Guido started his talk by discussing some interesting statistics regarding the costs of traditional outsourcing. He compared the costs of doing the development locally using a "hyperproductive" agile projects verses standard outsourced waterfall development. In the standard model, when one outsources to a very distant company with a different culture and especially in a different timezone, one has to define exactly what one wants in very detailed specifications which lead directly to a waterfall approach.
His figures suggested that to get the return on investment that one needs for a successful outsourcing project over for example a two year period then the cost of the outsourced team must be about 10% of the alternate local agile team's costs, or even less. However, typically one finds that outsourced teams are about 30% of the cost of local teams. Therefore, he suggested, taking a project that could be done locally with an agile team and cost $2 million, if outsourced to a traditional waterfall team, then that same project would cost around $6 million. Very interesting figures indeed and something that I feel is right and empirically sounds right from my experience of customers who have outsources, however I want to do more research before accepting these figures.
Having laid out some of the well known problems of this traditional approach to distributed teams, especially across continents, he described how his project had addressed them.