Activity Problem
Assess the economic trade-offs associated with obtaining inputs through spot exchange, contract, or vertical integration.
Business-process outsourcing (BPO) is a type of outsourcing that consists of contracting operations and responsibilities of a specific business process (e.g., human resources) to a third-party service provider. Such outsourcing generally began with manufacturing firms outsourcing their supply chain but has grown into a much wider range of processes, including marketing, finance, sales, and accounting. Competition among firms in the BPO market is strong. Companies based in the United States include HP Enterprise Services, Affiliated Computer Services, and Automated Data Processing (ADP). A number of Indian companies, however, also provide worldwide BPO services, such as Infosys, Wipro, and Genpact.
1) An article in Bloomberg BusinessWeek suggested that BPO can save end users anywhere from 15 to 85 percent. International BPO service providers are particularly attractive since offshore labor offers an additional 25 to 30 percent cost savings. Furthermore, approximately 25 percent of the cost savings results from BPO firms' proprietary products. The remaining 10 to 30 percent in cost reduction accrues from consolidated operations.
2) Suppose you are the manager of a company and must decide whether to outsource your human resources department.
a) Based on the above information and your study, outline arguments supporting and opposing a decision to outsource this function of your business.
b) Explain from a purely business standpoint, any issues that might arise from contracting with an international-based versus U.S.-based BPO service firm?
The response must include a reference list. One-inch margins, double-space, Using Times New Roman 12 pnt font and APA style of writing and citations.