Question

Playbo is considering using the services of a payroll bureau to pay its employees. At the moment, the employee timesheets are collected by a Bryan, a junior member of the finance department, who then enters the information into a payroll software package. He is also responsible for office administration and training in the budgeting department. The total annual cost of employing Bryan is £20,000 p.a. The concern is that there isn’t enough time to collect the timesheets and process them, in order to have the payslips ready by Friday afternoons. It has been calculated that 2 hours of Bryan’s seven and a half hour day is needed to collect the timesheets and then enter them into the payroll software but he usually only has about 6 hours a week for this job. Bryan uses a scanner to enter in the information, which is rented at a cost of £25 per month, with no minimum rental period. The printer used to print out the payslips is also rented at a cost of £30 per month, the agreement was for 36 months and was signed 3 months ago. The subscription for the payroll software is £75 per month, renewed on a yearly basis. The payroll bureau has proposed an annual contract at a cost of £3,500 a year. Playbo have asked of users of the bureau and they have all confirmed their satisfaction with its service.

Required: Should Playbo outsource its provision and identify 3 qualitative factors it should also consider.

Answer 1

Hi,

Playbo should outsourced its payroll activity to payroll bureau.

3 qualitative factors it shoud consider is:

1	Cancellation fee for the printer agreement
2	Cancellation fee for the payroll software
3	to engage the Bryan for his balance 6 hours