The Hidden Cost of Short-Term Outsourcing
Nikos Katsikanis - 10 September 2025
In my experience, short-term outsourcing can look great on a spreadsheet: cheaper contracts, quick savings, happy investors. But each time you take on a new vendor you invest in onboarding, lose relationship capital, add cultural friction, create time zone drag, and often damage local economies. I noticed these downsides before AI—and AI actually makes the case for keeping teams closer to home even stronger.
Why it breaks down
- Onboarding takes months. Engineers take real time to understand a complex codebase and its unwritten context. The longer they stay, the more valuable they become. Swapping vendors resets the learning curve again and again.
- Relationship capital gets wiped. Trust, shared norms, and team rhythm are assets. Replacing teams destroys that human capital and forces me to rebuild it from scratch.
- Cultural friction is real. Beyond language, my decision-making style, quality bar, and expectations often differ from a new team. Those micro-misalignments add latency to every project.
- Time zone differences create drag. A slim overlap window is not collaboration—it is a bottleneck. Async handoffs stretch simple tasks across days and sap my momentum.
Why public companies still chase it
In large, listed companies, I see employees reduced to line items. An "expensive" role gets benchmarked against a cheaper offshore alternative, and the bigger picture gets lost.
- Shareholders are too far from the people who do the work. There are often several layers from shareholders to non-C-level employees, losing any form of personal touch.
- Local economy loses out. Offshoring drains local tax bases and weakens communities. Over time, the very customers public companies rely on have less to spend on their own services.
AI changes the calculus
- Repetitive work is automatable. Tasks that once justified offshoring are increasingly handled by my AI agents and internal tooling. That reduces the labor-arbitrage advantage.
- Context becomes the moat. AI amplifies teams that hold deep product and domain context. Keeping talent close—on-site or nearshore—lets me integrate AI into workflows faster and safer.
- Nearshoring beats far-shoring. Working with teams in similar time zones and cultural proximity gives faster iteration cycles, tighter feedback loops, and fewer handoff losses.
I dug into how I pair these tools in Using Codex and GPT Together.
The long view
My spreadsheets make short-term outsourcing look cheap only if I ignore hidden costs: months of onboarding, erased trust, time zone latency, and community damage. With AI eroding the old offshoring rationale, the efficient play for me is to keep core teams close, invest in culture, and build durable relationship capital. That is where the long-term game plays out best.