Question

Question 3 (Outsourcing) Company C is considering a proposal to use the services of a press cuttings agency. At the moment, press cuttings are collected by a junior member of the marketing department, who is also responsible for office administration (including filling), travel bookings, a small amount of proof reading and making the tea. The total annual cost of employing this person is $15000 per annum. There is concern that the ability of this person to produce a comprehensive file of cuttings is limited by the time available. She has calculated that she needs to spend about two hours of her seven and a half hour day simply reading the national and trade press, but usually only has about five hours a week for this job. Press subscriptions currently costs $850 per annum and are paid annually in advance. The assistant makes use of a small micro-fiche device for storing cuttings. The cuttings are sent to a specialist firm once a month to be put into fiche. Company C pays $45 each month for this service. The micro-fiche reader is leased at a cost of $76 per calendar month. This lease has another 27 months to run. The cutting service bureau has proposed an annual contract at a cost of $1250. Several existing users has confirmed their satisfaction with the service they receive. Required: Should Company Coutsource its press cuttings work? Please explain.