Question

Using the class scenario, develop a business case for the hypothetical outsourcing of the CIT IT Help Desk functions. Background: The CIT currently uses up to three student work-studies to provide the internal ‘help desk’ functions. What if we hired local non-student individuals instead? Elements to include in this business case are as follows:

a. An alternatives analysis that compares existing internal operations to an outsourced external service provider.

b. A reasonably-estimated cost-benefit analysis for each of the alternatives.

c. A reasonably-estimated return on investment calculation for each of the alternatives.

*Assume class scenario is a college campus*

Answer 1

a. Comparison of outsourcing with the existing system

• increased flexibility to meet changing business and commercial conditions
• increased focus on strategy/core competencies
• access to skills and resources
• access to innovation, intellectual property, and thought leadership

Some of the risks of outsourcing include:

• affects the turnaround time
• lack of business or domain knowledge
• lack of control

b. Cost benefit analysis can be done in 4 steps

1. Defining the business process you would like to outsource

2. Determine the in-house costs that would be avoided by outsourcing

3. Determine the total cost of outsourcing

4. Subtract the cost of outsourcing from in-house costs to determine savings

c.Saving money on costs is typically the motivation for outsourcing work to another company. To make an accurate and effective comparison, organizations must have a thorough understanding of all service costs and benefits.

Apart from financial factors, some non-financial risks and benefits may also come into play in the decision to outsource. Example, though the salary expenses of an experienced person would be higher, it would also lead to an increase in the effectiveness and efficiency of the work don and help improve productivity.