Gartner Group concluded in a recent study that the added hidden expenses of offshore software development adds significant costs to the low time and material rates quoted by offshore firms. These costs appear through additional project management needs, extra personnel, communications, travel costs, and other quantifiable expenses. In addition, the qualitative costs related to risk, complexity, potential time delays, infrastructure reliability, transfer of knowledge, team morale, intellectual property risks, and security are all factors that need to be included in an ROI calculation. The University of Southern California (USC) found that to calculate the costs of only three of these elements (productivity, communications, and quality) you need to add $4.52 for each $1.00 of quoted cost when computing the ROI. Yes, that is an increase of 452% for only 3 quantifiable components!