Outsourcing in general, and software outsourcing in particular, has accumulated so many myths and legends in such a small time that I can only compare it with stories about UFO's. Those myths mutate, and change colour, and sometimes even pass as best practices.
I am not pretending to know all of them, however after working in the industry for many years I have come across dozens of them and even (and I’m not proud of this one) most likely did participate in creation of at least a couple.
Here is a small and humble attempt at redemption; I hope you will read this with your sense of humour switched on.
Myth 1. Offshore costs are so low you save 80%.
If you look at pure cost per hour, then this is probably the number you will see on your calculator. However, you should be prepared to find out that when you add the cost of management, your time to monitor the process, and the fact that cheapest developers rarely are the best ones, you will save 25-45%. This is still a very good number, mind you.
Myth 2. Offshore staff has no life and is grateful for any work.
Do you know the main problem that software development companies face every day? It is making sure that good developers consider you as 'the company to work for' and queue up at your HR department doors. Senior people need challenging work and will get bored quickly at routine staff. Thus, you need to balance and mix different people in project teams, and monitor psychological health in them, and do hundreds of other things to make sure that the talent feels appreciated and welcome in your office. You will be rewarded, trust me.
Myth 3. There is a development process that will guarantee results independent of people
No comments, really.
Myth 4. Developers will stay on a project forever
Unless the project is constantly growing and presenting everyone with new exciting challenges, they will not. Those people have careers, too.
Myth 5. Outsourcing can work without proper IT management in-house
Maybe it will, maybe it won't, you will only find out in the end, and it might be a tad too expensive.
Myth 6. There is a way to precisely estimate a large project upfront
I can only give one argument against this one, but I think it is a killer one. Here goes: If there were, would so many methods exist?
Myth 7. Developers can be judged by their CV
I have seen brilliant developers with only 2 years experience. A CV is only a set of metrics; if you really want to measure the level of a developer you should interview them, or use benchmarking mechanisms such as brainbench, for example.
Myth 8. RFIs and RFPs are a good way to get to know vendors
Do you really, really believe that people filling the RFI are indeed the people who will be working on your project?
Myth 9. Volume discounts are good for bottom line
It is an abc of economy I am afraid, but low margin makes vendor assign poor staff.
Myth 10. Give your vendor a long term commitment and they will treat you as a partner
Too much of a good thing is not always good. Keep your options open.