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Of companies outsourcing, 44% reported increased productivity, 38% realized labor cost savings,
and 26% retained competitive position. 2
The most important reason cited for utilizing offshore outsourcing was reducing labor costs (29% of
respondents). 1
Of the companies outsourcing offshore, 61% reported that it allowed them to remain competitive,
54% reported a reduction in labor costs, and 36% benefited from increased labor pool skills. 3
In the end, outsourcing is all strategic—minimizing risk, sharing risk with a partner, and getting the
best return from the company‟s own resources.
Domestic versus Offshore Outsourcing
What are the pros and cons of the two alternatives? Clearly, cost is the main motivation for offshore
outsourcing. Labor costs in India are typically one-third U.S. labor costs. However, as demand has
increased, the cost of technical talent in India has as well. Though more expensive than before, Indian
labor cost is still dwarfed by that of U.S. talent. In addition, the time difference of approximately 9 to
12 hours offers the strategic advantage of 24-hour productivity.
For example, many hospitals in the United States do not staff their radiology departments at night to
read x-rays. Rather, because most radiological exams are now digital, the images are transmitted to
facilities in countries such as India, where they are read immediately. When the hospitals‟ radiologists
arrive in the morning, they verify the readings. IT maintenance can also now be scheduled during the
overnight with database maintenance and optimization performed remotely from offshore sites.