Outsourcing Report for Retail Company

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Team Name: Shah’s Favorite Retail Specialists
TeamAssignment:FinalProposal
Dr. Shah / MIS347-900
Team Members: Fanghong Lu, Meggan Lynch, Jacob Petroski,
Melissa Silvestrini, and Paulina Vink

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Table of
Contents
Executive Summary.........................................................................................................................4
Introduction.....................................................................................................................................6
Background and Current Trends of Outsourcing in the Philippines..............................................6
Current Outsourcing Trends.........................................................................................................7
Future of Outsourcing .................................................................................................................7
The Pro & Cons of Outsourcing in the Philippines ........................................................................8
Philippines - Pros ..........................................................................................................................8
Philippines - Cons .........................................................................................................................8
Political and Environmental Risks in the Philippines ....................................................................9
Rationale for Outsourcing: How the business objectives are being achieved ...........................10
List of Viable Business Processes to Outsource ..........................................................................11
Customer Service Call Center ....................................................................................................11
IT Helpdesk ................................................................................................................................12
IT Data Center ............................................................................................................................12
Manufacturing ...........................................................................................................................13
Logistics ......................................................................................................................................14
Business Cases Including Key Steps Required for Implementation ............................................15
Business Case 1: Customer Service Call Center..........................................................................16
Business Case 2: IT Helpdesk .....................................................................................................19
Business Case 3: IT Data Center ................................................................................................23
Business Case 4: Manufacturing ................................................................................................27
Business Case 5: Logistics ..........................................................................................................29
Conclusion .....................................................................................................................................33
Project Assumptions .....................................................................................................................33
Project Roles/Responsibilities .....................................................................................................34
Organizational Chart...................................................................................................................35
Responsibilities ..........................................................................................................................35
2-28-2016

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Team Members’ Individual Major Contributions ......................................................................36
Hour Log .....................................................................................................................................36
References ....................................................................................................................................38
Appendix A - Relevant Company Z Information and Data ..........................................................41
A1: Additional List of Pros and Cons (Advantages/Disadvantages) for Outsourcing ................41
A2: General Business Timeline for Retail Companies ................................................................42
Appendix B - Project Deliverables ...............................................................................................43
B1: Scope Statement .................................................................................................................43
B2: Expectation Management Matrix .......................................................................................45
B3: Meeting Minutes .................................................................................................................46

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Executive Summary
Our Management Team consisting of Fanghong Lu, Meggan Lynch, Jacob Petroski, Melissa
Silvestrini, and Paulina Vink researched the possibility of outsourcing business processes of our
retail company, a large U.S. based athletic apparel and equipment company, to the Philippines.
Our Client included Dr. Samir Shah, the CEO of Company Z. We found that for the most part,
the Philippines is a favorable destination to outsource to for a variety of reasons. Our decisions
were made using extensive research and by performing financial analyses.
Our initial research areas included background and current trends of outsourcing in the
Philippines, current outsourcing trends, the future of outsourcing, the pros and cons of
outsourcing in the Philippines, political and environmental risks in the Philippines, and the
rationale for outsourcing, or how the business objectives are being achieved. The highlights of
this research include the following information conveyed in the few paragraphs below.
The Philippines have provided outsourcing opportunities for decades. However, as of recently
the country has experienced significant growth and is considered one of the major countries to
outsource to. This growth is fueled by the numerous pros of outsourcing to the Philippines
including an English speaking population, cheap cost of labor, and friendly culture. The pros are
also accompanied by certain risks. Currently, the Philippines has an extremely high political risk
due to rampant political corruption and instability. As a result, the Philippines is home to a weak
judicial system with an uninspiring record in case disposition with procedural delays and
technical failures, differing application of laws and regulations on procurement, taxation and
land usage, and poorly run public financial management. The government lacks independent
controls internally as well as means of accounting and reporting to keep regulations afloat. After
completing this initial research, we narrowed our scope to five main processes to research the
feasibility of outsourcing to the Philippines. We then analyzed these five scope areas and
determined the following.
We feel that the call center operations should be outsourced to the Philippines to ensure higher-
level quality at a reduced cost. Annually, we would save $380, 253.16 if we chose to outsource
our customer service representatives to the Philippines instead of domestically. Hundreds of
U.S. companies including Citibank, Safeway, Chevron and Aetna have successfully outsourced
their call centers to the Philippines.
The Management Team believes outsourcing the IT Help Desk is in the best interest of Company
Z. The workers in the Philippines are IT-proficient and the country has an efficient IT
bandwidth/IT infrastructure. This IT knowledge will prove beneficial to provide technical
support for our corporate employees. The labor costs in the Philippines are significantly lower
and can provide significant savings overall if implemented efficiently and the right company is
chosen. It was found to have an annual savings of 28%.
The Management Team recommends outsourcing the IT Data Center to the Philippines. It has a
great potential to be outsourced in the Philippines which according to the Information

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Technology and Business Process Association of the Philippines (IBPAP), the Philippine
information technology and business process management (IT-BPM) industry employed 776,794
people at the end of 2012, wherein it added 137,066 new jobs. This new intake reflects 21
percent growth from 2011. We will be expecting a group of experienced talent to manage our
data center.
While we do feel that Company Z should pursue outsourcing its manufacturing to improve
efficiencies and lead time, due to the political unrest, lack of reliable infrastructure, and loss of
oversight, we would not recommend utilizing the Philippines at this time. In this case, the
benefits are outweighed by risks involved and our company does not want to add risks to a
crucial aspect of our business
The management team had additionally decided not to outsource the logistics. Both logistics and
manufacturing are considered interrelated as they are both in regards to our men’s shoe products.
Essentially, if one is not outsources then both will not be outsourced. Outsourcing the logistics
creates an added risk for the company much in the same way manufacturing does. The political
instability, lack of quality infrastructure, reliability, and lack of control forces us to, at this time,
not outsource the logistics to the Philippines.
In conclusion, the Management Team favors outsourcing the customer call center, IT help desk,
and IT data center to the Philippines. The Management Team recommends against outsourcing
manufacturing and logistics to the Philippines.

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Introduction
As a large U.S. based retail company, there exists opportunities to use the strategy of outsourcing
in an attempt to find savings in the form of costs, time, and efforts while leveraging outside
expertise. More and more cost and quality conscious businesses all over the world are turning to
destinations overseas for highly skilled, hardworking, and proficient English-speaking talents to
outsource their non-core business processes. Among the countries that offer outsourcing
solutions to entrepreneurs, the Philippines has always been ranked as one of the best outsourcing
countries in the world.
As one of the economic pillars and main revenue generators of the country, the Philippine
Government recognizes the potential growth of the industry by providing strong support and
infrastructure for investment overseas. With that being said, The Philippines is currently a hot
market in outsourcing website optimization, IT services, internet marketing, and call center
operations. It will also be very low compared to prices in the US and Europe. Given these
reasons, outsourcing to the Philippines is one strategic move that will help Company Z realize its
objectives and goals in a strategic way.
Background and Current Trends of Outsourcing in the Philippines
The Philippines have provided outsourcing opportunities for decades. However, as of recently
the country has experienced significant growth and is considered one of the major countries to
outsource to. Below is a list of facts surrounding the background of outsourcing in the
Philippines:
● 2014- 6.1% economic growth
● 2nd behind China for fastest growing economies in Asia
● Predicted to continue to grow in 2015 along with China
● Two main drivers- OFW remittances and offshore outsourcing
● Outsourcing industry has doubled on its revenues, reaching $13.3 billion
● Earnings estimated to grow up to $25 billion in 2016 and $55 billion by 2020
● Industry- specific outsourcing expected to generate higher growth rates
● Capital markets at 20- 22% growth
● Insurance and banking outsourcing at 14-16% growth
● Finance and accounting outsourcing (FAO) 8-10% growth
● Contact centers 6-8% growth
● Multi-process HRO 2-4% growth
● Focus lies on special skills and expertise rather than generic types of services: Banking,
capital markets, and insurance
Outsourcing in the Philippines has tremendously helped the country boost its way next to Asia’s
economic giants. The remarkable growth has helped make it one of today's top call center
destinations. Buildings, warehouses, and commercial areas have been dedicated to house future

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call centers. Business process outsourcing (BPO) companies have grown significantly in the
Philippines; the promised employment is making job seekers very optimistic. The Philippines
was recently crowned by international businesses and outsourcing associates as the “new call
center capital of the world”.
According to the Information Technology and Business Process Association of the Philippines
(IBPAP), the revenues from offshore companies increased 18%, jumping to $13 billion from $11
billion in 2011. This growth is continuous. The Philippines is exceeding every target recorded.
The labor force has also experience a 21.8% increase jumping to 780,000 from 640,000. IBPAP
reported this number is expected to jump to 926,000. In the next few years, the call center
segment of the Philippine outsourcing industry is expected to take $14.7 billion worth of the
BPO revenue and a total of 816,000 new jobs.
Outsourcing trends like offshoring provide cost savings, while improving company quality and
efficiency.
Current Outsourcing Trends:
In the past, offshoring has been intriguing to companies mostly because of the cost savings,
quality, and efficiency. Cutting expenses motivates companies but more recently foreign
businesses are finding that outsourcing may not be as helpful with the quickly changing market
demands. Some companies are choosing to near-shore their business instead of sticking with
offshoring.
Near-shore outsourcing is a trend, which offers both cheap and quality services while keeping
business close by. It is not a strategy this proposal will examine or pursue for Company Z but it
is a relevant trend in regards to the Philippines. While the Philippines offers fantastic streamline
services, near-shore may decrease their number of investments which come into the country and
can have an effect/risk on our outsourcing projects in the country.
Future of Outsourcing in the Philippines:
The Philippines has a stable environment, rising economic incentives, and highly skilled human
resources. Compared to its major competitor, India, the Philippines telecom infrastructure is
extremely better and companies are more safely set up, they are rapidly catching up to India in
relation to the growing BPO market. American, Australian, and European countries have already
outsourced to the Philippines and are saving 40-60%, which has increased profits and ability to
expand.
The Philippines workforce is excellent; the quality of their work is incomparable. For example,
Kelly Services located in Michigan, found that the Philippines has the highest agent productivity
in the region. Call center agents in the Philippines handle an average of 107 outbound and 98
inbound calls a day compared to Indian call centers, which handle 78 outbound and 73 inbound.
The Philippines is currently ranked number one in the availability of knowledge-based jobs and
workers in the entire world. Based on a study done by the US-based Meta Group, they concluded
that in terms of labor quality, the Philippines is ranked 4th among all Asian nations.
The Philippines workforce is driven by their high quality and impressive literacy rate of 93.4%,
according to the United Nations Development Program. India’s literacy rate is 61%.

