Reference no: EM132748720

Outsourcing at Texas Instruments Canada

• Dawn McWhirter, CHRP, is the HR manager at Texas Instruments (TI) Canada. TI Canada outsourced its payroll function to a national provider but, faced with a large number of transaction errors, Dawn is crunching the numbers to determine whether it makes more sense to have payroll provided by staff internal to Texas Instruments.

• The current external provider is paid $30 000 annually to prepare biweekly payroll inputs/changes, additions/terminations, ad hoc payments (such as commissions and bonuses), car allowances, mileage reimbursements, and so on, plus pay-slip printouts, tax remittances, and T4s. However, so many errors are made that Dawn has to pay an administrator $37 440 annually to correct mistakes and liaise with the provider. As well, the employees at headquarters in Dallas are also spending time correcting these errors for an additional cost of $12 000 annually. Dawn estimates that she is spending about 100 hours a year overseeing the errors and auditing quarterly reports for a cost of about $3400.

To provide these same services internally, Dawn prepared the following estimates:

New national provider: $4000 annually for partial in-house-all biweekly payroll changes/additions would be input on-site using a secure web portal provided by the carrier; the new provider would be responsible only for printing pay slips, remitting taxes to government agencies, and preparing year-end filings such as T4 remittances.

Administrator: $37 440.

Auditing: $3400.

Correspondence with Dawn McWhirter, HR Manager, Texas Instruments Canada, October, 2008.

Problem 1: If you were Dawn, what decision would you make and why?

Problem 2: What are the advantages and disadvantages of the decision that you made?