How does outsourcing save money?
Michael S Czeiszperger
czei at webperfcenter.com
Mon Aug 14 18:28:56 EDT 2000
Heather Hesketh wrote:
> You don't have to pay benefits to contractors, for one thing.
> You also don't have the same sort of overhead for payroll. The contract
> firm and/or the contractor becomes responsible for the payroll taxes. Keep
> in mind that employers match the payroll taxes taken out of your paycheck,
> when you're an employee.
I know someone whose department is being outsourced, and they'll all
being picked up by the outsourcing supplier at their same salaries and
benefits. Given that the outsourcing firm is charging a 25% overhead on
the total cost of salaries and benefits, even assuming the employer
doesn't have to pay payroll taxes its still costing the employer more.
Payroll taxes don't cost 25% of an employee's salary.
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