What are the Cost Savings when a company outsources?

(Due Week 7)


In this case study, please choose from one of the areas in an organization that may be outsourced and prepare a cost savings report.

  • Finance and Accounting
  • Investment and Asset Management
  • Human Resources
  • Procurement
  • Logistics
  • Real estate management
  • Miscellaneous (energy services, customer service, mailroom, food processing)

Your Assignment:

Prepare an executive summary document that focuses on the cost savings of the outsourcing / contracting process for the business process that you decide to outsource. Your analysis must include the steps below.

  • You need to JUSTIFY your decision for the business process outsourced (e.g., accounting, editorial, photography, publishing, distribution, printing, layout, advertising, editing, articles, etc.); and

  • For the service that you intend to outsource:
  • Establish the preliminary performance targets / level of service that will be required from the selected vendors;
  • Establish the type of contract that you will use for each contract (i.e., fixed, cost-plus, reimbursable, unit);
  • Determine the evaluation criteria you will use to select the preferred vendor(s) (e.g., low price, best value, etc.). [Are there different evaluation criteria for different business units? Why?];
  • Identify the number of vendors that you will select to provide the services to be outsourced (i.e., one vendor for all services versus individual vendors with specific expertise in each of the services to be outsourced); and
  • Construct a timeline that summarizes the bid activities and time duration for each contracting process (i.e., plan purchases and acquisition through select sellers).


Grading Rubric:




Correlation of the assessment with the TCOs outlined above and material covered through Week 6.


Compliance with format requirements outlined above.


Assessment of which business processes you would outsource. Determine whether it would be cost effective to outsource the business unit, and also, whether or not it might be helpful or detrimental to your core business.


Assessment of the preliminary performance targets/level of service you require from each vendor. Point out anything unique about your performance targets/level of service that may preclude some vendors from bidding.


Assessment of the type of contract chosen for each business unit outsourced. Provide a rationale for your choice.


Assessment of the evaluation criteria used to rank the proposals. Again, a rationale for your choice needs to be included.


Strength of argument on the number of vendors selected to provide the services.


Assessment of timeline for bid activities and time duration for each contracting process.

Total: 70