The general publicity that large outsourcing firms from the Asian Pacific region is that they can reduce costs for software outsourcing projects with more than 50% from the normal expenses that a Western company should go through with an in-house development team. While this publicity is extremely vague and unfounded, there are some true facts about it and also some tricks that the outsourcing company should take into account.

First of all, one can not really expect such a good news, that of cost reduction by half, to come by for free. There are other costs that the outsourcing company has to be aware of. One of these are transaction costs. Such costs comprise a series of investments that have to be made before setting up the actual business. They manage the existent infrastructure, technical support for ensuring the full comprehension of the assignment and trainings. These are all necessary for long-term projects, when the outsourcing company is moving an entire branch of its business into an offshore location.

How the offshore location is another important issue. If the offshore outsourcing location suffers from corruption, the business will suffer, and while initial costs are low, more and more funds will be necessary in order to maintain a good level of product quality. If the offshore location is suffering from the financial crisis, costs are expected to grow because all the other expenses of that local company will grow: from electricity to office rent, salaries and others.

In Eastern Europe, Romania especially, economics stand on an upright curve. Because the economy of Romania, as those from other Eastern European countries from the former communist block, is still developing the financial crisis has not affected the economy at a deep level. Salaries here are still quite low, but Romania is part of the European Union, so financial stability is secured. The local labor pool offers a vast amount of highly skilled programmers, who do not require training or other transactional investments other than the actual payment, from the outsourcing firm. With the new economical background provided by the world financial crisis, each outsourcing location should be judged as a singular one, with unique development patterns. With the financial crisis, it is expected that previous large outsourcing destinations that depend to a great extent to Western investments to drop, and new nearshore outsourcing destinations like Eastern Europe, to meet the new demands and increase their market share.