Risk Effect on Offshore Systems Development Project Cost

Abstract

Organizations frequently consider offshore systems development in the belief that projects can be completed for lower cost.  While prices quoted by offshore vendors are often very appealing when compared with domestic vendors, additional risks must be considered when looking into offshore systems development.  These risks typically take the form of intangible and indirect project costs which add to the total cost of the delivered system.  This paper describes and classifies these risks, which fall into three primary categories of security risks, legal risks, and general risks.  Suggestions for incorporating these intangible and indirect costs into the decision making process, and their effects on total project costs, are offered for the offshore v. domestic vendor selection process.