Gizmo, Inc. is a diversified multinational manufacturer.The CEO is considering outsourcing the marketing research function to a global consulting firm.The consulting firm would charge a fixed annual fee of $1,300,000.At present, the costs of operating the marketing research department are $1,508,000 per year, as follows:

Director salary$146,000

Staff salaries890,000

Travel137,000

Occupancy84,000

Consultants90,000

Executive VP75,000

Overhead40,000

Miscellaneous46,000

The outsourcing firm would perform all duties currently performed by Gizmo personnel, as well as those of the external consultants.Miscellaneous expenses (supplies, etc.) would be eliminated.Travel costs would decline 90%.Occupancy costs reflect internal charge for office space in corporate headquarters.Cost for Executive VP reflect a charge for 15% of her salary; the market research director reported to her. Overhead is an allocation of general corporate overhead.

Required:Discuss the factors that the CEO should consider in deciding whether

to outsource the marketing research function.