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The Philippines, as well as India, both offer offshore software development, call center
operations, Web development, and other IT services. However, the Philippines is also in the
global animation market, which is growing because of the increased popularity in 2D and 3D
animated shows, movies, and games. Disney, Hanna Barbera, Marvel, and Warner Brothers
established offices in the Philippines many years ago.
Outsourced medical transcriptions is another promising industry for the Philippines. Many
doctors, medical technologists, nurses, and specialized medical transcriptionists in the country
have been able to convert medical records into data format, which is now required by law, to
meet the growing demands of US hospitals.
Many large companies have already started operating in the Philippines, such as AT&T, IBM,
MSN-Microsoft, and Sallie Mae. Small and medium sized companies have also chosen the
Philippines as their BPO headquarters. Reading all of the present signs, the future in outsourcing
and offshoring is the Philippines.
The Pro & Cons of Outsourcing in the Philippines
When it comes to making any business decision, such as outsourcing business processes, there
are pros and cons that need to be considered. The Philippines have numerous advantages and
disadvantages that would have a significant impact on our company. Below are the major pros
and cons, determined by the management team, that the company needs to consider when
deciding whether or not to outsource to the Philippines:
Philippines - Pros:
Culture - The Philippines have a culture that is very Western compared to the other Asian
countries (CNBC International, 2014). This is advantageous as it allows for a smoother
implementation and prevents cultural barriers from creating problems between our
company and the vendor.
English Speaking - Over 100 million individuals in the Philippines speak fluent English
while many others in the country have some English speaking ability (CNBC
International, 2014). Much like the culture, this will benefit the company in terms of ease
of implementation and operation. This advantage can be easily overlooked but is
definitely one of the most significant.
Cheaper Operational Costs - Outsourcing to the Philippines has proved to be cheaper for
a lot of companies in most business areas including manufacturing (CNBC International,
2014). This is mostly seen through lower labor costs. Since one of our main goals in
outsourcing is to reduce costs, this is clearly a major benefit for our company.
Philippines - Cons:

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Red Tape - Even today, where outsourcing has expanded in the Philippines, the country is
still one of the countries that are least open to foreign investment (CNBC International,
2014). This can clearly make it difficult to outsource in this country as there will be a
barrier to entry.
Corruption - With the red tape, there is also a moderate level of corruption that exists in
this country (CNBC International, 2014). This is a huge stumbling block as the company
may have to weigh the option of paying bribes/not being an ethical company with the
option of not entering the country from an outsourcing perspective/being an ethical
company.
Lack of Quality Infrastructure - The Philippines have improving economic conditions but
one of the major concerns includes the country’s poor infrastructure. The economy
experiences a significant amount of wasted money and time due to the lack of quality
transportation system (CNBC International, 2014). With this in mind, we would need to
be conscious of how this will add to our final costs and how it will affect our vendors and
their employees.
Please see section A1 of Appendix A (“Relevant Company Z Information and Data”) for an
additional list of pros and cons that should be considered.
Political and Environmental Risks in the Philippines
Currently, the Philippines has an extremely high political risk due to rampant political corruption
and instability. The current Filipino Administration has been governing for almost six years.
Current President Aquino has taken measures to introduce a “good governance agenda with
reforms to counter corruption, bolster the economy and improve the business and investment
climate in the Philippines” to counter the culture of corruption and instability. Although,
progress has been made to increase the economic risk of business in the Philippines, there is still
much risk remaining. Even so, International Monetary Fund (IMF) assessed monetary
transparency fiscal visibility in 2015 as “generally good” (“Overseas Business Risk -
Philippines”, 2015).
The most severe issues include a weak judicial system with an uninspiring record in case
disposition with procedural delays and technical failures, differing application of laws and
regulations on procurement, taxation and land usage, and poorly run public financial
management. The government lacks independent controls internally as well as means of
accounting and reporting to keep regulations afloat. On a brighter note, although procurement
can be hindered by bureaucracy, business to business deals can often occur quite rapidly.
This inability to regulate efficiently has also led to environmental issues in addition to political
issues. One of the largest environmental threats is unregulated deforestation, especially in areas
considered to be watershed areas. Deforestation has led to other problems such as poor air
quality. In major urban areas, air and water pollution are a threat to public health as a result of
increased industrialization.

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Native animals are also suffering. Specifically the marine life being subjected to coral reef
degradation and increasing pollution of coastal mangrove swamps are crucial to the breeding
processes of native fish. The inability to regulate agriculture has caused soil degradation, which
is damage to the land's productive abilities largely because of poor agricultural practices such as
the excessive use of “pesticides or fertilizers, soil compaction from heavy equipment, or erosion
of topsoil, eventually resulting in reduced ability to produce agricultural products” (“Philippines
Environment - Current Issues”, n.d.).
Rationale for the Outsourcing: How the business objectives are being achieved
In today’s business world, outsourcing has become a popular business strategy and is a common
buzzword. It has reached the point that nearly every company outsources at least one business
process and some business executives believe it is the simple fix for businesses when a strategic
decision needs to be made. This begs the questions of, why do companies outsource and what is
the rationale for outsourcing? The answer to this is clear, assuming it is being looked at from the
correct perspective. Outsourcing as a business strategy, much like any other business strategy,
should serve the purpose of working towards and accomplishing the firm’s identified business
objectives.
From Company Z’s perspective, we have two fundamental business objectives that we are
pursuing. They include to accomplish reducing our operating costs and increasing our product
time to market. In order to remain competitive in the market, Company Z will need to best
leverage its core competencies to complete these business objectives. This is an assumption the
management team made since Company Z is a large US based sports apparel and equipment
retailer in a competitive market. This assumption, along with the other assumptions we made,
can be seen in the Assumptions section.
Our first business objective of lowering operating costs can be achieved by outsourcing.
However, this is not always the case. Often times it is too easily assumed that outsourcing
automatically means lowering costs. The majority of the time, labor cost are significantly
cheaper than a domestic option but other costs can be higher. Additionally, there are one time
upfront costs that need to be accounted for. To accomplish this business objective, we will have
to properly identify and estimate all costs. Additionally, we need to consider the risks involved
and the potential for costs to increase.
Our second business objective of increasing product speed to can be achieved by outsourcing.
For this to happen we need to pursue business processes that have a direct impact on the product.
For example, manufacturing can have a direct impact on speed to market. By decreasing
production time by outsourcing manufacturing, it can decrease the overall time required in the
general retail business cycle (see section A2 in Appendix A - Relevant Company Z Information
and Data). To accomplish this business objective, we will have to ensure that we can decrease
certain aspects in the retail cycle while not increasing others.
As outsourcing projects begin, it will be important to monitor and keep evaluating the progress
of each one we pursue. It will be necessary to make sure that the measurables are staying on
track. This process will help to understand whether the outsourcing projects are going to be

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successful or are facing failure. This will allow us, if necessary, to use a different strategy to
deal with bettering our performance.
List of Viable Business Processes to Outsource
The management team has identified five business processes that are potentially viable options
as outsourcing projects specifically in the Philippines but it is important to note that the
recommendation decisions for these five business processes are determined in the next section of
this proposal. This was completed by leveraging the established business process selection
criteria from the “Product Characteristics and Requirements” of the Scope Statement document.
This document can be found in the B1 section of the Appendix B (“Project Deliverables”) which
is attached at the bottom of this final proposal document. These five business processes were
narrowed down from over seven initial business processes. They include:
1. Customer Service Call Center
2. IT Helpdesk
3. IT Data Center
4. Manufacturing of Men’s Athletics Shoes
5. Logistics of Men’s Athletics Shoes
For all of the viable options with further details and research in regards to how they exist in the
Philippines, please see the information following this paragraph. The actual business cases, and
recommendations, are in the next section of this proposal titled “Business Cases Including Key
Steps Required for Implementation.”
1. Customer Service Call Center
The Philippines is an excellent choice as a destination for outsourcing customer call service
centers. This is clearly demonstrated by the fact the Philippines has been identified by top
business journals and editorials such as the LA Times as the call-center capital of the world.
Although the Philippines only became a call center hot spot eight years ago, its attractability
launched it into a prime destination, especially for English speaking companies. In a world
that has become hyper-aware of the ethical treatment of workers in developing nations, the
Philippines provides a good option for U.S. businesses. By outsourcing, the companies not
only reduce operating costs, but also can still pay Filipino workers a higher salary to work in
the call centers than these people, even the college educated, would make otherwise.
Therefore, outsourcing to the Philippines is not only a smart financial decision, but also a
smart public relations decision in an age where many companies such as Forever 21 are
boycotting and written about online for paying their workers low wages.
Over 1 million Filipinos currently work at call centers and related outsourcing businesses,
serving largely American companies. The mixture of cheap labor and specialized skills has
contributed to making the Filipino workforce invaluable American companies. These
companies use these workers to “field customer complaints, generate sales leads, code data,
format documents, and read medical scans and legal briefs”. Filipinos working in call centers
can make even more money than general doctors. The industry in the Philippines has grown

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so rapidly that it has overtaken India as the call-center capital of the world. India still does
have capital on information technology outsourcing, but Filipinos dominate almost every other
kind of task known as business process outsourcing, or BPO. By 2017, experts estimate that
the Philippines’ BPO industry will generate $25 billion in revenue, accounting for about 10%
of the Philippines' economy and as much as the total amount expected to be sent home by the
“11 million Filipino nurses, sailors, musicians and others working overseas”.
2. IT Help Desk
Setting up an in-house help desk support can be very costly. With the ever-changing
technology issues, recruiting problems and equipment costs are spiraling out of control. In the
athletic apparel industry we experience severe competition and the product requires intensive
labor, causing us to face extreme pressure to increase the profit margins through our sourcing
practices. Help desk outsourcing provides us with the most cost-effective solution and
flexibility, as well as the best opportunity for success.
Every business needs a strong internal customer (employee) support desk. Good technical
support is worth the investment. The management team has realized this part of process is an
unavoidable expense and we want to satisfy our customers. Therefore we have two basic
options in setting up our IT helpdesk: we can both own and operate the help center that provide
assistance to our clients or subcontract this department out to secondary service provider.
These facilities can be located either domestically or internationally, and both present a myriad
of positives and negatives. Firms that produce domestically benefit from ease of monitoring,
skilled workforce, government stability, job creation, and well understood labor rules, while
suffering from the relatively high wages required in the U.S. as compared to developing
countries.
Philippines came into the business of outsourcing quite long times. Over a span of years they
have grown tremendously in the BPO sector employing thousands of people and generating
billion dollar of revenue. In this country we can find the support associates are experts in
helping customers solve any issue that arises, 24 hours a day, seven days a week. To the
surprise of many, it is unquestionable that the Philippines is doing something right in handling
outsourcing projects, better than other possible outsourcing countries on our list.
3. IT Data Center
The presence of these centers allows processes and information to become more efficient,
centralized, and easier to manage. Unfortunately, maintaining a data center is very challenging
even for IT related businesses. For this reason, data center outsourcing now becomes a
growing trend, with many large enterprises embracing the financial and operational benefits
associated with wholesale co-location solutions.

