Reference no: EM13594343

Incremental Analysis of Outsourcing Decision Selzer & Hollinger, a legal services firm, is considering outsourcing its payroll function. It has received a bid from ABC Payroll Services, Inc., for $18,000 per year. ABC Payroll will provide all payroll processing, including employee checks and payroll tax reporting. Selzer & Hollinger's costs for payroll processing inhouse over the past year were as follows: Cost Amount Payroll clerk (part-time) $9,000 Annual cost of payroll processing software updates 1,000 Human resources manager's salary 80,000 Depreciation of computers used in payroll processing 2,000 Annual payroll tax update seminar costs for one employee 1,200 Currently the payroll clerk works only on payroll processing, and will be laid off if payroll is outsourced. The human resources manager spends 25 per cent of her time currently on payroll-related issues. The computers would remain and be used for other tasks if payroll is outsourced. What qualitative factors should be considered in this decision?