Submitted by: Submitted by johnbernard
Views: 394
Words: 1965
Pages: 8
Category: Business and Industry
Date Submitted: 03/12/2012 04:35 PM
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PROJECT PROPOSAL
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Insourcing vs. Outsourcing
Introduction
First Research Quarterly Update states “Major products (for Internet Service Providers, ISP) are internet access, website design, hosting, and technical support services. Internet access accounts for about 75 percent of industry revenue. Three major systems operate on the internet: the email system that allows users to send email messages to each other; the file transfer system, called FTP, that allows users to exchange many types of files; and the World Wide Web (www, by far, the largest part of the internet), that allows the user to see special graphical files or Web pages.”
Yearly Costs of Present and Proposed Help Desk Alternatives
Current Online Help Desk
Personnel Costs
* 40 full-time equivalent (FTE) technical experts @ $40,000 per year (salary and benefits)
Total Personnel Cost = $1,600,000
Equipment Costs
* 4 servers @ $2,000 each per year
* 20 PCs @ $1,000 each per year
Total Equipment Cost = $28,000
Variable Costs in Server Requests
* $1.50 per request (office supplies, fax paper, etc.).
* 800,000 requests per year
Total Variable Cost $1,200,000
Total insourcing cost = $2,828,000
Bangalore Proposal
Fixed Cost
* $1,500,000 per contract year (covers all administrative and IT costs)
Total Fixed Cost = $1,500,000
Variable Costs
* $0.50 per request
* 800,000 request per year
Total Variable Cost = $400,000
Total outsourcing cost = 1,900,000
From a cost perspective only, outsourcing to India ISP, is the best option, saving $928,000
Figure 1 - Weighting Point Evaluation Factors
| | Insourcing | Outsourcing |
Category | Weight Factor | Score | Total | Score | Total |
Environment/Safety | 0.1 | 4 | 0.4 | 1 | 0.3 |
Data Loss Prevention | 0.1 | 3 | 0.3 | 3 | 0.9 |...