Reference no: EM13154273

According to BusinessWeek Online, worldwide spending on IT services andoutsourcing are expected to modestly grow through the end of this decade. Growth in business-process outsourcing (BPO)-the practice of hiring a third party to administer and manage functions ranging from human resources and management training to sales, marketing, finance, and accounting-is projected to be particularly strong, reaching $200 million by the end of the decade. Competition among firms in the BPO market is already strong. Companies based in the United States include Electronic Data Services (EDS), Affiliated Computer Services, and Automated Data Processing (ADP). A number of Indian companies, however, also provide worldwide BPO services, such as Infosys, Wipro, and Satyam Computer Services. The BusinessWeek article suggests that BPO can save end-users anywhere from 15 to 85 percent. This contrasts to traditional IT services, which alone offer a savings range of 10 to 15 percent. International BPO service providers are particularly attractive since offshore labor offers an additional 25 to 30 percent cost savings. Furthermore, approximately 25 percent of the cost savings results from BPO firms' proprietary products. The remaining 10 to 30 percent in cost reduction accrues from consolidated operations. Suppose you are the manager of a U.S. based company and must decide whetther to outsource your human resources department. Outline arguments supporting and opposing a decision to outsource this function of your business. From a purly business standpoint, do any issues arise from contracting with an international- based versus US based BPO service Firm?