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1. (TCO 1) A cost-plus-percentage-fee contract is a: _______.

(Points : 5)
cost-reimbursable contract, te seller pa!s te bu!er"s actual costs, an# a percentage of te
total pro$ect costs
cost-reimbursable contract, te seller pa!s te bu!er"s actual costs, an# all of te total pro$ect
costs
cost-reimbursable contract, the buyer pays the seller's actual costs, and a percentage of
the total project costs
cost-reimbursable contract, te seller pa!s te bu!er"s actual costs, an# none of te total
pro$ect costs
2. (TCO %) Te #ifference bet&een te pro$ect manager an# contract a#ministrator is:
______.
(Points : 5)
the project manager is responsible for the project-related coordination, while the
contract manager is responsible for administering the contract
te contract a#ministrator as te autorit! to ma'e all contract-relate# #ecisions, li'e
appro(ing a cange or#er. Te pro$ect manager #oes not a(e tis le(el of autorit!.
te pro$ect manager is responsible for te a#ministering of te contract, &ile te contract
manager is responsible for pro$ect-relate# coor#ination.
te pro$ect manager as te autorit! to ma'e all contract-relate# #ecisions, li'e appro(ing a
cange or#er. Te contract a#ministrator #oes not a(e tis le(el of autorit!.
3. (TCO )) *ic is a 'e! component in te pro$ect procurement management process+
(Points : 5)
,-. ,e/uest for .ssue
RF Re!uest for roposal
,-0 ,e/uest for 0u!
,-C ,e/uest for Contract
". (TCO %) 1enior management t!picall! as #ifferent reasons for issuing te #irecti(e to
outsource tan management responsible for te business process. 1enior management
t!picall! #eci#es to e(aluate outsourcing because: ______. (Points : 5)
tere is a means to focus more resources on business process strateg!
tere is a means to focus less resources on business process strateg!
tere is an effort to #ecrease performance
there is an organi#ation-wide directi$e to downsi#e or cut costs
5. (TCO ) *en notif!ing tir# parties in a transition plan, &o &oul# not nee# to be
notifie#+ (Points : 5)
Tir#-part! (en#ors
2o(ernment or regulator! autorities
%ustomer's competitors
Customer"s clients
3. (TCO ) .n .nternational contracts, &ic in#ustr!-specific /uestion #oes not nee# to be
as'e#+ (Points : 5)
*ic countr!4s stan#ar#s are use#+
&hat regulatory authorities are called into !uestion'
*at regulations are specific to te business process operations+
*at notice re/uirements or appro(als are nee#e# before an# after a contract signing+
(. )f a contract is seen through its full term, list two items that should be completed as
part of contract close-out' &hat is a close out manager' &hy is deli$erable acceptance
documents so important'
Te close out manager as all responsibilit! to &rap up te pro$ect an# finali5e te
paper&or'. *it a ne& pro$ect beginning, te P6 is tie# up in sce#uling an# ma'ing it start
smootl! tat e7se #oesn"t a(e time to return to te oter pro$ect to complete e(er!ting.
P6 as to be onsite at all times from te start of a pro$ect to basicall! te completion of &or'
so tat tere isn"t time to be running bac' an# fort, especiall! at te beginning of a ne&
pro$ect &ic is (er! important to set te tone an# sce#ule from te start. Te completion
pase is more attune# to a#ministration. A close-out manager is assigne# to pro$ect at te
close-out pase. 8e7se onl! focus an# concentrate on te tas' of tat particular contract
close-out. 8e7se &oul# onl! be limite# to tat purpose.
9nsure tat all pro$ect #eli(erables a(e been complete# an# formall! accepte# b! te
customer.
- :etermine if te measurable success in#icators &ere acie(e#.
- Con#uct pro$ect close-out meetings, bot internal an# e;ternal.
- *rite te final pro$ect report.
- :ocument an# sare lessons learne#.
