Cost efficiency in global engineering projects.

A saving is meaningless without a baseline, and the baseline varies enormously. Measured against a London or Houston consultancy rate, an Indian engineering rate produces a dramatic percentage. Measured against an in-house team in a lower-cost European market, the same rate produces a modest one.

The first question to ask any provider is therefore not "what do you save" but "against what". A provider who cannot answer specifically is quoting a marketing number.

The more important distinction, and the one that actually determines whether an engagement saves money, is between hourly rate and cost per delivered output.

An engineer at 40% of the rate who takes 60% more hours has saved you very little. An engineer at 40% of the rate whose work requires two review cycles instead of one has saved you less than that, because your reviewer's time is expensive and your schedule is finite.

This is why the quality argument and the cost argument are not separate. They are the same argument.

Four categories are routinely omitted from offshore cost cases and routinely encountered in practice:

• Your management time. Somebody on your side directs, reviews and unblocks the offshore team. Industry practice suggests roughly one onshore coordinator per eight to twelve offshore engineers, varying with work complexity.
• Ramp-up. The first weeks are slower while standards and expectations settle. This is predictable and should be budgeted, not treated as a disappointment.
• Rework during establishment. Reducible with good governance. Never zero.
• Communication latency. Time-zone separation gives round-the-clock progress and costs response speed. Both are real; which dominates depends on the work.

Work requiring constant high-bandwidth interaction with your own engineers performs poorly offshore. So does work with very short turnaround, where latency dominates. So does genuinely novel work whose specification cannot be written down — because the whole model depends on being able to define the deliverable.

A provider who tells you this before the engagement rather than during it is worth more than one who does not.

If we were buying offshore engineering, we would ask four things: what baseline the savings figure is calculated against, what the expected rework rate is during establishment, how many onshore coordinator hours the provider expects us to spend, and which categories of our work they would advise against sending offshore.

The fourth question is the most revealing. A provider with no answer is selling capacity rather than judgement.