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In analyzing the athletic apparel industry, we are faced with the question, which potential
business processes are possible to be outsourced to the Philippines? As the economies of
countries around world expand, so does their ability and skill level in all facets of
manufacturing. The decision to outsource a data center requires careful examination of options
at a strategic level from a business vision perspective and a thorough tactical evaluation on an
operating plan involving asset inventories, facility requirement estimation, and budgetary
considerations. Whether looking to support critical applications or simply manage day-to-day
operations, the IT needs of every company vary. We turn to solution providers from staff
outsourcing knowing that their expertise can provide multilingual technical service desk
support for an athletics apparel company headquartered in the U.S.
Many organizations – whether small, medium and large companies across various industry
verticals have realized that outsourcing their data centers is the best way to align IT and
business in the most cost-effective manner. We realized there are many important business
benefits gained from outsourcing: our company can receive higher operational and financial
efficiencies, enjoy proactive monitoring and management of our hosted IT infrastructure, and
increase customer satisfaction by using employees from outsourcing company, while
businesses can stay focused on our core business areas.
Benefits not only include protection of IT infrastructure from technology obsolescence, but
also allow maximum freedom and flexibility in daily IT operations, while simultaneously
lowering their financial and operational overheads.
4. Manufacturing
When determining whether to outsource a key process such as manufacturing, our company
must first consider its core competencies. In the case of Company Z, the core competencies
that set us apart from our competition have been identified as our design abilities and our
marketing. Knowing this, it is in the best interest of our company to then partner with other
companies with skills that complement our core competencies.
The high costs associated with manufacturing our product within the US in has led us to look
for a strategic partner elsewhere. In addition, it has been difficult to obtain qualified, skilled
laborers to operate the machines involved in the process. When a new machine is needed or
the existing machine breaks down, it is extremely difficult to find a technician to fix the
machines. (Aeppel, 2008).
The success of this partnership requires a facility that can not only reduce the cost of
manufacturing but also leverage its relationships with suppliers to improve our time to market.
In the U.S., it is difficult to find suppliers willing to produce the smaller batches we need for
the production of our products. In addition, when new designs are brought to the suppliers,
there is considerable turnaround time to produce the necessary components of the new design.
This severely restricts our time to market with the average design taking 12 to 14 months to get
to market. By moving our operations to the Philippines, the turnaround time for new designs

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would be improved (see business case for specific details). Manufacturing costs can also be
greatly reduced by moving operations to a manufacturer in the Philippines (see business case
for specific details).
The Philippines has a long history with textile manufacturing. Established in the 1950s, the
government-backed program promotes producing goods domestically. The program continues
to grow increasing annually from 2009 to 2011 to $2.14 billion. There is an abundance of
natural unique fibers throughout the country, which could provide a competitive advantage to
the final product. One such fiber is abaca, which is prized for its strength, buoyancy,
resistance to saltwater damage and long fiber length and is being used to manufacture
lightweight, strong fabrics.
The cost of doing business in the Philippines could be even more beneficial. The SAVE Act
introduced to Congress in 2009 & 2011 is positioned to expand textile and apparel trade
between the US and the Philippines by eliminating certain duties on apparel products made in
the Philippines using U.S. fabric. (Textile World Asia, 2013). This Act in addition to tax and
duty free areas designated by the Philippine Government make it a prime location for factories
in various places around the country. (Posadas, 2008).
5. Logistics
Outsourcing to a Third Party Logistics (3PL) company can be rewarding yet challenging to an
organization. To successfully outsource, a business must be fully invested in handing over
various aspects of the supply chain to a partner. This can be extremely difficult and ultimately
requires much trust. The growing complexity with globalization, technology, and competition
has greatly affected the supply chain functions. To make an effective business decision that
will generate incremental profitability, a company must first thoroughly examine the
motivations, expectations, and justifications for outsourcing.
An effective practice, which allows a business to grasp the overall impression of logistics
performance would be to conduct a logistics performance gap analysis. This analysis will
present the strengths and weaknesses, identification of complementary logistics benchmarking
partners, and development of cost benefit justification of a world-class logistics initiative.
Companies must collect and summarize their operational performance data in order to develop
many key performance indicators, that is, if they are not currently reporting them. The
company should evaluate the process attributes and their key cost and service metrics, assess
the primary functions included in the cost analysis for performance gaps, as well as include the
cost and gaps of the technology infrastructure in the analysis.
Once these gaps are properly identified, the company should use them to better understand the
strengths and weaknesses within their organization. This analysis allows the company to
pursue partners with strengths that can compensate for, or complement their weaknesses.
The company must evaluate financial opportunities relative to current cost factors, capital
investment requirements for closing cost factors, investment requirements for closing

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performance gaps, financial structure, and objectives, volume variability and company risk
tolerance. The analysis should reflect current unit costs, the mix of fixed and variable costs and
the potential ability to convert fixed to variable cost.
If gaps exist in the company’s current technology, the company should conduct an estimate of
capital investment required to adequately fill the technology gap and the time required for the
implementation. If volume fluctuates significantly, conversion to variable cost will allow the
company to more closely complement period costs to the volume resulting in stable cost per
unit, per period. The removal of facility leases, sales distribution facilities or fleet operations
can have positive balance sheet impacts, which can also add extra savings or benefits to the
outsourcing justification.
An outsourcing suitability analysis can also be conducted, which will demonstrate an
assessment of candidate functions, the major processes, and the company’s capabilities against
a set of evaluation attributes that stratify elements such as criticality, competence, customer
impact, complexity, and improvement capacity. To conduct a suitability analysis, a company
must begin by developing matrices of the major outsourcing candidate functions.
Warehousing, transportation management, order processing, freight audit and payment,
specialized packaging and assembly, a returns and reverse logistics.
The next step would be to distinguish the major processes within these given functions.
Evaluation criteria should be developed listing the complexity, customer receptivity,
competitive differentiator, customer interaction level, product knowledge requirements,
exception incidence rates, current performance gaps, and 3PL ability to assume quickly and
improve. The company should individually score the attributes for each major process; once
this is done the scores will be accumulated and summarized. The company should then meet,
review, and develop a list of the easiest and most effective way to outsource. During this time,
the company should also identify barriers and risks associated with outsourcing.
Business Cases Including Key Steps Required for Implementation
For each of the business processes above that are viable to outsource, there has been a business
case developed to determine if they should be acted on by Company Z. The business cases
include the projected costs and benefits as well as the recommended steps for implementation
and the skillsets required, if deemed necessary. Additionally, the Scope Statement found in the
B1 section of the Appendix B (“Project Deliverables”) which is attached at the bottom of this
final proposal document. Below are the five examined business processes and the
recommendation decision for each:
1. Customer Service Call Center - Yes
2. IT Helpdesk - Yes
3. IT Data Center - Yes
4. Manufacturing of Men’s Athletics Shoes - No
5. Logistics of Men’s Athletics Shoes - No

16 | P a g e
Please see each of the full length business cases for all five business processes, starting on the
following page:
Business Case 1 – Customer Service Call Center
General Information Section:
Business Process: Customer Service Call Center
Specifics: Customer Focused
Necessary Steps: Moving the customer call service centers to a third party provider in the
Philippines. This provider would fully own and operate the facility. This would be a strategic
move that would require little transitional foresight given that the current customer call service
center operations are outsourced domestically.
Business Objective(s) Addressed:
Lowering Operating Costs - The outsourcing of the customer call service center to the
Philippines would reduce the monthly cost of customer call service center by anywhere from
14-50%, depending on the provider chosen. See Costs and Benefit sections below.
Pros:
1. The Philippines is currently the number one destination for American companies to
outsource their customer call service center operations.
2. The Filipino workers labor costs are low.
3. The Filipino workers are strong English speakers which is a major benefit that can
prevent cultural barriers from causing problems.
4. The culture is the Philippines is friendly and encourages Filipino people to provide
high quality customer service.
Cons:
1. We will be outsourcing customer call service center operations to a foreign culture that
we have yet to interact with professionally.
Criteria:
1. The business process has the potential to be outsourced in the Philippines:
i. Hundreds of U.S. companies including Citibank, Safeway, Chevron and Aetna
have outsourced their call centers to the Philippines. There are currently multiple
shoe manufacturers located in the Philippines.
ii. There are currently over one million Filipinos working in call centers for U.S.
companies. We would pick a call center ranked in the top ten by the American
Press. Our top choice is Convergys Philippines, which has a reputation for being a
global leader.

