Many companies today are evaluating the prospect of significantly decreasing costs of IT, BPO, and related services through offshoring. In order to maximize the savings potential throughout the offshoring lifecycle, companies need to understand and manage the entire range of direct costs, indirect business changes, and potential risks for offshore sourcing. Without a comprehensive sourcing plan, results of a transaction can vary greatly -- from one that maximizes potential value to one that incurs value destruction. In this article, neoIT discusses these risks and costs in what we define as the Total Cost of Offshoring.

A dizzying array of factors - both internal and external - contributes to the success or failure of sourcing transactions. Ross Research says one of the most essential ingredients in a recipe for outsourcing success is utilization of an external sourcing advisor throughout the entire process. While sourcing advisors contribute significant value in many aspects of outsourcing transactions, buyers found they were most valuable in helping them save money, secure better contractual terms, reduce time-to-contract signing, and instill disciplined processes.