Advantages of Outsourcing and How It Really Worked Out Economies of scale in staff recruiting, retention, and redundancy Allows you to concentrate on core.

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Presentation transcript:

Advantages of Outsourcing and How It Really Worked Out Economies of scale in staff recruiting, retention, and redundancy Allows you to concentrate on core business Outsourcer is free from campus politics

Disadvantages of Outsourcing and How It Really Worked Out Inflexible Loss of best of breed Loss of internal expertise

What Does Outsourcing Cost 1. Functional Requirements 2. FTE Cost (including benefits) 3. Plus 28-30% “Uplift” 4. Plus 8% Corporate Overhead 5. Plus Cost of necessary hardware and software 6. Plus 3% Mgmnt Fee if outsourcer buys hard/software 7. Inflation adjustment, 8% per year

Example of a 3 Year Contract Core personnel (incl benefits)$4,000 Uplift (28%)$1,120 Subtotal (22% profit margin)$5,120 Corporate Overhead (8%)$ 410 Management fee (3%)$ 154 Total/yr (Personnel + 42%)$5,684 Plus Inflation Adjustment Yr 2&3 Plus hardware and software costs

Requirements Full time contract administrator Core internal technical expertise Quantitative measurements in contract

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