The Illusion of Cost-Saving with Offshoring — and Experts Layoff
Last Updated on 9 May 2025 at 19:24
Autumn — a season of harvests and beautiful colourings but also the period when corporate overlords sharpen their pencils and their knives. Budgets are drawn, and so are the battle lines. Employees, those foot soldiers of capitalism, tremble as autumn leaves in the wind. Some fall, and not gently.
The first to go ?
Salaries, particularly those of seasoned experts with domain-specific knowledge.
Why pay $70/hour when you can offshore for $70/day ?
So here we have the usual replacement by someone — or several someone — half a world away, in a very different timezone, and at a tenth of the cost.
The C-level execs are enamoured with this idea, thinking they can always “rehire” later. When there is a customer crisis, the $70 hourly rate for an onshore expert is seen as a pocket change against the billions of annual revenue and profits.
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The Offshoring Illusion
On paper, it’s a tempting proposition. The numbers look good. In reality, it’s corporate hara-kiri.
In specialized sectors like FinTech, MedTech, or MarTech, expertise is a rare asset, not a basic commodity. Did you know that it takes 20 to 30 years to bring a new tulip to market ? The same goes for specific expertise and skills.
Corporations have this illusion of an “abundance of choice” and thousands of “talents” on the market — yet constantly starving for expertise skills.
Corporations forget that the true metric in offshoring is not the hourly cost but productivity, plus additional management team expenses and loss of quality.
Consider a multinational offshoring the development of a complex financial product. An onshore expert might take 15 minutes and $18 to fix an issue.
An offshore resource ? Two days with several dozens of e-mail messages that are candidly trying to give this assignment to someone else. Plus, another four weeks of work to deliver a subpar solution and create other problems.
Sure, this outsourced resource might cost $70 a day, but over 12 days, that’s 840.- in direct costs alone.
The onshore is supposed to be much more expensive but is only 2% of the offshoring costs.
What we often witness in corporate offshoring is incompetence on steroids and sometimes, corruption — it’s about doing less with more.
The fallacy that offshoring always results in cost savings is just that — a fallacy because offshoring doesn’t always translate to cost-saving; it often translates to higher costs, multiple cascading errors, lack of expertise, and livid customers who are paying the same price for a degraded service.
The above calculus and situations are not exceptions — and companies that have experienced such misadventures are pivoting and pulling back offshore investments to reinvest in onshore or exiting such markets altogether. Indeed, current pricing and cowboy markets cannot create viable businesses.
In practice, offshore vendors are frequently oversold, their capabilities inflated, while onshore directors might find their pockets filled up for turning a blind eye. In a corporate setting, everyone knows it, but nobody speaks up or steps up.
With offshoring, we often have a toxic cocktail of inflated costs, clumsy projects and program management, while those directors are career wiser at the same time. And self-proclaimed experts.
In the corporate echo chamber, the graveyard of failed offshoring projects goes unnoticed — until the company goes bankrupt in less than 48 hours, or survives a turnaround, or is sold to a new pragmatic leadership — whatever arrives first.
The Hidden Costs of Offshoring and Expertise Loss
Offshore teams are perceived as low-cost replacements.
They’re young, they’re eager, they’re cheap, and they often live in countries where literally, there is a shit cow in the middle of the home office.
But they also very often lie about their skills only to get “any” job, inexperienced, ignorant of quality, management, and ethics standards.
Instead of focusing on New Product Development (NPD) or running the business (RTB) as per the business strategy, those offshore teams became stuck firefighting new problems … they created.
In offshoring, the final customer is often seen as an “enemy” to send far-far-away with copy-paste messages. Teams and individuals morph into direct fights whose purpose is to “keep their jobs“. And the customer becomes a collateral loss.
Welcome to a new operating model of ETF — extinguish the fire.
Sure, offshore people might “learn in time”, but big “ifs” come into play: if they don’t leave for better pay, if they’re well trained first, if they aren’t treated as cheap and expendable, and if the knowledge transfer isn’t a dumpster fire.
Expertise is not a commodity you can pass along — and the reality is not a Matrix movie where a top neurosurgeon can download brain surgery skills into a debutante nurse.
When a company lays off experts who’ve been in the trenches for decades, they are not just cutting costs — they are amputating institutional memory, strong hands-on skill sets, trust that took years to build, and powerful client relationships. Those experts understand the nuances and the quirks of the products that no one else does.
These elements are not variables that can be easily quantified on a balance sheet, but their absence reverberates for a long time. Especially when those people are active in highly regulated industries such as banks, healthcare, or dealing with data.
