|Exhibit 1: Outsourcing Diagnostic Tool|
| Lang offers this
checklist to clients as a self-evaluation tool to help them
determine whether to outsource a particular function. The
client identifies the activity it is considering outsourcing
and then rates it from 0 to10, to represent the degree to
which it is core or noncore. A task thats a core function of
the operation gets a low number (meaning dont outsource). A
high number, corresponding to the degree to which it is
noncore, indicates do outsource. A total higher than 70
indicates an activity the client probably could benefit from
outsourcing. Items 1 through 8 pertain to operational issues;
8, 9, 10, 11 deal with staffing considerations; and 12, 13 and
14 address cost. |
Heres how it might be filled in by the CEO of a midsize education association, with an annual budget of $5 million and a staff of 16, who needs to determine whether to outsource accounting or replace a staff person who has just announced shes leaving. The department also has an administrative assistant who has responsibilities besides accounting.
Name of business activity: accounting functions.
1. Core/noncore _____ (Accounting is not a core activity for the organization: 10 .)
2. Reduce service/increase service _____ (Wed have more time for serving our clientele: 10 .)
3. Less flexible/more flexible _____ (Arrangement might be more flexible, to vary with our seasonal needs: 8 .)
4. High risk/lower risk _____ (We dont know how hiring an employee will work out. With outsourcing theres less risk, and we can find the right skills quickly: 10 .)
5. Easy to maintain/difficult to maintain _____ (Weve had luck with our accounting department in the past, but the future is uncertain: 5 .)
6. Difficult to outsource/easy to outsource _____ (Its easy to find an outsource firm to provide the accounting services we need: 10 .)
7. Inability to grow/ability to grow _____ (If our organization grows, we can easily add services if we outsource: 8 .)
8. Inefficiencies/increased efficiency _____ (Efficiency could increase if specialists do the accounting and the administrative staff member takes on additional work: 8 .)
9. Instability/stability _____ (Not much turnover: 5 .)
10. Stagnant ideas/new ideas _____ (The outsourcing firm is up to date on all the latest accounting information: 10 .)
11. Basic skills/cutting edge skills _____ (A candidate with new ideas and top skills probably will require too high a salary: 10 .)
12. Higher operating costs/lower operating costs _____ (Cost of outsourcing may be lower based on proposals received: 7 .)
13. Fixed costs/variable costs _____ (Our organization likes fixed costs, such as knowing the salary of the hire: 3 .)
14. Small capital requirements/large capital requirements _____ (Does not apply here.)
In the example above, the total is 104 . Outsourcing the organizations accounting probably would work out well.
Source: Lang Group.