:iscuss some of te approaces to #ealing &it ser(ice-le(el failures. Caan tere be e;cuse#
performance &itin a ser(ice le(el agreement+ 9;plain. *at &a!s can ser(ice le(el
agreements be reporte# or monitore#+
<=esson learne#< is often o(erloo'e# or forgotten in te close-out pase of a pro$ect. Te P6
an# team &ill probabl! be more concerne# &it closing te pro$ect an# mo(ing on to te
ne;t. Te! migt o(erloo' #ocumenting &at &ent &ell an# &at #i#n"t. =essons learne#
are probabl! often forgotten, especiall! if te pro$ect &as consi#ere# a success b! all parties
in(ol(e#. Tere &oul# still be lessons learne# #uring a successful pro$ect.
Actual close-out of a contract occurs &en te Procuring Contracting Officer signs te
Contract Completion 1tatement. *ile te actions re/uire# prior to close-out &ill (ar! from
contract to contract, some con#itions must e;ist for an! contract to be consi#ere# for close-
out. Te con#itions common to all contracts prior to closing is tat te contract must be
p!sicall! complete. -or a (2o(ernment) contract to be p!sicall! complete: te 2o(ernment
must a(e inspecte# an# accepte# all #eli(erable (supplies or ser(ices)> an#
all options, if an!, a(e e;pire#> or a notice of complete contract termination as been issue#
to te contractor.
*. +,%- *. &hat are the two ways to ran/ the seller's proposals before selecting a
seller' +oints 0 12.
Once te outsourcing team agrees on te e(aluation criteria, te customer soul# ran' te
(en#ors base# on teir fulfillment of te criteria. Tis ran'ing can be #one formall! or
informall!. To benefit from te $u#gment of eac member of te outsourcing team, man!
customers implement a (oting s!stem allo&ing eac team member to submit is or er
in#i(i#ual assessment of te proposals an# (en#ors. .n man! cases, te group of people
participating in te e(aluation process e;ten#s be!on# te outsourcing team an# ma! inclu#e
oter 'e! pla!ers, suc as te cief financial officer an# members of senior management.
Certain members of te outsourcing team ma! be as'e# to submit e(aluations on onl! certain
criteria (e.g., uman resources ma! be as'e# onl! to e(aluate te uman resources piece of
te proposal, &ile oter members of te outsourcing team?e.g., outsi#e consultants?ma!
not be as'e# to participate in te e(aluation process at all). .t is useful for au#it an# reporting
purposes for te customer to 'eep or as' te respon#ents to 'eep an! #ocumentation or #ata
use# to support te respon#ents" assessments.
1. +,%- 2. 3ometimes, a seller is selected based solely on lowest price. 4owe$er,
sometimes this is not always the most efficient or effecti$e way of selecting a seller. &hat
are some of the other e$aluation criteria that a buyer may use to help select a seller'
+oints 0 12.
Te t!pes of criteria tat a customer consi#ers 'e! &ill (ar! #epen#ing on te scope, (alue,
an# comple;it! of te propose# outsourcing transaction.
9;amples of 'e! criteria inclu#e:
@Te Propose# 1olution 6eto#ologies Tecnolog! (ar#&are7soft&are7net&or')
organi5ation - *illingness to sare ris'
@Abilit! to :eli(er 1er(ices 9;perience7s'ill le(els of staff 6eto#ologies Tecnolog!
(ar#&are7soft&are7net&or')
@Abilit! to .mplement Ae& 6eto#ologies or Tecnolog!- Tecnical resources7abilit!,
Access to ne& meto#ologies or tecnolog!, -le;ibilit!.nno(ati(eness, Open meto#ologies
or tecnolog! (ersus proprietar! meto#ologies.
@Abilit! to 6eet Performance 1tan#ar#s
@Balue-a##e# 1er(ices.ncenti(e mecanisms
@Ben#or ,eputation7-inancial stan#ing
@Ben#or 9;perience7Outsourcing e;perience
@Ben#or -le;ibilit!, A#$ustment of ser(ices
@Ceeping Abreast of .n#ustr!
