Cost Realism in Deploying Technologies for Development

In this paper, we present a simple costing model supported by three case studies to demonstrate the ways in which a technology intervention's ability to deliver cost savings through efficiency gains is conditional on the local economic environment. Examining a set of information collection and processing transaction tasks that are part of a microfinance institution's workflow, we find that technology-enabled gains depend critically on the technology's impact on labour productivity and variable capital costs, in the context of the local wage rate for adequately skilled labour. In certain contexts, the per-transaction gains from using capital-intensive technologies are overwhelmed by the fixed and operating resources required to generate and sustain these gains.

Cost_realism_TR.pdf
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Publisher  Microsoft Research

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TypeTechReport
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