17 | P a g e
2. The business process, when outsourced to the Philippines, will accomplish our
business objective of lowering operating costs since the company would save at least
14% (greater than 10%). Please see the Costs and Benefits sections.
3. The outsourced business process will have a financial break-even point by the end of
year 3, see Break-even section below.
4. There is little to no risk of affecting product quality standards as the Philippine call
centers have a stronger reputation than domestic call centers.
Costs:
In the United States, it costs $31,200 annually to employ an outsourced customer service
representative (Bureau of Labor Statistics). This includes all benefits, health insurance, and
usage of facilities. Comparable companies of our size and industry hire on average fourteen
customer service representatives (CareerBliss). Therefore, domestically, it costs us
approximately $436,800 (14 employees x $31,200) annually to pay for our customer service
representatives. In the Philippines, it costs on average 192, 241 PHP to employ an outsourced
customer service representative (PayScale). This includes all benefits, health insurance, and
usage of facilities. Therefore, in the Philippines, it costs us approximately $4,039.06 (192,241
PHP) annually to employ an outsourced customer service representative, substantially less
money than what it costs to hire an American customer service representative. Annually, it
would cost us $56,546.84 (14 employees x $4,039.06) annually to pay for our customer
service representatives. We would utilize the same training materials given to our current
company, and therefore do not foresee incurring a training cost.
Benefits:
Benefit = (Old operation/variable costs - new operation/variable costs)
Benefit = $436,800 - $56,800 = $380,253.16
Annually, we would save $380,253.16 or 87% if we chose to outsource our customer service
representatives to the Philippines instead of domestically.
Break-even Analysis:
Given that we are outsourcing to a different company and not investing any money in the
switch, we will not see negative figures at any time, and therefore a breakeven analysis is not
needed.
Recommendation (Yes/No): Yes
We feel that the call center operations should be outsourced to the Philippines to ensure higher
level quality at a reduced cost.
Implementation Plan, If Recommended:

18 | P a g e
The following includes the necessary steps for implementation of outsourcing the help desk
business process to the Philippines:
1. Identify and determine the best company to work with
a. This should be based on multiple factors outside of just costs, including their
company track record, their ability/knowledge, etc.
b. Currently, our top choice is Convergys since we will be saving money
regardless of the Filipino company we choose and this company has the best
reputation globally.
c. Obtain price quotes for their services.
2. Create a Contract
a. Determine the terms of the deal and ensure the most essential parts for
Company Z are taken care of.
b. Ensure that the company we are working with is held responsible for the quality
of their service.
c. Make sure that the cost details are accurately laid out with no grey areas.
d. Settle on a fair contract length, ensuring proper exit if necessary.
3. Establish the implementation team
a. Assign two project managers with the timeframe of a month to ensure that the
project is efficiently implemented
4. Implement the project
a. Work diligently to make sure the project is completed on or prior to the
determined completion date.
b. During implementation communicate any setbacks or new facts that need to be
considered.
5. Analysis/Feedback
a. Ensure estimated costs are maintained and that both the savings and break-even
come to fruition.
b. Determine if there are any changes to help desk metrics such as length of
average resolution, percentage of incidents solved, percentage of incidents
escalated, etc.
Skillset Required:
1. High Proficiency in English/Communication Skills
a. The Philippines are one of the most Western in terms of culture of the countries
in Asia so this is not foreseen as a problem.
b. The customer call center representatives must provide friendly and efficient
service. They must know how to read English in order to respond to customer

19 | P a g e
complaints according to the Company Z protocol handbook currently being
used by the domestic Call Center.
Business Case 2 – IT Helpdesk
Business Process: IT Help Desk
Specifics: Internal Customers (Employees) of Company Z Corporate Offices for technical help
regarding their computer software
Lowering Operating Costs - The outsourcing of the help desk to the Philippines would reduce
the operating cost by approximately 28% depending on the provider chosen. See Costs and
Benefit sections below.
Pros:
1. The workers in the Philippines are IT-proficient and the country has an efficient IT
bandwidth/IT infrastructure. This IT knowledge will prove beneficial to provide
technical support for our corporate employees.
2. The labor costs in the Philippines are significantly lower and can provide significant
savings overall if implemented efficiently and the right company is chosen.
3. The Filipino workers are strong English speakers which is a major benefit that can
prevent cultural barriers from causing problems when speaking to our corporate
employees.
4. The culture is the Philippines is friendly and encourages Filipino people to provide
high quality customer service. Additionally, they have an affinity towards Western
culture.
5. With outsourcing to the Philippines, our IT Helpdesk will be able to operate 24/7
allowing for IT fixes at any point in the day.
Cons:
1. There will be a loss of control over training as the firm Company Z outsources to will
determine the training necessary.
2. There can be a lack of customer focus as the company you are working with may have
employees on multiple clients. They may not have all of their attention focuses towards your
needs.
Criteria:

20 | P a g e
i. Hundreds of U.S. companies including AT&T, JPMorgan Chase and Expedia have
outsourced their help desks to the Philippines (Bajaj, 2011).
ii. There are currently numerous companies in the Philippines that perform
outsourcing work for U.S. clients such as Phil-Am Outsourcing Solutions, Inc,
AusPhil Outsourcing, and PITON.
2. The business process, when outsourced to the Philippines, will accomplish our
business objective of lowering operating costs since the company would save around
28% based on calculations (greater than 10%). Please see the Costs and Benefits
sections.
3. The outsourced business process will have a financial break-even point prior to the end
of year 3, see Break-even section below.
4. There is little to no risk of affecting quality of our product as it help desk does has an
indirect effect on the product and the Philippine help desk companies are well
established and have a solid reputation.
Costs:
Figure 1: Assumptions Made to Determine Costs for IT Help Desk

21 | P a g e
Figure 2: Calculated Costs
Call Volume/Employees Needed Figure Comments Reference
Calls Per User Per Month 1.2 (Spiceworks, 2014)
Calls Per User Per Week 0.276923077 22 days per month
Corporate Users 3964.5 15858 U.S works x 25% corporate (Nike, 2010)
Call Volume Per Week 1097.861538
80% Quick Fixes
20% Level 2 calls
Average Call Length 2 hours
Hours Needed Per Week 2195.723077 hours
Quick Fix 1756.578462 hours
Level 2 439.1446154 hours
Level 1 Employees Needed 44 *40 hours per employee per week
Level 2 Employees Needed 11 *40 hours per employee per week
Philippines "Total Pay" Cost Passed on to Company Z
Level 1 Yearly Salary "Total Pay" 350.00$ 44 Employees (Jobstreet, 2016)
Level 2 Yearly "Total Pay" 1,000.00$ 11 Employees
Total Pay Assumes Salary, Benefits, etc.
U.S Based
Level 1 Yearly "Total Pay" 30,000.00$ 44 Employees (Payscale, 2016)
Level 2 Yearly "Total Pay" 50,000.00$ 11 Employees
Total Pay Assumes Salary, Benefits, etc.
1 Month for Implementation
-2 Project Manager 13,333.33$
-Training (55 employees) 2,200.00$ Training is 1 month of Salary
-Hardware/Software 55,000.00$ ~$1,000/employee
Additional Variable Costs
-$45 per deskop per month 178,402.50$ (Ars Technica, 2007)
-Fee for Call Escalation 50.00$ per hour
-Fee Total 1,141,776.00$
Call Breakup
Assumptions
Pre-Outsourcing Post-Outsourcing
Project Management Salary -$ 13,333.33$
Project Setup Fee -$ 100,000.00$
Training Fee -$ 2,200.00$
Hardware/Software Fee -$ 55,000.00$
Total Upfront/Initial Costs -$ 170,533.33$
Admin Expenses -$ 178,402.50$
Employee "Total Pay" 1,870,000.00$ 26,400.00$
Escalation Fee -$ $1,141,776
Total Operational Costs 1,870,000.00$ 1,346,578.50$
Upfront/Initial Costs
Operational Costs (Annually)

22 | P a g e
The costs highlighted are the upfront and operational costs for the outsourcing project. Also,
included are the current costs to perform Company Z’s current domestic help desk service to
be used in calculating the cost savings in the Benefits section below.
Benefits:
Figure 3: Calculated Benefit
This project will provide a cost savings of 28% with an annual savings of $523,421.50.
Figure 4: Calculated Breakeven
This project will have a break-even of 0.33 years or approximately 4 months based on the
assumptions and the calculations performed.
The outsourcing of the help desk business process from its current state as an in-house
domestic process would accomplish all four of the necessary criteria. Therefore the
management team believes outsourcing of this business process is in the best interest of
Company Z.
The following includes the necessary steps for implementation of outsourcing the IT help desk
business process to the Philippines:
1. Identify and determine the best company to work with
a. This should be based on multiple factors outside of just costs, including their
company track record, their ability/knowledge, etc.
b. The company we outsource to will own and operate their own facility in the
Philippines.
c. A few companies have been identified such as Phil-Am Outsourcing Solutions,
Inc, AusPhil Outsourcing, and PITON.
d. Obtain price quotes for these company’s services in order to help determine the
best options.
2. Create a Contract
Savings in Variable Costs 523,421.50$ 28%
Savings (Annual) = Old Operational Costs - New Operational Costs
Benefits Analysis
Breakeven (Years)
Breakeven Analysis
Breakeven = (Upfront Cost)/(Savings in Operational Cost)
0.33

23 | P a g e
a. Determine the terms of the deal and ensure the most essential parts for
Company Z are taken care of.
b. Ensure that the company we are working with is held responsible for the quality
of their service.
c. Make sure that the cost details are accurately laid out with no grey areas.
d. Settle on a fair contract length, ensuring proper exit for Company Z if
necessary.
3. Establish the implementation team
a. Assign two project managers with the timeframe of a month to ensure that the
project is efficiently implemented
b. Determine if other resources are needed and allocate as necessary and available.
4. Implement the project
a. Work diligently to make sure the project is completed on or prior to the
determined completion date.
b. Require weekly progress reports/meetings to ensure proper and timely
completion
c. During implementation communicate any setbacks or new facts that need to be
considered.
5. Analysis/Feedback
a. Ensure estimated costs are maintained and that both the savings and break-even
come to fruition.
b. Determine if there are any changes to help desk metrics such as length of
average resolution, percentage of incidents solved, percentage of incidents
escalated, etc.
Skillset Required:
Outsourcing Tools and Practices Employees Assigned to this IT Help Desk Outsourcing
Project That Need to Be Developed:
1. High Proficiency with IT
a. The Philippines are generally IT proficient in this industry and both the
individuals and companies have experience performing this business process
for companies.
b. Need the ability to learn any IT related information specific to Company Z that
the individuals would need to perform in their work. This includes the ability to
utilize and understand the training they go through.
c. For the project managers that are assigned, they need to have enough
knowledge of IT to understand what is going on and what needs to be perform
in this project.

