A Tale of Two Shores

The best way to illustrate the difference in Total Cost of Engagement (TCE) is with an example. In this case, a California-based company needs to create a new product, but the existing product still needs enhancements and on-going support. The company simply cannot afford to double the team of 16 engineers in the US, nor can they afford not to develop the new product.

The decision is then made to outsource the on-going development and maintenance of the existing product to a less expensive locale. For lack of options, India is the first location investigated, but the responsible manager decides to investigate other locales closer to home.

Much to everybody’s surprise, the conclusion of all the research and comparison is that doing the work in Mexico is less expensive, and more effective, than doing it in India.

Below, the numbers tell the rest of the story.

The Scenario

• US-Based Team Costs
• Offshore- and Nearshore-Based Costs
• The Hidden Differences
• The Results
• The Model Behind the Numbers