The outsourcing decision plays a strategic role for competing in a global environment and it implies a systemic assessment of its impact on firm performance. We focus on the problem of the construction of cost information required by the decision-making process to better compare outsourcing and the internal production choice. The aim of this paper is to develop a full costing model which highlights the explicit and implicit costs of the two alternatives, taking into account the various levels of management complexity they involve. We therefore present an activity-based costing model to compare the total cost of ownership of outsourcing with the cost of internal production, taking into account the cost of the capital required for performing the activities. This paper contributes to the advancement of costing methodologies applicable to outsourcing decisions, proposing a model suitable for any type of outsourcing and useful in different phases of the process.

Total Cost of Ownership and Cost of Capital in Outsourcing Decisions

MOISELLO, ANNA MARIA;GOTTARDO, PIETRO
2013-01-01

Abstract

The outsourcing decision plays a strategic role for competing in a global environment and it implies a systemic assessment of its impact on firm performance. We focus on the problem of the construction of cost information required by the decision-making process to better compare outsourcing and the internal production choice. The aim of this paper is to develop a full costing model which highlights the explicit and implicit costs of the two alternatives, taking into account the various levels of management complexity they involve. We therefore present an activity-based costing model to compare the total cost of ownership of outsourcing with the cost of internal production, taking into account the cost of the capital required for performing the activities. This paper contributes to the advancement of costing methodologies applicable to outsourcing decisions, proposing a model suitable for any type of outsourcing and useful in different phases of the process.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11571/784637
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