Business-process outsourcing (BPO) is a type of outsourcing that consists of contracting operations and responsibilities of a specific business process to a third-party service provider. Such outsourcing generally began with manufacturing firms outsourcing their supply chain but has grown into a much wider range of processes, including marketing, finance, sales, and accounting. According to a recent Forbes article, the revenue of the global outsourced services industry rose from $45 billion in 2000 to nearly $100 billion in 2012. An article in BusinessWeek suggested that BPO can save end users anywhere from 15 to 85 percent. International BPO service providers are particularly attractive since offshore labor offers an additional 25 to 30 percent cost savings. Furthermore, approximately 25 percent of the cost savings results from BPO firms’ proprietary products. The remaining 10 to 30 percent in cost reduction accrues from consolidated operations. Suppose you are the manager of a U.S.-based company and must decide whether to outsource your human resources department. Based on the above information and your study, please outline arguments supporting and opposing a decision to outsource this function of your business. Please explain from a purely business standpoint, any issues that might arise from contracting with an international-based versus U.S.-based BPO service firm? (Chapter 6, page 199)Minimum of 550 words. Please use minimum three in text citation that matches peer reviewed references.

Discussion Topic: A Company's Cost StructureIn all respects, Companies A and B are identical except Company A's costs are mostly variable, whereas Company B's costs are mostly fixed. In your opinion, which company has a better cost structure?Please do the discussion then do the response each posted # 1 and 2 Garrison, R. H., Noreen, E. W., and Brewer, P. C. (2021). Managerial accounting: Seventeenth edition. Posted 1: Hello class,If Companies A and B are identical in all respects except for their cost structures, all quantitative and qualitative attributes of the companies are identical except for their cost structures and any other attributes that depend on the cost structures. I will further assume that Companies A and B are distinct companies with completely separate ownership and no balance sheet connections. As a consequence of these assumptions and facts, the net incomes and any other financial ratios or performance metrics that are independent of the initial cost structure difference should be identical for Companies A and B, which suggests that their overall financial positions and earnings performance are quite similar (nearly identical?) despite their differing cost structures. In my opinion, if I have correctly concluded that the earnings and many of the performance metrics for the two companies are identical in the current period, then there is insufficient data available to determine which company has the better cost structure in the current period. If the current period were all that mattered, I would think that neither cost structure is better than the other because the two cost structures have resulted in identical performance for Companies A and B. Levels of fixed costs can be changed in the long-run (Garrison, Noreen, & Brewer, 2021, p. 35), and the factors that determine the optimal cost structure for a particular firm or industry also vary over time. In my opinion, the company in this case that has the best initial cost structure should have the best long-term performance according to whatever criteria are deemed appropriate, which would likely be earnings or shareholder value. Given a long enough timeframe for comparative analysis, a comparative study of financial ratios, performance metrics, and cost structures for Companies A and B could support an opinion about which company has the better cost structure. I would expect that the company with the better cost structure would significantly outperform the company with the worse cost structure, and if both companies survive, their cost structures should converge to be identical after a long time, with the company that initially had the better cost structure showing the least change in its cost structure over time. Given the uncertainties of the business environment, there are a variety of factors that could cause the actual results to differ from my expectation, e.g., technological change could change the optimal cost structure of the industry from mostly variable to mostly fixed or Company A could adopt an unexpected corporate strategy that would cause them to exit the industry they were initially in and enter an industry with completely different characteristics from the industry of Company B. Posted 2:Good Evening, Class!The answer to this question is: it depends... on a lot of things. However deciding on which one is better really boils down to two things: Sales Volume (and of course all the other items that come along with sales volume like trends, forecasts, etc...) and managements or owners confidence/risk aversion.For sales: If sales vary widely from year to year and its hard to project future sales, than a more variable cost structure may be best. If sales are steady, stable and growth is expected, a fixed cost structure would be best. Our text does a great job illustrating this through the Blueberry farm example and how both farms with the same sales volume with varying cost structures ended up making the same profit. As mentioned above, the farm with more of a fixed cost structure would do better if sales were to beat expectations. (Garrison et al., 2021, p. 210) The reason is a more fixed-cost structure would do better in that scenario because every sale made above breakeven (i.e. above the fixed costs) goes directly to profit, whereas in a more variable-cost structure environment, cost continue to increase overall (not per unit) as sales rise. The other side of the coin in all of this is cash flow. IF (and that is a big if) variable costs can be done without spending cash (unlike manufacturing [instead think sub-contracting]), I'd go variable costs all the way, if I needed to keep a tight control on cash. I say that because fixed costs, also know as period costs are recognized and reported in the period incurred, which means CASH is going out the door regardless of sales! Now, I understand that companies with inventory spend cash on raw materials to make inventory or buy inventory directly from suppliers. So this theory doesn't work for manufacturing or heavy inventory firms because they spend cash AND aren't able to show profit until sales are made (so they better have a lot of cash). However, for many other organizations, costs (and the resulting cash-outflow) do not occur until a sale is made, hence making variable cost structures more attractive in those cases. For Risk-Aversion: There's a lot of psychology in all this... how much risk, or perceived risk is someone willing to take to have stellar profits (via high sales and fixed costs) or take less risk through controlling costs and most likely lower profits (via average sales and variable costs).