15. &hat are some of the common techni!ues used for establishing ser$ice le$els'
@9;isting 1=As. 6ore an# more customers (but b! no means all customers) a(e 1=As in
place prior to outsourcing. Tis enables te customer to inclu#e te 1=As in te re/uest for
proposal, if tere is one, or at least so& te (en#or te e;pecte# ser(ice-le(el commitments
so tat it can ma'e certain assumptions as it prices an# allocates resources to te #eal. 9(en if
tere are 1=As in place, te (en#or ma! &is to see performance reports #ocumenting
&eter te customer actuall! met te ser(ice-le(el commitments on a consistent basis. .f te
customer &as not able to meet tose commitments, te (en#or ma! nee# to cange, upgra#e,
or enance te resources (e.g., e/uipment, meto#ologies, tecnolog!, an# personnel) being
use# to be able to meet te commitments on a consistent basis going for&ar#.
@8istorical #ata. .f te customer as istorical #ata tat #ocuments performance prior to te
outsourcing, te customer an# te (en#or ma! be able to use suc #ata to assess an# establis
ser(ice le(els using te resources being transferre# to te (en#or. Again, te (en#or ma! be
&illing to commit to better ser(ice le(els b! upgra#ing or enancing te resources being
use#.
@0encmar'ing future performance. Often te customer #oes not a(e istorical #ata to
#ocument past performance. .n tese cases, te customer an# (en#or ma! agree to collect
#ata an# monitor performance #uring some representati(e perio# (e.g., te 1DE-#a! perio#
after te commencement #ate). 1uc #ata &ill ten be use# to establis te ser(ice-le(el
commitments. Aote tat tis meto# &oul# not appl! to time-sensiti(e ser(ice le(els (e.g.,
ta; filings, reporting) &ere te ser(ice le(el is tie# to a specifie# #ate (see te #iscussions of
customer re/uirements an# business7regulator! re/uirements tat follo&).
@Customer re/uirements. Anoter approac is to establis te ser(ice le(els base# on user
re/uirements. Altoug istorical #ata or bencmar'ing ma! re(eal on-time #eli(er! F%
percent of te time, users ma! re/uire on-time #eli(er! FD percent of te time. Terefore, te
ser(ice le(el to be met b! te (en#or is FD percent &it te agreement tat te (en#or &ill
upgra#e or enance resources as part of te base fees in or#er to be able to meet te FD
percent re/uirement.
@0usiness7regulator! re/uirements. 1er(ice le(els ma! also be #ri(en b! business or
regulator! re/uirements. -or e;ample, te (en#or ma! be responsible for generating reports
tat nee# to be file# &it te ta; autorities b! a certain time or #ate. Tis #ea#line is li'el!
to be met on a /uarterl! or annual basis. Arguabl!, te ser(ice le(el for tis ser(ice soul# be
1EE percent since if te (en#or misses te #ea#line, te customer ma! be penali5e# or fine#.
@1er(ice le(els #uring initial transition. As part of contract negotiations, te customer an# te
(en#or soul# #iscuss te le(el of ser(ice to be #eli(ere# to te customer #uring te
transition of ser(ices from te customer to te (en#or. -or e;ample, te customer ma! &is
to inclu#e in te outsourcing contract a commitment from te (en#or tat ser(ice le(els &ill
not be #egra#e# #uring te transition. Te (en#or, o&e(er, ma! &is to inclu#e a
commitment to use reasonable efforts to meet ser(ice le(els #uring te transition &itout
ma'ing an outrigt commitment to #o so.
age 2.
1. +,%- . &hat is benchmar/ing' lease support your answer. 6efend the cost of
benchmar/ing in an industry. +oints 0 35.
Te general ob$ecti(e of a bencmar'ing pro(ision is to pro(i#e a mecanism b! &ic te
parties perio#icall! compare te ser(ices being pro(i#e# an#7or prices being carge# against
similar ser(ices being pro(i#e# an#7or prices being carge# to a specifie# customer or
in#ustr! group. Altoug te effecti(eness of bencmar'ing pro(isions is #ebatable, most
customers feel tat te inclusion of suc a pro(ision &ill at a minimum gi(e te customer
some le(erage if te pricing, meto#ologies, tecnolog!, or ser(ice le(els are significantl!
