The cost savings from offshoring according to numerous reports could be anywhere between 10% and 70%. Only in the last one year, the early adaptors of offshoring are starting to look at the actual cost savings achieved by their offshoring efforts. The results have not come out yet, but there are clear indicators that the most critical factor that influences the cost savings is the productivity of the offshore teams and not the differential in the labor rates between different countries.
During our various client engagements and multiple research projects on offshore outsourcing,we have noticed that there is a direct relationship between the productivity of the offshore team and the level of ownership given to the offshore team. The higher the ownership, the better is the productivity of the team. On further research, we discovered the key advantages of higher offshore ownership and also the different constraints on the parent organization to provide more control and ownership to the offshore team.
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