Answered: Which option is the lowest cost for the…

Principles of Management

OER 2019th Edition

ISBN:9780998625768

Author:OpenStax

Publisher:OpenStax

Chapter18: Management Of Technology And Innovation

Section18.4: Internal Sources Of Technology And Innovation

Problem 2CTQ: What other types of forensics software do you foresee a need for in the future? Do you think there...

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Question

The Situation:

Imagine that you own a small software company. The company currently has three full time employees,

including yourself as the CEO. There is one person (software developer) who writes software based on

specifications provided by you. There is one person (testing and support) whose job it is to test new

software and to help customers find solutions to problems they may run into with the software product.

You have determined that you can leverage your existing code to create a new product which will result

in a significant increase in sales. In order to capitalize on this, you will need to expand software

development, testing, and customer support. However, the new software has a limited lifetime in the

marketplace, and will be obsolete in two years.

You can hire locally, either full time or contract, for the 3 new positions. It will require two software

developers and one new support position. A typical cost for full time positions would be $40,000 to

$60,000 per year, plus about 25% in benefits. Contract positions tend to have a higher pay rate, but are

limited in time, so there is no ongoing commitment from you, the employer.

Finally, you have been introduced to an offshore development company in India which does outsourced

software development. They will provide the same quality of services at approximately one third of the

cost, including 24/7 coverage for support. It will take some additional time to manage a process so far

away, but it has the added advantage that problems with the software can be fixed “overnight”, since

the software developers are working with a time difference that is 9 hours ahead.

In summary,

there are 3 HR Strategy Options here:

1. hire fulltime

2. hire contract or temporary employees

3. send the work offshore to an outsourcing company.

“Module 9 – HR Strategy” .

Which option is the lowest cost for the company? Explain your reasoning.

Which option has the lowest risk for the company? Explain your reasoning.

Would you consult with your existing staff before making a decision on additional staffing? What

are the benefits and difficulties with involving your existing staff in the decision-making?

Would your decision be influenced if you had a friend who was looking for work? Why or why

not?

Knowing what you do at this point, which HR strategy option would you prefer to implement in

this situation? Explain your reasoning

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