#ifferent from mar'et stan#ar#s. Ben#ors t!picall! resist te inclusion of bencmar'ing
pro(isions on te groun#s tat te comparati(e #ata are easil! manipulate# an# te results are
#ifficult to interpret.
Te potential costs of performing te bencmar' ma! be e;pensi(e. Te parties &ill nee# to
#iscuss o& te costs of te internal or tir#-part! resources use# to perform te
bencmar'ing are to be allocate#. Cost allocation scemes ma! inclu#e:
@Te (en#or buil#s te cost of tir#-part! or internal resources into its price.
@Te (en#or carges te customer on a pass-troug basis for te cost of te tir#-part!
bencmar'er.
@Te (en#or an# te customer sare te cost of te tir#-part! bencmar'er.
@Te (en#or absorbs te cost of te bencmar'er if it re(eals tat te (en#or"s prices,
meto#ologies, tecnolog!, or ser(ices are not in line &it in#ustr! stan#ar#s.
2. +,%- . &hat happens when there is a failure in an 378' 9se an e:ample to analy#e a
failure in an 378 and how important 378s are to the buyer in a ;- contract
agreement. +oints 0 35.
Tere are a (ariet! of approaces for #ealing &it ser(ice-le(el failures. Te selecte#
approac &ill #epen# on a number of factors, inclu#ing te t!pes of ser(ices being pro(i#e#
(e.g., are te! critical to te customer"s business+ are certain ser(ices more critical tan
oters+), te #egree of responsibilit! te (en#or as for misse# ser(ice le(els (e.g., is te
outsourcing (en#or onl! one of multiple (en#ors responsible for a particular ser(ice+), an#
te (alue of te #eal (e.g., o& muc re(enue is te (en#or &illing to put at ris'+). ,eme#ies
for ser(ice-le(el failures inclu#e:
@,oot cause anal!sis. Te outsourcing customer ma! &is to inclu#e a mecanism in te
0PO contract tat re/uires te (en#or, upon te occurrence of a ser(ice-le(el failure, to
in(estigate te cause of te failure, reme#! te failure, an# pro(i#e assurances to te
customer tat te failure &ill not occur again. Te (en#or, altoug often &illing to inclu#e
some t!pe of root cause obligation in te 0PO contract, ma! &is to limit its obligation to
perform suc anal!ses to repeate# failures (at least for noncritical failures). .n a##ition, te
(en#or ma! &is to be absol(e# of responsibilit! (as &ell as te imposition of an!
performance cre#its) an# compensate# for te root cause anal!sis if te failure turns out to be
te result of tir#-part! ser(ices or resources not te responsibilit! of te (en#or.
@Performance cre#its. 6ost customers no& &is to inclu#e a sceme b! &ic te! in effect
recei(e a cre#it for re#uce# or faile# performance. Te performance cre#it sceme (aries
from transaction to transaction. .n man! instances, te customers an# te (en#ors #o not tie
performance cre#its to e(er! ser(ice le(el, but focus on certain critical ser(ice le(els tat
&oul# cause particular problems if te! &ere misse#. .n a##ition, for ser(ice le(els base# on
percentages (e.g., on-time #eli(er! FD percent of te time), te (en#or"s performance often is
measure# o(er a specifie# perio# (t!picall! montl!) so tat cre#its &oul# appl! onl! if te
(en#or faile# to meet te ser(ice le(els on te a(erage #uring suc measurement perio#. Te
amount of re(enue at ris' as performance cre#its is te sub$ect of muc negotiation.
9;amples inclu#e performance cre#its calculate# as a percentage of te montl! fees, as a
fi;e# #ollar amount, or as te amount of fines tat te customer &oul# incur for misse#
#ea#lines.
