ID: 007444

Name: Lao chhayleang

Gender: Male

Assignment
Question 1.)
Calculate the total cost of outsourcing the online help desk versus staying with the current solution.
Which option is cheaper?

Total Cost Analysis for the Sourcing Decision at Pagoda

Assumptions: 40 workers
3 supervisor
800,000 support contacts per year

INSOURCING OPTION
Personnel Cost:
$ 1,600,000
Wages $40,000 per worker
Supervisory salary $ 210,000 $70,000 per supervisor
Equipment Cost:
Servers $ 8,000 4 servers, at $2,000 per year
PCs $ 20,000 20 PCs, at $1,000 per year
Variable Cost:
Office supplies, fax paper, etc. $ 1,200,000 $1.50 per request
Total cost for year $ 3,038,000

OUTSOURCING (New Delhi) OPTION

Fixed Cost:
Administrative and IT Costs $ 1,500,000
Variable Cost:
Charge $ 400,000 $0.50 per request
Total cost for year $ 1,540,000

Total Savings $ 1,498,000

The option to outsource the technical support center is Outsourcing (New Delhi)by $ 1,498,000

Question 2.)
What other factors, other than costs, should Pagoda consider? How would you weight these factors? Given the
above, how might you use a weighted-point evaluation system to evaluate the two options?

Pagoda should consider the factors like service delivery quality, availability of other service providing companies in Delhi, Technical expertise of working group , environmental
stability of the market and reliability of the concerned company to whom it is thinking to outsource the activity.
-These factors will be weighted by the perceived importantance of each of these factors in determining performance of the company.The weightages Will be given such that sum
of all the weightages will be equal to one.
-After giving weightages to each of these dimensions both the scenarios are scored on the given performance criteria and performance scores will be generated for both
outsourcing and non-outsourcing situations by using the formula.

1
 Question 3.)
Should Pagoda.com outsource its online help desk? Why or why not? Be sure to consider Table 7.7 and 7.8 when
framing your answer.

Yes, Pagoda should go for outsourcing of its onlinc help desk. Because outsourcing will cost less S per
service provided to its customer, in addition to this the outsourcing will take out risk of investmcnt in
cstablishing and managing the hclp desk and the scrvice outsourced is not concerncd will any core
competency of the company. The monitoring of the outsourced activity performance is as casy as it was in
self management of help desk and hence there are no difficulties associated with the monitoring of
outsourced activity. The only possible but managcable thrcat is the possibility of choosing of bad supplicrs,
which can be mitigated by close and continuous supcrvision.

Question 4.)
A statement of work typically specifies performance measurements that the buying firm can use to determine
whether the service provider is meeting the terms of the contract. What performance measurements would you
recommend be put in place? What should happen if the service provider fails to meet these requirements?

If the service provider fails to fulfill these pcrformance standard, we will investigate the reason for the same and if it is genuinc and correctable at acceptable costs without bringing any threat to the parcatal
company then such correction mcasures (like training the staff, on the job training cte.) will be crccuted. If the reasons for failure are difficult to correct and not under the preview of parental organizations
capabilities and objactives then the contracts will be retracted.