24 | P a g e
2. High Proficiency in English/Communication Skills
a. The Philippines are one of the most Western in terms of culture of the countries
in Asia so this is not foreseen as a problem.
b. For the project managers that are assigned, they need to have an
understanding/respect for any time zone or cultural differences.
3. The Ability to Solve Problems/Troubleshoot
a. For those working in the help desk center, they need to be able to solve user
problems efficiently including problems that may not be typical. This is directly
related to their job description which includes the following (Payscale, 2016):
i. Troubleshoot all information technology issues, including software,
hardware, and networking.
ii. Install and update desktops, laptops, PDAs, peripherals, networks, and
related software.
b. For the project managers that are assigned, they need to be able to solve time
management issues as they arise.
Business Case 3 – IT Data Center
Business Process: IT Data Center
Lowering Operating Costs - In Asia, US-based companies can get the services they need at a
much more cost-effective rate. Company Z should choose contractors in the Philippines to take
management of these centers to allow processes and information to become more efficient,
centralized, and easier to manage. The objective we want to outsource the data center and
manage from long distance is to improve our operating costs. By leveraging our purchasing
power and buying common hardware and software products in volume, we expect ongoing
service contract savings to be realized through consolidation and standardization. Reducing the
number of data centers locate in US, eliminating duplication and standardizing processes will
improve working efficiency and reduce cost related to vulnerabilities.
Pros:
1. Expanding new data center operations involves acquiring new buildings, and setting up
expensive equipment. Outsourcing reduces the costs of expansion and setting up new
departments. This also leads to higher profits for the company outsourcing to the
Philippines.
2. The data center requires we employ highly skilled workers related to that field. The
cost of labor in the Philippines is much lower when compared to other countries of the
world. This low cost labor is the biggest benefit to business owners who outsource
their work. The reduction in labor costs cuts the employee costs drastically. This, in
turn, leads to higher profits for the company.

25 | P a g e
3. The Philippines has been in the IT outsourcing field for a long time and has the
infrastructure to support its operations.
Cons:
1. Long distance management, the difference of time zone and the jet lag from long flight
could be causing a lower work efficiency.
2. Despite dramatic investment increases, there is a strained power capacity and
inadequate local and international connectivity.
Criteria:
1. IT data center has a great potential to be outsourced in the Philippines which according
to the Information Technology and Business Process Association of the Philippines
(IBPAP), the Philippine information technology and business process management (IT-
BPM) industry employed 776,794 people at the end of 2012, wherein it added 137,066
new jobs. This new intake reflects 21 percent growth from 2011. We will be expecting
a group of experienced talent to manage our data center.
2. The business process, when outsourced to the Philippines, will accomplish at least one
of the following business objectives, as compared to the current state of the business
process in the United States:
a. A significantly improved product time to market of 10% or more.
b. The company saves significantly on its annual operational costs by at least
10%. Specifically, due to the lower salary level of Philippine employees by
choosing to outsource, the variable cost will sharply drop. Please see the Cost
and Benefit Sections below.
3. The outsourced business process will have a financial break-even point, taking into
account both upfront and operational costs, that would occur by the end of year
4. The outsourced business process needs to have minimal to no risk of affecting product
quality standards.
a. There is little to no risk of affecting product quality standards as the Philippine
call centers have a stronger reputation than domestic call centers.
i. All of candidates on our potential partners list are very professional and
experienced.
Costs:
Operating Data Center in US (Colocation in US) Colocation in Philippine(exchange
rate: 1 Philippine Peso=0.021 US
Dollar)

26 | P a g e
Data Center Space Cost:
(Includes 42U Cabinet,
Power, 5 mbps Internet
bandwidth.)
Floor Space $61,200.00 $2098.86(setup
fee)+13222.8(monthly
fee)*12=$160,772.2/year
Price offering by: Vitro data
center, Solid Hosting company
Electricity $95,955.20
Average Salary of both countries
Electrical Maintenance
salary(25 day a month, 8
hours a day)
$26.17/hour $62808/year $818.62/month $9823.44/year
HVAC Maintenance
salary $41,000/year
$1364.26/month $16371.12/year
Data Center Manager
Salary
$92,539/years
$1860.22/month $22,322.64/year
Summary
$353,502.2/year $209,289.4/year
Operational Cost
Build our own cost: $35,3502.2
Outsourcing cost: $209,289.4
Upfront/Initial Cost:
Systems Maintenance $789.11
24x7x365 Staff $60,000.00
Benefits:
Benefits = (Old operation/variable costs - new operation/variable costs) = $144,212.8/year

27 | P a g e
Break-even: Upfront Costs/Yearly savings in variable costs
=$789.11+$60000/$144,212.8 = 0.42 years = 5 months
Data centers will be established in pairs that can back each other up in case of a failure. This
will allow the continuity of important business activity and decisions. In keeping with industry
best practices, the data centers in each pair will be located closely (between two close towns)
of each other to minimize delays in data transmission and allow for instantaneous system
back-ups. Also the 24/7 stuff will be there to monitor the situation and maintenance.
Also the data center should be a top level and redundant Power Supply and Air Conditioning
facilities operating 24 hours a day, 365 days a year. And it will prepared swipe card and
biometric authentication as access control, video surveillance cameras located in the
collocation room and other strategic locations of the building and stand-by security experts
Skillset Required:
1. Excellent PC skills, including Microsoft Office (Word, Excel, PowerPoint); Microsoft
outlook
2. Familiarity with Oracle, SQL
3. Scripting
4. Ability to troubleshoot systems and applications in a timely manner required
5. Understanding of critical IT facilities infrastructure and structured cabling
Business Case 4 - Manufacturing
Business Process: Manufacturing
Specifics: Men’s Shoes
Necessary Steps: Moving the manufacturing of men’s athletic shoes to a third party provider in
the Philippines. This provider would fully own and operate the facility. Two full time
employees of Company Z located in the Philippines would facilitate oversight of operations.
These Company Z employees would be required to submit weekly reports to senior officers on
the status of operations at the contracted facility.

28 | P a g e
Increased Speed to Market - The outsourcing of manufacturing would improve our time to
market as historically manufacturers in the Philippines are able to produce new designs within
4 to 6 weeks. Once a design is approved, the production time is reduced to 60 to 90 days to
produce an order of 5000 pairs of shoes. Domestic production of the same shoe will average
12 to 14 months for the new design prototype. Once approved, the design will average 150 to
180 days when manufactured domestically. (Motoawi, 2015).
Lowering Costs - Outsourcing manufacturing to the Philippines would also reduce the costs
associated with production. Currently the cost of manufacturing a men’s athletic shoe incurred
by Company Z is $40.75. Outsourcing manufacturing to the Philippines would result in a 30%
reduction in cost ($28.50). Our current retail price point on this shoe is $100.00 with a
wholesale cost of $75.00. This price is currently competitive in the market and we see no
need to change. By reducing our manufacturing cost per shoe, we increase our revenue per
pair of shoes by $12.25. (Kish, 2014). Note: there may be additional transport costs not
accounted for in the manufacturing costs.
Pros:
1. Manufacturing is not one of Company Z’s core competencies. By partnering with a
third party provider, we are able to focus on design and marketing (our strengths) and
allow a more experienced manufacturer to produce our final product.
2. Accomplish both business objective - reduced costs, faster time to market and allow us
to be more nimble when responding to new design trends in the industry.
Cons:
1. By outsourcing the manufacturing of our biggest seller, we will lose some oversight
over the process.
2. Due to the lack of regulation and oversight, we run the risk of having our proprietary
designs compromised. As a result, we could potentially see an increase in black
market production of our designs that could devalue our brand.
3. There exists a lack of quality infrastructure that can have a significant impact on the
manufacturing.
4. High levels of political corruption and instability.
Criteria:
i. Currently, those shoes that are exported are focused in the areas of
sports and special use footwear. In addition, some exporters are
maintaining licensing agreements with manufacturers of foreign shoes
such as Nike and Florshiem. (Manufacturing Footwear, n.d.)
ii. There are currently multiple shoe manufacturers located in the
Philippines. Our top three candidates for outsourcing are:
1. Bibo Shoes (http://www.biboshoes.com/mcasual.htm)
2. Manor Shoes (http://manorshoes.com)

29 | P a g e
3. Gibson Shoe Factory (http://www.gibsonshoes.ph)
2. The business process, when outsourced to the Philippines, will accomplish both of our
business objectives. Please see the Costs and Benefits sections.
3. The outsourced business process will have a financial break-even point by the end of
year 3, see Break-even section below.
4. Does not pass – Risks are too high. See the Recommendation explanation.
Costs:
• Shoe Cutting Dies for existing machines (assuming using different machines in
Philippines than current) (custompart.net):
◦ $220 per die,
◦ 12 dies needed per shoe = $2640 per style.
◦ 12 sizes (sizes 6 - 12 in half sizes) per style = $31,680
◦ 30 shoe designs
◦ $950,400
• Production Setup costs (the cost to set up for a production run which usually includes
some amount for the waste generated while tuning and testing the process) (Anderson, 2011).
◦ $80,000
• Two full time employees to oversee production (Payscale, 2016).
◦ Philippines Salary: $15,000.00 USD/employee
◦ $30,000.00 USD
• Total Initial/Upfront Costs: $1,060,400
Benefits:
• Current Production costs: $203,750 per 5000 order
• Outsourced production costs: $142,500 per 5000 order
• Benefit = $61,250 per order
• 3 Orders Per Month
• 36 Orders Per Year
• Benefit = $61,250 x 36 = $2,205,000 per year
Breakeven = [Upfront Costs/Yearly savings in variable costs]
Breakeven = $1,060,400/$2,205,000 = 0.48 years
Recommendation (Yes/No): No

