The offshore outsourcing mega-trend is powered by several underlying assumptions: some true and some false. The common assumptions and hypotheses you see behind offshoring decisions follow.

Survival and Competition
The assumption: If you don't offshore, you won't survive. If General Electric, IBM, or ADP achieves a 20% lower cost advantage over its competition due to offshore outsourcing, it puts tremendous pressure on its competitors to either follow its lead or prepare to exit that business. Either you're going to cut costs or you're going to shut the company down.

The reality:Few companies have the executive leadership and the relentless commitment to take advantage of globalization.

Lower Cost
The assumption: By taking advantage of low-cost labor offshore, companies can substantially reduce their technology budgets and operating costs and realize vast savings.

The reality: Costs add up even when offshoring is done right. Many companies tend to send "trusted" employees to set up their operations abroad, and their compensation usually runs high. Then there's the price of frequent travel. And, ideally, offshore employees are brought to the United States for several months for extensive training in language and culture. In addition, labor costs in traditional outsourcing powerhouse locations such as Bangalore and Mumbai are escalating.

Quality and Best Practices
The assumption: Offshoring isn't about cost, it's about higher quality. Companies can immediately leapfrog from where they are today to become best-practice companies that have superior capabilities and processes.

The reality: Companies going offshore are often unhappy with the quality they receive initially. The expectation that processes will be the same or better as before they offshored is unrealistic.

Unresponsive Departments
The assumption: We've had some dramatic shifts in terms of the kinds of projects we're doing. Our IT department is unable to adjust.

The reality: Many IT projects are very complicated. The line of business often does not understand the complexity and assumes that the IT department is unresponsive.

Internal IT
The assumption: Our cost structure is too high to be competitive. We're not getting all the things done that we would like to get done in information technology.

The reality: Many IT projects are complex and costly. Organizations often supplement their internal IT departments with offshore staff resources to meet project demands.

The best case is that these assumptions hold. The worst case is that they don't. It is wise to remember the old adage about projects: they always take longer and cost more than you expect. Offshoring is no different.

It is the job of every manager to "look behind the obvious" and ask what the underlying logic, rationale, or assumptions are. Are they valid in the context of your business?