is the most popular one. Basically, there are a lot of off-shore outsourcing resources in India and Europe and other parts of Asia, and the rates to hire off-shore resources is quite competitive in the past several decades. You can find the solution for your needs from India 10 times cheaper than those in US several years ago, although the labor cost in India is increasing, off-shore outsourcing is still a good choice.

On-shore outsourcing is not a new word, although it sounds weird. And because of the high cost of hiring resources in US compared with hiring off-shore resources from India, on-shore outsourcing is not widely used. However, on-shore outsourcing enables the client to have direct communication with their consultants with no time and geographical gaps. And the price could be not that high as it usually be for on-shore outsourcing though, some of the consultants may get tired of travelling and willing to compromise on the rate. And the rate for those young consultants is also a lot cheaper than regular prices.

Below is the price comparison among these 3 types of outsourcing strategies:

  • Off-shore outsourcing: the cost for off-shore outsourcing is increasing, the labor cost in Asia and Europe has increased a lot in the past decade, and the communication could also be a problem for off-shore outsourcing. However, the low cost is still a factor that those Indian outsourcing companies are still developing. After all, if they can get your work done with half of the cost saved, why do not you try it?
  • Near-shore outsourcing: the consultant may need to work remotely or travel every week, in this case the cost may be a little higher, it is also a little harder to manage your near-shore outsourcing team.
  • On-shore outsourcing: the cost for on-shore consultants can be lower than market price, and it is also lower than hiring internal employees to your organization, because you can save benefits for consultants. And basically the client can get a lot more flexibilities than hiring a regular employee. And this is also a reason that on-shore consultants are getting hotter and hotter.

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    Looking at just at the pricing does not represent the full picture of IT outsourcing. Many times communication is the key to stay on track and on budget while performing a project. As a proficient SAP BW/BO consulting firm, ATCG Solutions provides you in depths analysis and support for your IT requirements. If you want to learn more about our service and IT outsourcing, please click the button below.

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