30 | P a g e
While we do feel that Company Z should pursue outsourcing its manufacturing to improve
efficiencies and lead time, due to the political unrest, lack of reliable infrastructure, and loss of
oversight, we would not recommend utilizing the Philippines at this time. Additionally, this
business process will not have a breakeven point within three years.
Company Outsourcing With: N/A
Implementation Plan, If Recommended: N/A
Skillset Required: N/A
Business Case 5 – Logistics
Business Process: Logistics
Specifics: Men’s shoes
Increased Speed to Market:
 33% to 55% improved
 Short lived production
Lowering Costs:
 20+% plus reduction in transportation costs
Pros:
1. Outsourcing logistics saves time as well as money for companies. With a 3PL provider, this
will eliminate the need to invest in a warehouse, technology, transportation, and the staff
needed to execute the overall logistics process. 3PL providers will allow a company to build a
global logistics network with low risk and high return. 3PL providers can also potentially save
a company from making costly mistakes.
2. Working with a 3PL means working with a knowledgeable provider who stays up to date
with the latest developments in logistics, manufacturing, and technology. 3PL software is
skilled in advanced reporting, inventory management, and provides visibility to oversee the
entire process. The experts involved employ Just in Time practices to guarantee that the
appropriate amount of inventory is shipped when and where the company needs it. When
outsourcing logistics, the company can focus on the core competencies and rest easy knowing
that their needs are being taken care of by reliable and seasoned professionals.
3. 3PL providers are able to ensure that your needs will be met and have the resources
available to make any adjustments and improvements necessary. They use the most cost
efficient and fastest methods known. A 3PL provider is able to restructure the supply chain,
and use technology, which will guarantee the correct amount of goods arrive when and where
they are needed. The sophisticated management software they use can analyze and monitor
practices to eliminate inefficiencies and streamline the supply chain. Outsourcing 3PLservices

31 | P a g e
will guarantee continuous improvements, help maximize profits, reduce wait times, and
improve customer service. If a company or business choses to keep their options open or is not
ready to fully commit, 3PLs are ideal. Since the company is only paying for what they are
using, they can walk away whenever they please. The convenience of outsourcing allows a
company to focus on other important aspects of business while their logistics is being taken
care of.
Cons:
1. Some problems can arise when outsourcing. Inadequate preparation, strategy, reputation of
the company, compliance, financial aspects, flawed service providers, unclear contracts,
inaccurate performance measurement, and ineffective ongoing management are all signs of
difficulties. With outsourcing, there comes the outsourcing provider. Companies will work
closely with their provider to complete to common goal of effectively and sufficiently
completing the work needed. However, these relationships could impact the company
positively or negatively. Several things could go wrong when outsourcing, technical failures,
inadequate financial capacity, breach of contract, fraud, and high cots in undertaking
inspections.
2. Outsourcing providers could potentially conduct activities that are inconsistent with the
overall strategic goals of the outsourcer. The outsourcing company could also fail to
implement appropriate and effective oversight of the outsourcing provider. The outsourcer
could also have insufficient expertise to oversee the outsourcing provider. Even though 3PLs
are very convenient, that convenience comes at a price. The 3PL in which a company works
for is in a position to get volume discounts from their freight carriers; that cost may be passed
along to a company or business.
3. When a company choses to go with a 3PL, they do lose some control. The company has to
be aware that they are transferring total responsibility, competency, reliability, and honesty to
their 3PL and the staff. The distance when working with a 3PL is a challenge, which most
companies think they can handle, but more often than not, they can’t. With 3PL warehouses
and facilities being far away, producing products and materials this can make some business
owners anxious. Communication by phone or email is really the best and sometimes the only
way to contact the 3PL.
Criteria:
1. Logistics has great potential with being outsourced to the Philippines.
2. Many companies have and continue to outsource their logistics to the Philippines. This
gives Company Z time to study other businesses implementation plans and allows time
to establish a proper strategic plan.
account both upfront and operational costs that would occur by the end of year.
4. Does not pass – Risks are too high.
Costs:
18 full time employees:

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Mid Senior Level Productions Systems Engineer Monthly Salary 25-30,000 PHP = 520-630
USD
Mid Senior Level Productions Systems Engineer Yearly Salary 300-360,000 PHP = 6,240-
7,560 USD
Mid Senior Level Automation Engineer Monthly Salary 40-50,000 PHP = 840-1,050 USD
Mid Senior Level Automation Engineer Yearly Salary 480-600,000 PHP = 10,080-12,600
USD
Graduate Level Resident Mechanical Engineer Monthly Salary 13,000 PHP = 270 USD
Graduate Level Resident Mechanical Engineer Yearly Salary 156,000 PHP = 3,240 USD
Graduate Level Operations Supervisor Monthly Salary 15-20,000 PHP = 315-420 USD
Graduate Level Operations Supervisor Yearly Salary 180-240,000 PHP = 3,780-5,040 USD
Graduate Level Retail Operations Supervisor Monthly Salary 17-21,000 PHP = 360-440 USD
Graduate Level Retail Operations Supervisor Yearly Salary 204-252,000 PHP = 4,320 -5,280
USD
Mid Senior Level Warehouse Supervisor Monthly Salary 19-30,000 PHP = 400-630 USD
Mid Senior Level Warehouse Supervisor Yearly Salary 228-360,000 PHP 4,800-7,560 USD
Total Philippines Yearly Salary for 18 Employees (3 employees for each position) if they all
make the starting out figure: 104,940 USD
Links for salary by position in the Philippines:
https://www.kalibrr.com/job-board/te/productions-system-engineer/1
https://www.kalibrr.com/job-board/te/automation-engineer/1
https://www.kalibrr.com/job-board/te/resident-mechanical-engineer/1
https://www.kalibrr.com/job-board/te/operations-supervisor/1
https://www.kalibrr.com/job-board/te/retail-operations-supervisor/1
https://www.kalibrr.com/job-board/te/warehouse-supervisor/1
Productions Engineer 67,000USD
http://www.payscale.com/mypayscale.aspx?pid=7c905e5f-61ce-40bf-a030-
0fb1d260e92a&wizardid=7&s=1&ft=0
Automation Engineer 76,000USD
http://www.payscale.com/mypayscale.aspx?pid=7ebe49e0-3762-48a9-98ca-
9c8b595ac658&wizardid=7&s=1&ft=0
Mechanical Engineer 72,000USD
http://www.payscale.com/mypayscale.aspx?pid=382cb249-9be1-4cbb-915c-
63d5a7d06736&wizardid=7&s=1&ft=0

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Operations Supervisor- Retail 47,000USD
http://www.payscale.com/mypayscale.aspx?pid=69590689-4a21-400b-a230-
c4b0ef3c0251&wizardid=7&s=1&ft=0
Warehouse Supervisor 48,000USD
http://www.payscale.com/mypayscale.aspx?pid=eda47aba-2395-48e2-ad4a-
0c3b5ec1dab6&wizardid=7&s=1&ft=0
Operation Supervisor 47,000USD
http://www.payscale.com/mypayscale.aspx?pid=b4b88f12-179c-402b-9bf7-
9fea7a35f64e&wizardid=7&s=1&ft=0
Total US Yearly Salary for 18 Employees (3 employees for each position): 1,071,000USD
Training of 18 employees per year in the Philippines 102,598PHP = 2,160USD
Training of 18 employees per year in the US 21,600USD (1,200USD per employee)
Benefit: Company Z would save a significant amount of money with salaries by outsourcing
the logistics to industrial engineers and operations supervisors in the Philippines. By hiring
these individuals, Company Z could use the saved money to move forward with other areas of
business.
1,071,000USD(US Yearly Salary for 18 Employees + Training)/104,940USD(Philippines
Yearly Salary for 18 Employees + Training)=10.2% Savings
1,071,000USD(US Yearly Salary for 12 Employees + Training)-104,940USD (Philippines
Yearly Salary for 12 Employees + Training)=966,060USD Cost Savings
Recommendation (Yes/No):
No.
Company Z has decided not to outsource the manufacturing and logistics. We feel that these
two processes go hand in hand and are a package deal. Outsourcing the logistics creates an
added risk for the company. The reliability, financial aspects, and lack of control forces us to,
at this time, not outsource the logistics to the Philippines.
Company Outsourcing With: N/A
Implementation Plan, If Recommended: N/A
Skillset Required: N/A

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Conclusion
Based on the research performed by the management team, Company Z should implement
outsourcing projects for the business processes of Customer Service Call Center, Helpdesk, and
IT Data Center. These three business processes will help accomplish the business objective of
lowering operating costs, however, none of the recommended business processes to implement
provide increased speed to market. This business objective may be accomplished in other ways,
such as outsourcing in another country, however the scope of this proposal is limited to the
Philippines.
The Philippines as a country to outsource Company Z’s business processes to, has proved to be
an excellent option for its advantages such as its affinity for Western culture and large population
of fluent English speaking professionals. However, it was learned that the country has numerous
disadvantages such as lack of quality infrastructure and political risks that make outsourcing our
manufacturing and logistics processes too risky at this time. There is potential to reevaluate the
country in the future for additional outsourcing projects, assuming some of the conditions
considered disadvantages improve.
Project Assumptions
The following includes the list of assumptions used for the project:
● The company, and company metrics, were modeled as closely as possible to the real
world company Nike with only some exceptions.
● The business objectives for our company were assumed to be lowering operating costs
and improving product speed to market since our company is in a highly competitive
athletic apparel industry and accomplishing these business objectives are essential to
remain in this market.
● All business processes examined and recommended were assumed to have existed
previously as domestic processes and any financial numbers reflect this as such. For
example, all salaries and “Total Pay” figures were identified by looking up the pay
statistics for those position each in the United States and in the Philippines. We utilized
sites such as Payscale.com and Jobstreet.com (sources cited in the references section) to
find these figures.
● The customer confirmed and is aligned with our project templates such as the
Expectations Management Matrix and the Scope Statement.
Project Roles/Responsibilities
Project Manager:
Name: Jacob Petroski
Email: jdp332@gmail.com
Phone: (716) 939-0346

