In this paper, I will explore the hidden costs and risks of IT offshoring and how to manage those costs so that realistic expectations can be set. Establishing a baseline of such expectations will help companies understand and follow best practices in planning, executing, and managing the full offshore lifecycle. While details will vary with each project, offshore vendor, and company, these costs are seen across most offshore ventures and, if understood, will help explain why so many offshoring attempts fail, help IT managers and decision makers anticipate potential problems, and help CIOs more accurately predict cost savings.