The Corporate Circus
The latest corporate strategy is to lay off experts just to beautify the stock options price for the next quarter — while attempting to rehire them at a lower cost during the next period. Another strategy is to set the stage for business acquisition and decorate short-term financials for a new buyer or investor.
It’s such a corporate circus manoeuvre to win less than a half-million in a billion exercise.
What’s missing from the equation ?
The social costs, the economic ripple effects, and the intangible yet palpable impact on employee morale and corporate culture. This is how those short-sighted companies are handing over their competitive edge on a silver platter.
Good luck with attracting new “talents” if the existing ones are just laid off for a quarterly budgetary exercise.
But wait, there is more. Customer attrition starts to creep in because they are sent into a perpetual state of crisis management.
Why ?
The offshore teams are often too busy playing whack-a-mole with issues they barely understand. Once an innovator, the company becomes reactive rather than proactive. And customers, who were once the advocates are now starting to shop around while the NPS (net promoter score) goes down the ladder from promoter to detractor.
This situation is even worse in the B2C arena.
What to Do ?
Short-term cost-cutting measures, when the company is highly profitable with billions in profits, are plain useless.
- Re-evaluate the cost-benefit analysis by factoring in the medium and long-term losses, such as customer attrition and brand erosion. The ROI on a well-trained, loyal, expert employee far outweighs the cost of recruitment, onboarding, training, and management of offshore teams.
- Skip the layoffs when there is no such financial need and focus on operating expenses instead. Think of luxury utilities and services when there is no real business need, reduce futile expenses, and cut the unproductivity of endless business subscriptions that no one remembers about.
- Ditch also the dozens of “talent scouts teams” searching only for competent keywords straight out from ChatGPT. Very often, talents are already on the payroll. Unlock their potential instead.
- Besides, the price tag for expertise is similar all over the world. The antiquated notion of “local salary for local talent” is obsolete.
The need of complex skills combinations has levelled the playing field. Expertise now commands an universal price tag.
5. Also, change the direction and focus on the right management and KPIs that matter instead. Quite often, mid-level managers are responsible for implementing corporate strategies — and they have an imperative to ensure smooth daily operations. Mid-level management’s failure to grasp the long-term fallout of losing experts is not just incompetence or oversight but a lack of leadership that perfectly mirrors the myopia at the top. That is why successful turnaround strategies also focus on mid-level layers and their skills assessment.
There is a difference between “cost optimization” and “cost reductions” and “following the strategy” particularly when it is about loss of expertise.
6. If the company has no other financial choice and its existence is at stake, take a look at “who” is really laid off ? Is there another choice and alternative solutions ? This approach includes a deep dive into the potential impact on operations, processes, customer satisfaction, and reputational damages.
Rethinking Offshoring Strategies
The long-term impact on productivity, increased operational issues, lower customer satisfaction, bad reputation, and macro-economy is always higher than “just” a couple of “experts’ layoffs” — or any firings for that matter.
After all, such billionaire corporations really need a third rebranding to disguise a tarnished reputation ? No — it’s pointless.
The erosion of the brand and the loss of trust have a tangible impact on every company. Neglect a product long enough, and alternatives will surface. But such ideas about the market that will magically correct these issues are a fairy tale.
Why ?
Because the market is neither fast nor wise enough to self-correct. Very often, customers have no viable choices; a challenger of existing companies requires a huge amount of money to invest, especially in complex industries, and the boycott is ineffective.
Besides, monopolist companies can sometimes play the long game and wait until the “expert” is hungry — especially those who are too old for other companies and, at the same time, too young to retire.
Sometimes, experts leave the industry or contribute to competitors, and such risks and failures are well-known to corporate leaders and investors alike. They’re playing with fire, not because they’re smart, but because they think they’re unreachable — and they are correct on this point.
The same “wait-games-and-risk-strategies” go for customers, too. At some point, customers will purchase what they need, even if the quality is decreasing. Competitors are also decreasing the quality.
At the same time, under the flag of “economic freedom“, more and more billionaire corporations are increasing their profits with a vicious lack of accountability — while transferring their risks and costs to the state.
Onshore unemployment ? Real numbers are skyrocketing. Companies of all sizes continue to play the offshoring game, pretending they can’t find local expertise.
What’s needed is robust social governance, where companies with billions in profits must pay in full for the “forced sabbatical” of their people.
It is cheaper than creating new “social” taxes on the existing workforce of other companies — and also much smarter than importing millions of immigrants into small territories.
Such an approach is not just logical — it’s also economically sound.
Elena Debbaut is a strategic execution expert to boards and executive teams. She leads and advises on complex transformations when governance barriers, internal politics, or structural fragmentation prevent organizations from executing critical decisions.
Specialities:
• governance-constrained transformation
• operational restructuring
• strategic recovery & execution