Business-process outsourcing (BPO) is a type of outsourcing that consists of

contracting operations and responsibilities of a specific business process to a third-party

service provider. Such outsourcing generally began with manufacturing firms

outsourcing their supply chain but has grown into a much wider range of processes,

including marketing, finance, sales, and accounting. According to a recent Forbes

article, the revenue of the global outsourced services industry rose from $45 billion in

2000 to nearly $100 billion in 2012.

An article in BusinessWeek suggested that BPO can save end users anywhere from 15

to 85 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 whether to

outsource your human resources department.

Based on the above information and your study, please outline arguments

supporting and opposing a decision to outsource this function of your business.

Please explain from a purely business standpoint, any issues that might arise from

contracting with an international-based versus U.S.-based BPO service firm?

(Chapter 6, page 199)