@Performance bonuses. Te (en#or ma! argue tat if te customer insists on performance
cre#its, ten it is onl! fair tat te (en#or be entitle# to performance bonuses if it e;cee#s te
ser(ice le(els. 6an! customers &elcome te opportunit! for te (en#or to o(eracie(e an#
agree to put some amount into a bonus pool (&ic is t!picall! nette# out against te cre#it
pool). Oter customers re$ect suc argument on te basis tat te! are comfortable &it te
ser(ice le(els tat te! a(e agree# to an# tere is no a##itional (alue to te customer if te
(en#or o(eracie(es (e.g., pro#uction is not enance# or re(enue increase#).
@Termination. A reme#! in a##ition to or in lieu of performance cre#its is termination. .f te
(en#or fails to meet te ser(ice le(els (at least critical ser(ice le(els or oter ser(ice le(els on
a repeate# basis), te customer ma! &ant te abilit! to terminate te (en#or for breac.
Altoug tis ma! be an implie# rigt un#er te termination pro(isions in te 0PO contract,
man! customers &is to a## an e;plicit rigt to terminate upon te failure to meet certain
ser(ice le(els or if te performance cre#its e;cee# a certain amount o(er a specifie# perio#.
3. +,%- . &hat are the elements of a Re!uest for roposal +RF.' lease list and
discuss fi$e of the elements. +oints 0 15.
Some common elements of an RFP are listed below.
Introduction: The name speaks for itself. This area briefly answers the who, what,
when, how, and why questions. Common issues addressed in the introduction include
contact information, how to respond, submittal format, and timeframe for response.
Background: ere is the part in which the buyer needs to let the sellers know the
decision and thou!ht process behind how the buyer reached the conclusion to outsource
"i.e., why it is solicitin! bids for a certain outsourced product or ser#ice$.
Scope of Services: The %meat and potatoes% of the RFP. &t is the buyer's responsibility
to pro#ide a clear and accurate description of the scope of ser#ices. Contractors will base
their staffin!, pricin!, and timeline on this scope of ser#ices. &f the buyer has left the
scope of ser#ices inaccurate, misleadin!, or incomplete, there will be a lot of contin!ency
plannin! happenin! once the contract has been awarded "and ultimately, the contract
may break down somewhere alon! the line$. Common issues addressed in this section
include employee mi!ration "if any$, location, and transition.
Performance Standards: (hile some buyers elect not to include performance
standards, it is recommended that requests for proposal include these standards.
Performance standards are key for alertin! sellers to how and when the buyer will
e#aluate the seller's work. )*amples of a performance standard for a metal parts
manufacturin! plant would ha#e to be less than +,- of all parts re#iewed, with an error
difference within ,.,+ to ,.,+.-. /ther issues addressed in this area are benchmarkin!,
ser#ice0le#el a!reements, and root0cause analysis in the off chance that somethin! is
wron! in the contract.
Management and Control: This area pro#ides the opportunity to discuss how the
pro1ect will be mana!ed and what the process will be if a chan!e order is needed.
Employee Issues: This section describes how and if employees are transitioned and will
disclose employee0related confidentiality issues.
Staffing: 2ey staffin! requirements are outlined in this section, includin! requirements
for pro1ect e*ecuti#e, pro1ect mana!er, and other lead staff on the pro1ect. 3ny specific
qualifications are listed here. For e*ample, the pro1ect mana!er must be P4P certified.
Pricing: The terms and conditions of the pricin! contract structure are discussed in this
section. /ther pricin! considerations are outlined, includin! ta*es, cost of li#in!
ad1ustments, #olume discounts, and in#oicin!.
Termination clause: This one is important. The termination clause states how and
when the contract can be terminated. &t is useful for both the buyer and seller to know
when a contract may be terminated. &ssues includin! cause, con#enience, termination
ri!hts, and warranties are hi!hli!hted in this section.
Contract terms: Similar to the termination clause section, the contract terms section
pro#ides the more le!ally oriented contractin! lan!ua!e. Contract terms include
insurance, intellectual property ri!hts, and required consent.
Appendices: 3 buyer may attach referenced documents in the appendices.
Terms and Conditions: /ther terms and conditions to the RFP are included in this final
section.
