ODC Hidden Fees

The conference call I had with my ex-partner in Noida, India was quite unusual and it’s worth mentioning. Two PMs, AM and I were going in circles for 30 mins in attempt to solve a $10,000 conundrum. About a year ago we purchased 3 servers for our team in India, at roughly $3K a piece. The relationship came to an abrupt end due to major reshuffle of the road map on our side a few months ago.  Naturally we wanted to get our servers back in a form of iron or cash.  That turned out to be unreasonably costly.

As it turned the servers were in some special industrial zone and to get them out of the zone we would have to pay a de-bonding fee to India customs.  The fee at this point would be about 75% of the price of the new server, supposedly if I would wait for about 5-6 years the fee would be reduced to almost zero.   But today to get the servers to San Francisco between shipping and customs I would have to pay the price of new server for one year old box I already “own”.  I could not even donate the boxes to any of my friends in Noida – they would have to pay de-bonding fee to take the servers off the vendor’s premises.  Talk about hidden fees and small print!

That would be my latest lesson learned on ODC hidden fees.  There are a plenty of others you need to be on look out for when negotiating a contract with an offshore vendor.   Here are just a few I came across over the years:

  • Telecommunication, a variety of expenses associated with connectivity and other telecom needs
  • Setup costs, including workstations and other expenses
  • Administration fees, a bizarre combination of fees including janitorial, rent, etc.
  • Recruiting fees in a wide variety of contracting clauses
  • SW Licenses, sometimes for just “non-standard” components often for all
  • Termination fees, a variety of clauses preventing from or penalizing you for canceling agreement
  • Variety of financial fees, such as late payment fees with percentage higher that you would see from credit card vendors

What is important here is of course not the fairness of the fees.   You need to inspect every inch of the contract, every caveat and clause to avoid surprises and control your total cost of outsourcing.  Hopefully that will save you from serious blunders and oversights like mine.

And just FYI, thanks to Chris Balmain, here is a link for de-bonding procedures http://india.ewasteguide.info/files/Debonding_Summary-Report_2007.pdf

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