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The short answer to this complex question is - Yes, outsourcing reduces the overall costs and risks.

This should be viewed in conjunction with the other aspects of the complete outsourcing process. The over all costs involve

1. Cost of finding a reliable outsourcing partner

2. Cost of training the staff for outsourced services

3. Cost of managing the outsourcing process

4. Cost of retaining the staff and maintaining the quality service

5. Cost of transferring dependency on the outsourcing partner

The basic fundamental reason that people look for outsourcing partners is driven by the cost effectiveness of the outsourcing vs in-house staff. The companies some times don't have the bandwidth to ramp-up soon enough to server their customers, and they look for outside service providers to help in meeting that demand.

In either situation, the "cost" generally reduces by 30-50% if the outsourcing partner is reliable and flexible to adapt to the changes in business. Our experience has been that companies often overlook the importance of reliability' and total long-term' costs of outsourcing while selecting an outsourcing partner.

Yes, the short-term' and long-term' costs could be reduced significantly, however, total long-term cost can only be reduced if you select a reliable outsourcing partner.

Hytech Professionals offers a wide range of software development and outsourcing services with the goal to become your long-term partner.

Vishal Gupta, Technology Expert in Java/J2EE/Struts, Microsoft .Net, C#, VC++, XML at Hytech Professionals.
Hytech Professionals (http://www.hytechpro.com) is a US Based Software Outsourcing Company with a supporting development office in India. Our expertise include .Net, C#, C/C++, Java/J2EE, JSP, ASP, XML, Servlets...and many other solutions. We are currently providing services to the companies in the US, Germany, France and Australia.