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Team Layout and Reporting Structure:
1. Customer:
a. Dr. Samir Shah: CEO, Large U.S. Based Retail Company
2. Management Team:
a. Project Manager: Jacob Petroski
i. Financial Analyst: Fanghong Lu
ii. Market Analyst: Meggan Lynch
iii. Deliverable Manager: Melissa Silvestrini
iv. Market Specialist: Lai Ho Tsim
v. Editor: Paulina Vink
The Reporting Structure for this project consists of the Customer, specifically the CEO, at the
top. The management team reports to the customer through the Project Manager. Please see the
organizational chart on the following page:
Organizational Chart:

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Responsibilities:
● Project Manager (Jacob Petroski) - The project manager is responsible for keeping the
team on track, setting up meetings, sending out meeting minutes, and for the final review
and submission of all final drafts of tasks/assignments
● Financial Analyst (Fanghong Lu) - The financial analyst is responsible for determining
and confirming the accuracy of any financials metrics and financial information used
throughout the group project
● Market Specialist (Lai Ho Tsim) - The market specialist is responsible for developing a
thorough understanding of the international market and the overall landscape of
outsourcing in the Philippines including but not limited to political and environmental
risks
● Market Analyst (Meggan Lynch) - The market analyst is responsible for providing
background and determining market trends with regards to outsourcing in Retail.
● Editor (Paulina Vink) - The editor will be responsible for the quality and continuity of the
project documents.
● Deliverable Manager (Melissa Silvestrini) - The deliverable manager is responsible for
dividing up the responsibilities of the creation of the deliverables in a clear, even and fair
manner among team members.
● Team Members (All participants listed in the section above) - All Team Members will be
responsible for any individual work allocated to them including if it is outside the
roles/responsibilities listed above. They will also abide by the Communication Plan,
Code of Conduct, and Other Information sections of this Team Contract.

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Team Members’ Individual Major Contributions:
Team Member
(Last, First Name)
Major Contributions
Lu, Fanghong Final Proposal Contributions: Introduction, Viable Business
Process: IT Data Center & IT Help Desk, Business Case: IT
Data Center
Additional: Attended Majority of Meetings, Team Building
Activity, Initial Proposal: Project Description
Lynch, Meggan Final Proposal Contributions: Viable Business Process:
Manufacturing, Business Case: Manufacturing
Additional: Attended All Meetings, Scope Statement
Version 1, Expectation Management Matrix Version 1,
Team Building Activity, Initial Proposal: Project Resources
& Team Roles,
Petroski, Jacob All Project Management: Setup Meetings, Room
Reservation, Meeting Minutes, Communication with the
Customer, Submission & Editing of Documents
Final Proposal Contributions: Pros & Cons Section,
Outsourcing Rationale Section, Project
Roles/Responsibilities Section, Project Assumptions,
Conclusion, Appendix A1, Appendix B, Business Case: IT
Help Desk
Additional: Attended All Meetings, Scope Statement
Version 2, Expectation Management Matrix Version 2,
Team Building Activity, Group Progress Report, Initial
Proposal, Team Contract
Silvestrini, Melissa Final Proposal Contributions: Executive Summary, Political
and Environmental Risks Section, Organizational Chart,
Viable Business Process: Customer Service Call Center,
Business Case: Customer Service Call Center
Additional: Attended All Meetings, Team Building Activity,
Team Contract
Tsim, Lai Ho Removed from the group due to lack of participation

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Vink, Paulina Final Proposal Contributions: Background and Current
Trends Section, Viable Business Process: Logistics,
Business Case: Logistics
Additional: Attended All Meetings, Team Building Activity,
Group Progress Report,
Hour Log
References
Hour Log Lu, Fanghong Lynch, Meggan Petroski, Jacob Silvestrini, Melissa Vink, Paulina
Meeting #1 0.5 0.5 0.5 0.5 0.5
Meeting #2 1 1 1 1 1
Meeting #3 0.5 1 1 1 1
Meeting #4 0.5 1 1 1 1
Meeting #5 0 1 1 1 1
Meeting #6 1 1 1 1 1
Meeting #7 0 0 1 1 0
Meeting #8 0 0 1 1 1
Meeting #9 1 1 1 1 1
Meeting #10 1 1 1 1 1
Meeting #11 0 0 1 1 1
Meeting #12 1 1 2 1.5 2
Meeting #13 1 1 1 1 1
Team Contract 0 1 8 1 1
Initial Research 5 5 0 5 5
Initial Proposal 1 2 8 2 2
Group Activity 2 2 3 2 2
Scope Statement 0 1 1 0 0
Expectation MM 0 1 1 0 0
Final Proposal 15 25 40 30 25
Project Management 0 0 10 0 0
Total 30.5 46.5 84.5 53 47.5

39 | P a g e
43-4051 Customer Service Representatives. (n.d.). Retrieved February 25, 2016, from
http://www.bls.gov/oes/current/oes434051.htm
Aeepel, Timothy. (3 March 2008). U.S. Shoe Factory Finds Supplies Are Achilles' Heel. The
Wall Street Journal. Retrieved from
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Anderson, David R., Dennis J Sweeney, Thomas A. Williams, Jeffrey D. Camm & R. Kipp
Martin (2011). An Introduction to Management Science: Quantitative Approaches to
Decision Making. Retrieved from
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ction+setup+costs+shoes&source=bl&ots=WnLQP2SiC2&sig=tWoUdHaJ7ULfZ-
Hhvf1YxPdBG-
M&hl=en&sa=X&ved=0ahUKEwiAkMmazIzLAhXFtoMKHfJ1BTE4ChDoAQgbMAA
#v=onepage&q=production%20setup%20costs%20shoes&f=false
Ars Technica. (2007). Pricing Models for Helpdesk Outsourcing. Retrieved from 23 February
2016, http://arstechnica.com/civis/viewtopic.php?t=174143
Bajaj, Vikas. (2011, November 25). A New Capital of Call Centers. Retrieved from 23 February
2016, http://www.nytimes.com/2011/11/26/business/philippines-overtakes-india-as-hub-
of-call-centers.html?_r=0
CNBC International. (2014, June 2). Business Outsourcing in Philippines. [Video file]. Retrieved
from https://www.youtube.com/watch?v=t8HzNS27JUY
Cost Estimator. In Custompart.net. Retrieved 20 February, 2016 from
http://www.custompartnet.com/estimate/die-casting-std/
Call Center Agent Salary (Philippines) Philippines Home Change Country Don't see what you
are looking for?Get A Free Custom Salary Report ». (n.d.). Retrieved February 20, 2016,
from http://www.payscale.com/research/PH/Job=Call_Center_Agent/Salary
Diversify. Why outsource to the Philippines? Retrieved February 18, 2016 from
http://www.diversifyiss.com/resources-categories/why-outsource-philippines
Flatworld Solutions. The Advantages and Disadvantages of Outsourcing. Retrieved February 22,
2016 from https://www.flatworldsolutions.com/articles/advantages-disadvantages-
outsourcing.php
Hubstaff. (1 April, 2015). 7 Awesome Virtual Assistant Companies in the Philippines. Retrieved
February 15, 2016 from
http://blog.hubstaff.com/virtual-assistant-companies-in-the-philippines/

40 | P a g e
Jobstreet.com. (2016). Tech & Helpdesk Support Jobs. Retrieved 21 February 2015,
http://www.jobstreet.com.ph/en/job-search/role/it-support-helpdesk-jobs/
Kish, Matthew. (16 December 2014). The cost breakdown of a $100 pair of sneakers.
Retrieved from
http://www.bizjournals.com/portland/blog/threads_and_laces/2014/12/the-cost-
breakdown-of-a-100-pair-of-sneakers.html.
Motawi, Wade K. (14 February 2015). How long does it Take to Make a Pair of Shoes? In
How Shoes are Made: A Behind the Scenes Look at a Real Shoe Factory. Retrieved from
http://sneakerfactory.net/sneakers/2015/02/long-take-shoe-factory-make-pair-shoes/
Manufacturing Footwear. (n.d.). In investphilippines.gov. Retrieved 15 February 2016, from
http://investphilippines.gov.ph/industries/manufacturing/footwear/.
Motawi, Wade K. (14 February 2015). How long does it Take to Make a Pair of Shoes? In
How Shoes are Made: A Behind the Scenes Look at a Real Shoe Factory. Retrieved from
http://sneakerfactory.net/sneakers/2015/02/long-take-shoe-factory-make-pair-shoes/
Nike. (2010). Total Nike Inc. Employees by Region. Retrieved 23 February 2016, from
http://www.nikebiz.com/crreport/content/charts/chart-7-2.php
Nike Customer Service Representative Salaries | CareerBliss. (n.d.). Retrieved February 20,
2016, from http://www.careerbliss.com/nike/salaries/customer-service-representative/
Operations Manager Salary (Philippines). 11 January 2016. In Payscale.com. Retrieved 15
February 2016, from
http://www.payscale.com/research/PH/Job=Operations_Manager/Salary.
Overseas Business Risk - Philippines. (2015, July 15). Retrieved February 12, 2016, from
https://www.gov.uk/government/publications/overseas-business-risk-
philippines/overseas-business-risk-philippines
PayScale - Salary Comparison, Salary Survey, Search Wages. (n.d.). Retrieved February 24,
2016, from http://www.payscale.com/
Payscale. (2016). Help Desk Technician Salary. Retrieved 21 February 2015,
http://www.payscale.com/research/US/Job=Help_Desk_Technician/Hourly_Rate
Philippines Environment - Current Issues. (n.d.). Retrieved February 12, 2016, from
http://www.indexmundi.com/philippines/environment_current_issues.html
Posadas, Dennis. (5 August 2008). The Philippines: Competing with China and Vietnam.
Bloomberg Business. Retrieved from http://www.bloomberg.com/bw/stories/2008-08-

41 | P a g e
05/the-philippines-competing-with-china-and-vietnambusinessweek-business-news-
stock-market-and-financial-advice
Rodrigue, Dr. Jean-Paul. (2016). THE GEOGRAPHY OF TRANSPORT SYSTEMS. Hofstra
University. Retrieved 21 February 2016, from
https://people.hofstra.edu/geotrans/eng/ch5en/conc5en/logistic_costs_breakdown.html
Solid Hosting | Cheap Affordable Web Hosting Philippines | ePLDT Colocation. (n.d.).
Retrieved February 24, 2016, from http://www.solidhosting.ph/epldt.php
Spiceworks. (2014). How many support requests do each of your helpdesk operatives deal with
daily? Retrieved from 23 February 2016,
https://community.spiceworks.com/topic/532733-how-many-support-requests-do-each-
of-your-helpdesk-operatives-deal-with-daily
Textile World Asia. (4 March 2013). The Philippines: Textile and Apparel Industry on the
Mend. Retrieved from 19 February 2016, http://www.textileworld.com/textile-world-
asia/country-profiles/2013/03/the-philippines-textile-and-apparel-industry-on-the-mend/.
THE COMPLETE DATA CENTER BUILD VS BUY CALCULATOR. (2016, February 24).
Retrieved February 24, 2016, from http://www.thecloudcalculator.com/calculators/build-
vs-buy.html

42 | P a g e
Appendix A - Relevant Company Z Information and Data
A1 - Additional List of Pros and Cons (Advantages/Disadvantages) for Outsourcing

43 | P a g e
A2 - General Business Process Timeline for Retail Companies
Here is a general business process timeline for retail companies, from ideation to the end
of life. First, we will have to define the ideas or the concept about the product. Allowing
different departments such as, the marketing team, design team, manufacturing team, and
suppliers to define the product collaboratively. It can provide a better visibility in the
development cycle. By having a clear concept about the product, it helps the business handle
better product development. We will have to analyze the competitors, understanding the market,
and survey the target market. Validation will help to check and make sure that our product or
service have been satisfying and meets the requirements to the market. Last, it will be the end of
the process, and we will have to do more promotions in order to boost the product.

