Most companies choose to lower cost in their service areas by using labor arbitrage and outsourcing and, in doing so, save an average of 20%. An alternative approach is to increase productivity; recently, some firms achieved 100-200% improvement in areas such as applications development and maintenance and other service areas. Clearly the potential offered by productivity improvements dwarfs the labor arbitrage route. So, why haven’t more companies focused on the productivity method and emphasized it over the outsourcing or labor arbitrage route?
Read more in my blog on Forbes