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internetworkers - Re: How does outsourcing save money?

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  • From: Michael S Czeiszperger <czei AT webperfcenter.com>
  • To: InterNetWorkers <internetworkers AT franklin.oit.unc.edu>
  • Subject: Re: How does outsourcing save money?
  • Date: Mon, 14 Aug 2000 18:28:56 -0400

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.

Michael Czeiszperger
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