Out Goes Development, In Come the Risks

Outsourcing development – particularly software programming and information-technology (IT) design, and particularly to countries like India and China – has become institutionalized. Once-loud voices decrying "Benedict Arnold CEOs" have grown hoarse, and lucrative consulting industries now organize and match offshore development teams with growing legions of seekers. Furthermore, offshore activity appears poised to increase. In fact, IDC Research predicts that offshore spending will quadruple by 2007, to $46 billion.

Still, the trend has led to some high-profile instances of buyer’s remorse. Most of these involved cost overruns and quality disappointments, the result of poor management in the home country or – depending who’s telling the story – inadequate technical skills overseas. Whatever the cause, it is clear that low wages do not inevitably translate into lower project cost.