The Cost of Bureaucracy
Every company of significant size that we work with has a developed a certain amount of red tape that needs to be waded through to complete a project. The amount varies by organization but often doing the same job for a company with hundreds of employees costs us 4 or 5 times as much as it would to do the same job for a company with 10 employees.
These larger organizations have over time developed rules, regulations, and committees to handle the interaction with outside projects. Often these rules and regulations can cause a serious barrier to entry for service providers considering making a bid for the project. Those providers that do bid will bid at a premium to cover the added costs associated with working through the bureaucracy of the organization.
Here is an interesting article discussing the cost of bureaucracy in terms of software. Check it out and let me know your thoughts on the topic: http://www.paulgraham.com/artistsship.html
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