44 | P a g e
Appendix B - Project Deliverables
B1 - Scope Statement
Scope Statement (Version 2)
Project Title: Process Review– Company Z
Date: 2/13/16 Prepared by: Shah’s Favorite Retail Specialists
Project Justification:
Company Z is a large US based sports apparel and equipment retailer. In order to remain
competitive in the market, Company Z will need to best leverage its core competencies to
reduce costs and increase product time to market. The team has been engaged to determine
if outsourcing some of the company’s business processes will be effective and if so, how to
engage strategic partners to improve efficiencies. The management team has preliminarily
identified seven business processes that are not core competencies and need to be examined
further. They include:
1. Customer Call Centers - Generally for this company, this business process is used to
complete tasks such as field customer complaints and generate sales leads.
2. Staffing Augmentation - In terms of Company Z, this would include the staffing
needed for our business operations including the staffing of our manufacturing,
retail, and corporate business areas.
3. Human Resources - All other responsibilities of the HR department besides staffing
including payroll, benefits, tax laws, etc.
4. IT Data Centers - This business process includes the physical repositories for the
storage, management, and dissemination of both data and information pertaining to
our business.
5. Help Desk: This business process refers to the internal channel for employees to
receive information and assistance in regards to computer and other technology use.
6. Manufacturing: This applies to our business process regarding the physical creation
of our athletic apparel and equipment.
7. Logistics: This involves the flow and storage of our finish athletics apparel and
equipment. Manufacturing and logistics would need to effectively be outsourced
together.
These processes will be examined further and narrowed down to the most viable 3-5
business processes for outsourcing. This will be accomplished by using the specific set of
criteria in the following Product Characteristics and Requirements section. Although the
proposal will recommend the 3-5 most viable options, it may only recommend a smaller
number of business processes to implement after looking at the benefit to cost ratios, the
various risks involved, and any other pertinent information.

45 | P a g e
Product Characteristics and Requirements:
The recommendation of 3-5 business processes produced for the CEO will need to consist
of the following:
1. The business process has the potential to be outsourced in the Philippines which
includes, but is not limited to:
a. The business process having been successfully outsourced by another
company or organization in the Philippines.
b. There exists companies in the Philippines that can complete the required
project/business process.
c. The Philippines can be identifiable as the best option for outsourcing this
specific business process.
2. The business process, when outsourced to the Philippines, will accomplish at least
one of the following business objectives, as compared to the current state of the
business process in the United States:
a. A significantly improved product time to market of 10% or more.
b. The company saves significantly on its annual operational costs by at least
10%.
account both fixed and variable costs, that would occur by the end of year 3.
4. The outsourced business process need to have minimal to no risk of affecting
product quality standards.
If there still remains more than 5 business processes after following the criteria, the options
will be further reduced by identifying the ones that accomplish the business objectives by
the greatest margin.
Summary of Project Deliverables
Project management-related deliverables: team contract, meeting minutes, scope
statement, WBS, schedule, cost baseline, status reports, final project presentation, final
project report, lessons-learned report, and any other documents required to manage the
project.
Product-related deliverables: The recommendation:
1. The 3-5 business processes viable to outsource
2. The recommended implementation plan of the subset of viable business processes
a. The incurred fixed and variable costs of implementing such outsourcing
projects
b. The expected benefit received from implementing such outsourcing projects
c. The project’s breakeven point given the estimated costs and benefits
3. The skillset required for implementation of the

46 | P a g e
Project Success Criteria: The outsourcing recommendation will be considered a success if
all of the following criteria are accomplished:
1. A definitive recommendation is delivered by February 28th 2016
2. A minimum of one of the business objectives is accomplished if the implementation
plan is put into place.
B2 - Expectation Management Matrix
Expectations Management Matrix (Version 2)
Prepared by: Shah’s Favorite Retail Specialists Date: 2/13/2016
Measure of
Success
Priority Expectations Guidelines
Scope 3 The Scope Statement clearly states
the number and nature of the business
processes within the recommendation.
This recommendation w illbe based on the business
objective and criteria fromthe Scope Statement. The
result w illbe narrowed down fromthe initially
identified processes..
Time 5 The recommendation w illbe
completed by February 23rd, or later if
the due date is adjusted.
This is the due date as expected by the customer and
it is essentialto comply w ith this.
Cost 2 The recommendation w illhave no
financialcost to develop.
The implementation plan w illresult in a
breakeven of less than three years.
Based on the nature of the proposal, there are no
expenses required.
As a company in a competitive market, it is essential
to not have resources heavily invested long-term
projects. The generalbusiness guidelines for a long-
term project is greater than 3 years.
Quality 5 Quality is essentialto this project as
the management team consists of the
top professionals in the firm.
All personnelare required to stay w ithin their
expertise and w orkcollaboratively. Alldocument
changes w illfollow the change management policy of
the team contract.
Customer
Satisfaction
5 Our customer expects us to provide a
professionalrecommendation, act
professionally, and communicate
constantly and in a timely manner.
All individual parts w illbe completed 48 hours in
advance and all editing and submissions w illbe
handled by the editor and project manager
respectively. Allindividuals w illfollow the
communication plan found in the team contract.
Financial
Impact
1 Any financialimpact w illbe a direct
result of accomplishing the business
objectives.
The company has indicated the necessary business
objectives in the scope statement.

47 | P a g e
B3 - Meeting Minutes
Outsourcing Retail Business Processes to the Philippines
Date: 02/26/2016
Meeting Objective: FinalProposalMeeting
Agenda:
 Wrap up the Proposal
 AnyQuestions
Notes:
-Created Hour Log
-Finalized Proposal
Attendees:
All members
Date and time of next meeting: tbd
Date: 02/24/2016
Meeting Objective: FinalMeeting With Customer
Agenda:
 ShowCustomerFinal Proposal
Action Item Assigned To Due Date
Make Any Adjustments Jake/Melissa/Paulina 2/26/2016
Notes:
Based on professor review:
-Appears to be almost there
-Need to consider all costs and have backup
-Question each other’s parts like the professor did for us and make adjustments that way
Attendees:

48 | P a g e
Jake, Melissa, Paulina
Date and time of next meeting: Friday Feb 26th
6pm
Date: 02/22/2016
Meeting Objective: FinalProposalFinalization
Agenda:
 AnswerAnyFinal Proposal Questions
 Group Editing
Finalize/Edit Final Proposal
Document
All 2/26/2016
Notes:
Attendees:
Jake, Melissa, Paulina, Meggan, Fanghong
Melissa to take Executive Summary
Everyone to update their costs/benefits
Jake to rewrite Outsourcing Rationale
Date and time of next meeting: Wednesday 12:30pm (2/24)
Date: 02/17/2016
Meeting Objective: BusinessCase Template& Completion
Agenda:
 Create BusinessCase template

49 | P a g e
 Complete BusinessCases
Business Case for Each BP All 2/19/2016
Notes:
Attendees:
All
Business Case template created
Business Cases to be filled out by respective team members who worked on
Setup meeting with Dr. Shah for Monday
Date and time of next meeting: Monday 6pm (2/22)
Date: 02/17/2016
Meeting Objective: Customer Meeting
Agenda:
 DiscussTemplates(Version2)
 OtherQuestions
Notes:
Attendees:
Jake
Melissa
Paulina
1. Is itok if we just refertoourselvesasCompanyZ? -yes
2. For the proposal,isthe “howbusinessobjectivesare beingachieved byoutsourcing”sectionthe
same as “rationale foroutsourcing”section?
Labor costs, risks, quality
Look at all factors and compare contrast
Just one section in the paper.

50 | P a g e
3. Is there a specifictemplate/formatforbusinesscase?If notwhatisneededbesidescosts,
benefits? –Nospecificformat
4. Also,isitok to have a listof 3-5 viable optionsandthensaywe thinkthese onesspecificallyare
the onesto go with?(ie manufacturingmaysave money,butitisclearthat itcouldbe better
outsourcedelsewhere)
Outsourced within the u.s., call center for retail or shipping (do not keep so broad)
Manufacturing men’s shoes or shoes
Why are you saying no? (not china is cheaper)
5. Whenare the EMM andScope templatestobe completed?Isitsomethingcompletedpriorto
the completingthe proposal,during,orafter?Shouldone be completedfirst?
6. Due date/presentation?mostlikelynopresentationslotusedfordialogues,new due date ( )
Date and time of next meeting: Tuesday at 6pm (2/17)
Date: 02/16/2016
Meeting Objective: EMM & Scope Templates
Agenda:
 EMM & Scope Templates
Notes:
Attendees:
Jake
Melissa
Completed as much as possible, need to consult the teacher
Date and time of next meeting: Wednesday 12:30pm (2/17)

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