can make financial sense if:
- the service is commoditised and low-priced;
- the demand for the service is collapsing;
- the skills are not sustainable in house;
- the payroll size triggers problems that contract payments would not;
- there is a cashflow crisis; or
- liability can be transferred to the service provider.
In Australia, a full-time employee on $70,000 pa works about 220 days of 7 hours per year. Employers’ on-costs (superannuation, insurance, payroll tax, administration) is typically 40-60%, so the effective hourly cost is about $68 per worked hour, and if outsourced will typically be billed at $140 per hour, so the agency profits if it exceeds 50% utilisation of its workforce. Very specific internal cost data is needed to justify outsourcing on a financial basis.
Wheeler notes some other considerations and counter-examples, and lists a few Australian external service providers.
References
- Wheeler, M. 2005, When to outsource helpdesks, ZDNet Australia, http://www.zdnet.com.au/insight/business/soa/When-to-outsource-helpdesks/0,139023749,139199827,00.htm