Assessing Outsourcing

Paper Summary:

This paper assesses the benefits and cost of outsourcing from the author's personal experience within an outsourced organization. Specifically, the company outsourced all accounting system IT functions including accounts payable, accounts receivable, credit and collections, and internal auditing. The author argues that the decision to outsource pays off in terms of both reduced personnel costs, reduced time taken solving relatively simple but time-consuming accounting problems, and the freeing up of financial managers' and analysts' time to work on the larger, more difficult problem of the order management system being inaccurate in the bills of material (BOMs) it is sending to production.

Outline:
Executive Summary
Costs of Outsourcing
Benefits of Outsourcing
Conclusion

From the Paper:

"The subjective costs are the perceived loss of control of core accounting functions by the senior accounting managers, and the tendency to keep managing and monitoring the activities of Infosys even though the processes have been outsourced. Additional subjective costs have begun to emerge as well, including the realization our company at one point was too thinly staffed to manage the outsourcing relationship and we would actually have to hire a new project manager to manage the relationship as no one had time to do this full-time. Carrillo, L, Desronvil, K., Niven, C. (2003) report from their research on outsourcing that often companies are too thinly staffed to manage the outsourcing efforts, and this slows down the potential benefits that could be achieved. There were also the intangible costs of trying to get the Infosys culture to work with our company's culture. Infosys moves much faster than the company I work for, and that took several months for each organization to culturally get synchronized with each other. There was also a degree of ethnocentrism to an extent in the financial analysts who wondered if they were going to be outsourced as the second wave of the project, and insisted they knew the financials and company better than any outsider could."

Sample of Sources Used:

• Carrillo, L, Desronvil, K., Niven, C..(2003) Offshore Outsourcing: Is It A Viable Approach for All Projects? Boston, MA. AMR Research,
• Economist, (2006). Virtual Champions . The Economist , ', 34 - 46. Accessed October 10, 2006 from: http://www.economist.com/surveys/PrinterFriendly.cfm?story_id=6969722
• Travis , L, & Meunier, M (2004). Successful Outsourcing Work Offshore Is In Your Hands. Boston, MA. : AMR Research .
• Travis, L. (2003) Best Practices in Managing Outsourcing Relationships. Boston, MA. AMR Research,

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