Transformed

CHAPTER 42Objections from Finance

Note: Much of this discussion is informed by chapter 24, “Partnering with Finance.”

“We need more flexibility in our spend levels. We want to be able to increase and decrease our technology investment depending on business results. Managing projects with outsourced vendors helps us do that.”

“We need to keep our costs down, and the loaded cost of an outsourced engineer is significantly less than the loaded cost of our own employees.”

If you look at the loaded cost on a per-engineer basis, then you will often find that outsourcing appears to be less expensive. But if you look at the loaded cost on a per–product team basis, the results reverse.

A smaller team of employees usually outperforms a significantly larger team of outsourced staff. This is not a claim about the relative merits of the people involved. It is a consequence of the role and working relationship.

And if you look not at projects but at achieving business outcomes, outsourcing is dramatically more expensive. In fact, most outsourcing firms refuse to even sign up for outcomes.

Earlier we talked about there being two sources of value once you build something. There is the thing that you built, and there is the learning that accrues from building that thing. When the people are constantly changing and not contributing at more than an order-taker level, you do not get the value from learning you depend on.

There are some occasional situations where temporary staff can make sense, ...