Analyze TCO to Make a Case for Onshore Sourcing

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Image courtesy: Pixabay

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Redding McLemore
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Hidden TCO Factors
Redding McLemore   1/29/2019 11:57:37 AM

Excellent article!  There are so many hidden costs to offshoring.  Often, the offshore supplier will bid the work very low so as to be very attractive, then make a profit by substituting components from lower quality suppliers.  They complain about the quality they receive but have not figured in the TCO of their own processes.    It is as if you are told everything you want to hear, and then everything changes once you leave.  These suppliers know you will probably not be back until next year so the risk is low.  To control the AVL and hidden outsourcing, there is an industry of independent auditors in popular offshoring countries whose job is simply to audit your suppliers to ensure they are building as contracted.     Of course, not every company is like this, and there are a multitude of factors behind the actions that the outsourcing companies make, from cultural to political to the maturity of private competition and ethics in their country. These make for a far more complex decision than simply landed cost.   

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