The Cost of Risk in Offshore Systems Development

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, there are additional risks that must be considered when looking to offshore systems development. These risks typically take the form of intangible and indirect project costs. 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 for offshore v. domestic vendor selection are offered.