Offshoring Becomes Too Expensive

After offshoring and near-shoring, there is a new outsourcing trend: domestic outsourcing. For example, a company in California outsources work to a company in Indiana or Wisconsin. A New York Times article sheds some light on the reasons for domestic outsourcing.

First, agile development rules.

But today, companies in every industry need mobile apps and appealing websites, which can be made smarter with data and constantly updated. That software is best created by small, nimble teams, working closely with businesses and customers — not shipped to programmers half a world away.

Second, “rising labor costs abroad also make domestic sourcing more attractive”.

A decade ago […] an American software developer cost five to seven times as much as an Indian developer. Now […] the gap has shrunk to two times. The standard billing rate for [the] engineers [of the US company Rural Sourcing] is $60 to $70 an hour, compared with $30 to $35 in India […]

I think that domestic sourcing is a bigger trend, where work moves to the people and not the people to the work.

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