Cost Considerations Essay

The Colbert and Kinzer divisions are mainly based in North America, are involved in the production of equipment and the manufacture of other products and have average profits. On the other hand, Reitzel has more diversified operations with its market extending broadly to ten countries in Europe, North America and South America (Brown et al. Reitzel deals majorly in the financial market, where it offers some credit facilities, such as agribusiness loans, equipment loans, and estate loans. As a result of globalization and extending its market, Reitzel records high profits in comparison to the two other divisions. In the recent past, Reitzel has contributed to about 80% of the corporation’s profits, while recording about two-thirds of the total sales in Schaeffer’s Corporation (Brown, et al.

The various benefits the corporation would enjoy are mentioned below. First, the technical capacity of Schaeffer’s corporation would significantly increase. The outsourcing company that managed to win the bid by Schaeffer’s Corporation was ABC corporation. ABC corporation offered a large pool of high-quality and already trained workers. Further, ABC corporation provided an unlimited supply of resources including technology and equipment that the Schaeffer’s divisions would use. Additionally, ABC corporation incurs any costs related to educating and training employees to achieve high standards. Further, management in the different sectors of Reitzel becomes simplified with the outsourcing of IT infrastructure. Finally, the Schaeffer’s corporation can find employees with adequate training to occupy customized jobs in the process of sales, marketing or distribution (Dinu, 2015).

The Development of the RFP Schaeffer’s Corporation had not been involved in any outsourcing deals in the past. Therefore, it hired an external consulting company, Gartner Consulting to ensure a smooth and effective transition (Brown et al. Gartner Consulting provided all means of assessing the cost differences between the outsourcing company and the Schaeffer's corporation. The third step involved the presentation of the applicable information to outsourcing vendors. The report included the expectations and the required resources from the outsourcing company, which was prepared within a year. The RFP system was created with the help from the consulting company and involved a total period of 2 months (Brown et al. The RFP was the detailed report including all resources that the company was ready to outsource and the types of IT infrastructure required by the corporation.

This showed proof that outsourcing would only burden the corporation’s budget, leading to reduced profits. Further, the issue of the drawn contract not being inclusive of all services the company was raised. However, the Schaeffer’s corporation could not negotiate any further for changes in the drawn agreement, which meant that the company would then be required to pay for any extra service received from the ABC corporation. Further, the managers argued that outsourcing IT resources was not geared towards the corporation’s ambitious plans of tremendous growth in the different fields. The corporation had initially aimed at gaining other companies in the bid for expansion, which would be opposed by outsourcing. According to my assessment, outsourcing the Reitzel division’s IT resources would have been the best option available to the company.

The Reitzel division was the company’s leading profit-maker, accounting up to 80% of the corporation’s profits. Therefore, the company would be able to increase the division’s operations and expansion (Doval, 2016). Connections with ABC corporation in Europe would enable the company to build a strong foothold in the country. Further, the division would have the availability of ABC’s resources to put into use. According to the above reasons, therefore, outsourcing Reitzel’s IT resources proves to be the best option. Controversies Arising from the Taskforce’s Recommendations. The task force decided to outsource the entire company’s IT infrastructure from ABC corporation. This move was received with massive criticism from the Colbert and Kinzer divisions and generally from employees in the company.

A number of factors contributed to the high criticism from the two companies as outlined below. The given issues would have been amicably avoided if the two other departments’ (Colbert and Kinzer) managers were involved in deciding outsourcing the IT resources. This would have given the managers a chance to understand the importance of outsourcing to the company as a whole and dispel any skeptics that the move would only be advantageous to the Reitzel division. References  Brown, C. V. , Dehayes, D. L. , Haden, S. S. P. , & Caruth, G. E. From RFP to selection: Guidance for outsourcing RIM functions.  Information Management, 49(1), 22. Dinu, A. M. Evaluation of non-functional requirements in a request for proposal (RFP). In Software Measurement and the 2012 Seventh International Conference on Software Process and Product Measurement (IWSM-MENSURA), 2012 Joint Conference of the 22nd International Workshop.