Beyond the Invoice
To make an informed decision about IT outsourcing, US businesses need to look beyond the vendor’s quote and calculate the Total Cost of Ownership (TCO), comparing it to the cost of doing the work in-house.
TCO Factors for Outsourcing
- Vendor fees (hourly/fixed/monthly).
- Internal management time.
- Communication tools and infrastructure.
- Knowledge Transfer and training.
- Transition/setup costs.
- Travel costs.
- Potential rework/quality control costs.
- Legal and contract management fees.
TCO Factors for In-House
- Salaries and benefits.
- Recruitment and training.
- Hardware and software.
- Office space and utilities.
- Management overhead.
A comprehensive TCO analysis gives a truer picture of the potential savings (or lack thereof).
