Comparing Outsourcing and Offshoring Rates in 2001

It’s always tricky to compare outsourcing rates because so much depends on the individual contracts. But we asked one prominent outsourcing customer (who prefers to remain anonymous) to share the rates he pays for basic data processing in-house and offshore:

In-house: $50 to $85 per hour (including benefits)

Offshore: $17 to $30 per hour

The American Indian vendor rates fit somewhere in the middle. Because of the low cost of living on reservations, these vendors can afford to pay lower wages than many U.S. companies?but not the $8,000 to $12,000 per year that some offshore providers pay programmers.

The real value offered by the American Indian companies is that they can work cheaper than in-house staff and they work onshore, avoiding some of the language, management and security hurdles that have undermined some of the cost savings of offshore projects.