5. (TCO Part !" #iscuss t$e follo%ing types of contract pricing" (a fi&ed price' (( cost)plus
price' (c time * materials' and (d unit price+ Part ," E&plain t$e appropriate utili-ation of
eac$ contract pricing type and t$e impact of risk to t$e contracting parties+ Part ." /$at type
of contract pricing structure misaligns t$e (uyer0s motivations %it$ t$e seller0s1 (Points " .2
Ans" Part+: Fi*ed0price contract is one in which the buyer pays the seller a lump sum "or
fi*ed price$ for the !oods or ser#ices that it is procurin!. For e*ample, a firm mi!ht
a!ree to pay a marketin! a!ency a flat fee of 6.,,,, to produce a brochure on one of its
newly released products. Re!ardless of the time and ener!y that the marketin! a!ency
puts into producin! the brochure "assumin! that the brochure met the specifications laid
out in the contract$, the marketin! a!ency will recei#e 6.,,,, at the end of the contract.
7nit0cost contracts are similar to lump0sum contracts in that the price of each %unit% is
determined at the start of the contract. The scope is well defined, so that the types of
units are defined8 howe#er, the number of units needed is not known at the start of the
contract. Therefore, a lump0sum amount cannot be awarded. This type of contract is
best used when supplies are procured, and it is not uncommon for a unit0cost contract to
be awarded for the supplies under a lump0sum contract for labor.
Time0and0materials "T94$ contracts are typically used when the scope is limited or
undefined. The contract is open ended, and the buyer pays the seller for its labor "i.e.,
time$ as thou!h it were a cost0plus contract, and its materials as thou!h it was a unit0
cost contract. Similar to the CPF, the contractor has little incenti#e to be efficient.
7nfortunately, because there is no defined scope, the cost to the seller can !o hi!her
than hoped.
3nother type of contract price structure is cost0reimbursable contracts. There are a
#ariety of cost0reimbursable contracts, but at their core, they are the same: 3ll cost0
reimbursable contracts pay the seller for the seller:s actual costs, plus a fee, which
basically represents the seller:s profit. Cost0reimbursable contracts are used when there
is a scope of ser#ices, but it is not well defined, or when there are too many
uncertainties for the seller to feel comfortable takin! on the risk of a fi*ed0price contract.
Part ;:
Fi*ed Price:
<Can be used in competiti#e biddin! to recei#e the lowest fi*ed price
<Can use incenti#e rewards to keep contractor on schedule and bud!et
<)asy to track bud!et and nail down final costs
(hereas risks are:
isk
<Seller may come in with a low0cost strate!y and then increase final cost throu!h chan!e
orders
<=ependin! on financial risk, some contractors may not bid on a fi*ed0fee contract
<>uality is harder to control
7nit Price: 7tili?ation
<(hen units of work can be quantified and appropriately priced, it works well
<Can use incenti#e rewards to keep contractor on schedule and on bud!et
Risk are:
<@ottom0line cost is difficult to estimate
<Aittle to no schedule moti#ator
<Should not co0min!le with cost0reimbursement contracts
Cost 0plus price: 7tili?ation
<)ffecti#e when schedule is hi!h priority
<3llows contractor to increase personnel and o#ertime without incurrin! financial losses
Risk are
<Contractor:s moti#es may be misali!ned with buyers
<@ottom0line cost is difficult to estimate
Time 9 4aterials "T94$: 7tili?ation
<)asiest to use with no scope defined
<Can use same contractor or team of contractors for #arious pro1ects as they come up
Risk are:
<Aittle to no way to estimate bud!et
<Contractor has little incenti#e to be efficient
PartB:
contract pricin! structure that misali!n the buyer's moti#ations with the seller's si the
cost0plus price contract.
3+ (TCO ) List and describe five components of a BPO. Then summarize why each of the items
that you chose are important to the BPO process. (Points " .2
The key components in the @P/ process are:
Plan Purchases and 3cquisitions sta!e 0 This phase starts at the be!innin! of the pro1ect
which in#ol#es make or buy analysis. 3t the end of this phase, the pro1ect team will ha#e
a documented pro1ect procurement plan.

