Cost Benefits Of Outsourcing

This paper is intended to explain about the process which leads in outsourcing of a process. This includes calculation of costs involved in the outsourcing process with the help of a case study. It would majorly focus on how cost analysis is done, and hence it assists in making a viable decision. Moreover, the report will state the internal processes that are involved in the process of outsourcing and various challenges involved in the outsourcing.

It is expected that this report would potentially help students and other practitioners to understand the accounting process behind the outsourcing. It would also help in conducting the cost benefit analysis in order to decide if outsourcing should be done or retain the process in-house.

Outsourcing

The benefits for outsourcing involve: improved service, reduced costs, easy accessibility to new technology, more focus on individual development of employees (Ketler & Walstrom, 1998; Lacity & Willcocks, 1998; Quinn, 1999). Outsourcing has apparently paved way for organizations to raise the bar of doing business. With organizations striving hard to achieve increased competitiveness, flexibility and improving performance, focus has been shifted from corporate activities to business processes that would eventually provide the competitive edge (Ngwenyama & Bryson, 1999; Quinn, 1999). Thus outsourcing is eventually turning to be a strategic decision that could significantly help the organizations to leverage skills and special

Internal costs and performance analysis: The intended aim of this phase is to conduct detailed cost analysis of the selected business function. While considering outsourcing at least one business process, various associated costs must be taken into account including salary incurred, benefits, training or education cost, exclusive software, traveling charges and many other. It is imperative that the project team does activity-based analysis so as to identify the current costs of the activities that are to be outsourced along with those which are to be done in-house. There are also financial benefits resulting from out-sourcing and these are eventually used in the make-or-buy decision.

4. Selecting service provider: This phase involves identifying organization’s requirements, and then selecting the service providers which be given request of proposal (RFP). This would further result in the selection of the potentially effective service providers after their internal assessment and practical exchange within the marketplace of potential providers. The project team would further line out qualifying criteria for the potential services providers to go through. With deep investigation and assessment, a final decision would be made about the service