Question

CASE STUDY: MEI PAYROLL AND HR RESOURCE EMPLOYEE AND DATA EFFICIENCY SCENARIO Your company has not been performing well and senior management is preparing to present a report to the Board to outsource your employees to India which will reduce staffing costs by 9%. Currently revenue from your division is $26,000,000 and staffing is 46% of gross revenue.. If the company outsources employees to India you will be out of a job. You need to create a counter proposal to convince senior management this is going to actually cost the company money through increased costs that are currently not being observed.

Answer 1

Outsourcing to India will only explicitly decrease the staffing costs by 9% but on the whole and after considering implicit factors as well the decision to outsource will only lead to higher costs for the company.

First of all the outsourced manpower in India will have to be given a comprehensive training, on-boarding and orientation. This will require a lot of resources both in terms of money as well as time. It should be noted that besides the initial training and orientation module the outsourced manpower will even have to be trained from time to time on a regular basis with regards to different aspects and developments. Thus there will be constant costs involved with regards to this.

Secondly the quality of manpower being outsourced will not be at par with the quality that we have here and so there will be opportunity costs in terms of quality issues.

Thirdly there might be political and economic issues that may arise in India in future that may cause a significant setback to us. We know that India is a democracy and with change in government in every five years the business regulations and economic policy framework also changes. This may create unstable business environment from time to time leading to significant costs for us.