Feasibility of Outsourcing: A Cost Analysis Report for RCS Outsourcing

This report provides a cost analysis of outsourcing and in-sourcing for Roell Customer Service. It evaluates the feasibility of outsourcing based on performance dimensions such as cost, customer satisfaction, quality, environment norms adherence, and efficiency. The report recommends outsourcing to a company in Bangalore, India. The online support desk system is benchmarked to assess the viability of the proposal.

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RCS outsourcing
Report on feasibility of outsourcing

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RCS outsourcing
Executive summary
First of all the total, the report is briefly described in the introduction section. Then, Cost analysis of the
outsourcing as well as in-sourcing is provided after which the feasibility of the proposal is ascertained.
The 5 dimensions are described on the basis of which the new proposal will be evaluated. Each
dimension is given the different score; based upon which weighted-matrix model is made. Then, the
final recommendation is provided. In the end, the online desk support system is benchmarked which will
be helpful in assessing the viability of the proposal from the quantitative point of view.
Contents

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Introduction.................................................................................................................................................4
Total Cost analysis.......................................................................................................................................5
Current personnel cost............................................................................................................................5
Current equipment cost..........................................................................................................................5
Current variable cost...............................................................................................................................5
Bangalore proposal..................................................................................................................................6
Feasibility of proposal..................................................................................................................................6
Performance dimensions.............................................................................................................................6
Cost..........................................................................................................................................................6
Customer satisfaction..............................................................................................................................6
Quality-....................................................................................................................................................6
Least environment disturbance...............................................................................................................7
Efficiency.................................................................................................................................................7
Relative weighting.......................................................................................................................................7
Rationale behind rating...............................................................................................................................8
Scoring model..............................................................................................................................................8
Weighted-matrix model..............................................................................................................................8
Final recommendation................................................................................................................................9
Benchmarking the support desk..................................................................................................................9
References.................................................................................................................................................10

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Introduction
In this report, an internet service provider company named as Roell Customer service is considered. The
company provides its services in Ontario and east in two languages viz English and French. The RCS has
received a proposal of outsourcing the support desk services from a company situated in the Bangalore
state of India. There is a need to provide answers to some basic questions so that the RCS can take a
sound decision regarding the proposal (Zerban, 2017).
Total Cost analysis
Current personnel cost
Basis Amount Salaries and Total

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Benefits per year
FTE and Technical
Experts
50 60,000 3,000,000
Supervisions 2 70,000 140,000
Total Personnel Cost 314,0000
Current equipment cost
Basis Amount Cost (per year) Total
Servers 3 6,000 18,000
PC’s 27 900 24,300
Total Equipment cost 42300
Current variable cost
Basis Volume Price Total
Office supplies For
paper etc.
6,00,000 1.30 7,80,000
Total Variable Cost 7,80,000

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Total current cost
Basis Cost
 Total Personnel cost 3,140,000
 Total Equipment cost 42,300
 Total variable cost 7,80,000
Total 39,623,000
Total Current Support Centre Cost 39,623,000
Bangalore proposal
Basis Amount Cost (per year) Total
Fixed Cost - - 3,400,000
Variable Cost 1.15 600,000 690,000
Total Cost 4,090,000
Feasibility of proposal
The data provided above clearly mention that in-sourcing has more benefits for the company in terms of
economy. But the RCS can consider Bangalore proposal as it will generate the profit only (Dawuda,
2017).

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Performance dimensions
Cost- The first criteria to be considered here is the cost. As stipulated above, the company has the
sound financial situation so it can outsource its online support desk. There will be the generation of less
profit comparatively, but the company will be able to expand its business. To get access to the new
market, the company can ignore the slight difference in amount between the current support centre
cost and Bangalore proposal.
Customer satisfaction- the next performance dimension to be considered in this case is the
customer satisfaction. The RCS has reputed image as its experts provide the solution of technical
problems within 8 minutes. This is the major trait for which customers seek the services of the RCS. This
customer satisfaction has to be maintained in Bangalore proposal work also. If customers are satisfied,
the RCS will be able to expand its business geographically (Kehinde, 2017).
Quality- Definitely, the quality of services matter very much. The RCS is known for its excellent
quality. It provides state-of-the art office applications with high speed servers. This quality needs to be
maintained so that customers remain satisfied. It will ensure the stability of the company in the market.
In addition to this, it will give competitive advantage to the company. Many other competitors are there
in market but the RCS provides quality services only though it comparatively charges more.

