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"So technically, he billed at $60 an hour"

I would say the cost goes way beyond that... the cost of doubling your time to market can be brutal. Not to mention extra strain on other resources (including your own time) having someone consistently missing deadlines.

One additional concern on this: the cost is hidden.

My current company sometimes misses this issue. The developer you've outsourced to can take 1.5x but if that slows down not just his items but dependent work, the cost can be very difficult to determine.

This is exactly why the outsourcing craze fizzled out for the most part. I remember when I was in school for CS in 2002/2003 there were people who would tell me that I was earning a useless degree, as all programming jobs would end up overseas.

The bottom line is that outsourcing looks great on paper but then just murders you with hidden costs. Delays to market, code maintainability, number of bugs, etc all go the wrong way once you outsource, but none of that is quantified on any C-level report.

Outsourcing has not fizzled out - I still see plenty of it ongoing

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