Plan contractin! 0 The documented pro1ect procurement plan will enter into
implementation process here. The pro1ect team will prepare the solicitation document
called CRequest For Proposal' "RFP$.

Proposal Solicitation 0 3fter acquirin! the RFP document from the pre#ious phase, this
phase will request for proposals from the suppliers.

Source Selection 0 The pro1ect team will recei#e a lot of proposals from #arious sellers.
3fter analysin! all the proposals, they will select the best supplier who suits for the
pro1ect and award the contract.

Contract 3dministration 0 &n this phase, both the contracted parties ha#e to ensure that
they meet their respecti#e contract obli!ations and at the same time both of their
interests are protected le!ally. The process also re#iews and documents the suppliers
performance in accordance to the contract and establishes correcti#e actions if any.
)ach of the abo#e items or the components are importnat because they determine the
@P/ process success and assures that the ri!ht #endor is selected as part of the @P/
outsourcin!. This also makes sure that due dili!ence has been followed at each of the
sta!e so that there are no roadblocks in the actual e*ecution of the pro1ect.
4+ /$at does t$e outsourcing of t$e 56 function involve1 /$at are pros and
cons of 56 Outsourcing1 /$at do you t$ink are t$ree critical considerations
t$at you must include in t$e implementation plan for t$is outsourcing
transition1
3ns:
4aintainin! an efficient and producti#e workplace is critical. /utsourcin! R functions
create !reater efficiency within human resources systems. 3d#anced human resources
technolo!y utili?ed by outsourcin! pro#iders help streamline important R functions,
such as payroll, benefit administration and compliance mana!ement. /utsourcin! helps
employers and mana!ers spend less time doin! paperwork and more time dedicated to
impro#in! the efficiency and effecti#eness of the workforce. There are many benefits to
outsourcin! R functions. For one thin!, not e#ery business has dedicated human
resources professionals. /utsourcin! !i#es them the ability to take on this responsibility
by outsourcin! them to outside human resources outsourcers. (e minimi?e risk by
outsourcin! R to outside human resources outsourcers. outsourcin! R is a !ood idea
and can sa#e them money by not ha#in! to staff this department. Some key benefits
are:
+. Sa#es time
;. =on:t ha#e to hassle with !o#ernment forms
B. 3ccess to skilled personal
5. )mployees don:t ha#e to worry about company backlash if they ha#e any
complaints
.. Sa#e money on trainin! and maintain skill sets
For mana!ement the outsourcin! of R can be a cost sa#in!s and it can ha#e the added
benefit of addin! a truly ob1ecti#e eye toward the process. @y bein! an outside source
R can be more free from the internal office political en#ironment. /n the other hand
this can be a minus in the same way. Since you are dealin! with people, treatin! them
as nothin! more than units to be mana!ed can be bad for morale. People are Relational
bein!s and de#elopin! relationships with the people in the company can be beneficial
and allow for the %human% element to be represented.
3nother plus is that R can be more free to hold mana!ement accountable. (hen R is
in0house the R person has to worry that they could step on the wron! toes and find
themsel#es in trouble with senior mana!ement. (hile it is poossible for an outsourced
R to make a ma1or blunder and thus lose the account, there is still that de!ree of
insulation by bein! an outside source.
ere are three thin!s that a mana!er would need to consider in the implementation
plan for this outsourcin! transition:
+. determinin! who stays and !oes. This was outlined in the te*t under a detailed list
makin! process. Pretty much a pro and con scenario.
;. le!al considerations in separatin! the employees from the company. 7nionDstate
lawsD)R&S3D(3RE and federal laws. Eot to mention public opinion from the
announcements and when to mention them.
B. compensation or se#erance packa!es. Truly here is where the difficulty must be from
an employer. They are tryin! to sa#e and limit costs but also are tryin! to maintain
fairness and !ood public opinion. (hat can they afford to doF ere & would be dealin!
with the CF/ and accountants and lawyers to determine what we can offer.

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