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Least environment disturbance
Environment deterioration has become a very important international issue. To prevent the company
from any legal complication in future regarding environment norms, the company needs to follow sound
environment strategy. All the environment regulations present in the particular state and country must
be followed. In addition to these, there are some international requirements like the location of the
server, electronic waste disposal etc. the RCS has to produce the minimum waste and that has to be
discarded according to the national or international environment norms (KR, 2017).
Efficiency
The company needs to follow sound strategy so that the work-life balance of its employees is
maintained. If they are happy, efficiency in the work will be increased. In addition to human resources,
physical resources should also be considered. New innovation will provide the efficiency in the
functioning of equipment also. There will be less depreciation cost which will save the total cost
indirectly. The separate department needs to be assigned to respective persons so that no overlap exists
in the working of employees and they can give their 100%.
Relative weighting
Variables Score
Cost 0.25
Consumer satisfaction 0.30
Quality of service 0.15
Environment norms adherence 0.15

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Efficiency 0.15
Rationale behind rating
The customer satisfaction is given the highest rating as it will decide the existence of the company in the
market. Everything depends on customer satisfaction. If customers are happy, the company can make
other changes with the passage of time. After customer satisfaction, the preference is given to cost. The
RCS is present in the market to do business. Cost is one of the major factors in deciding the outcome of
the proposal. Other three dimensions of quality of service, environment norms adherence and efficiency
are given equal weight. There is no dimension which can be ignored so sound weighting is provided to
each criterion (Javid, 2017).
Scoring model
 5- Exceptionally well
 4-excellent
 3-good
 2-average
 1-poor
 0-very poor

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Weighted-matrix model
Performance
Dimensions
Current support system Bangalore proposal
Weight Score Weighted
Scores
Scores Weighted
Score
Cost 0.25 3 0.75 4 1.0
Consumer
Satisfaction
0.30 3 0.90 4 1.20
Quality of
Service
0.15 4 0.60 5 0.75
Adherence to
environment
norms
0.15 5 0.75 5 0.75
Efficiency 0.15 3 0.45 4 0.60
Total 1.00 18 3.45 22 4.30

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Final recommendation
From weighted –matrix model. It can be ensured that Bangalore proposal has more weight and score.
There is no service dimension which has gained zero scores as the company provides only quality
services. Thus it can be inferred that the proposal will be viable for the company not only in terms of
economy but also expansion and image building (Olabisi, 2017).
Benchmarking the support desk
There are different provisions on the basis of which support desk can be benchmarked. These
are as follows-
1. Average time taken
For any response, the time taken should be within practical limits. The customer should feel that
he has been provided quality time and his problem is addressed within least time possible
(Ahmadi, 2017).
2. Number of customers handled
In addition to quality, the efficiency needs to be maintained in the company. The company has
to prevent itself from the loss so there should be the sound number of handled customers.
There should be a win-win situation for customers as well as the RCS.
3. Feedback rating by customer
Every person who will make a call to a company will be asked to give his or her feedback on the
services of the company. Based on that feedback, the quality of services can be ascertained
(Suleiman, 2017).

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References
Ali Ahmadi, M. S. (2017). The Corporate Social Responsibility of Family SMES: An Exploratory StudyBased
on the Development of Knowledge. International Journal of Accounting Research,, 40-46.

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Ayman Mohamed Zerban, A. M. (2017). Corporate Governance and Board of Directors Responsibilities:
The Case of Saudi Arabia. International Journal of Accounting Research, 45-50.
Dawuda A, A. S. (2017). An Exploratory Study on Management Support Services and Its effects on the
Quality Service Delivery of Internal Auditors in the Northern Ghana. International Journal of
Accounting Research,, 45-50.
Javid, M. H. (2017). The Effects of the Earnings Management and Corporate Governance on Expense
Stickiness. International Journal of Accounting Research,, 60-62.
Kehinde A*, O. A. (2017). Enterprise Risk Management and the Survival of Small Scale Businesses in
Nigeria. International Journal of Accounting Research, 170.
KR, A.-A. (2017). A Need for Theorizing Corporation: An Accounting Perspective. International Journal of
Accounting Research, 166.
Olabisi J, A. T. (2017). Audit Quality and Earnings Management among Nigerian Listed Deposit Money
Banks. International Journal of Accounting Research, 30-34.
Suleiman, S. (2017). Debt Contracting and Conditional Accounting Conservatism. International Journal of
Accounting Research,, 50-56.