KEMBAR78
Revision of Cost-Benefits Analysis | PDF | Cost–Benefit Analysis | Outsourcing
Scribd
Upload
313 views2 pages

Revision of Cost-Benefits Analysis

WeDeliver Warehousing is considering developing a custom HRIS to manage their growing employee base. The costs of developing the HRIS are estimated to be Rs. 26,25,000. Benefits like increased revenue, outsourcing savings, improved productivity and customer service are estimated to amount to Rs. 38,04,000 in the first year, resulting in a payback period of 8.28 months.

Uploaded by

Pragya Singh Baghel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
313 views2 pages

Revision of Cost-Benefits Analysis

WeDeliver Warehousing is considering developing a custom HRIS to manage their growing employee base. The costs of developing the HRIS are estimated to be Rs. 26,25,000. Benefits like increased revenue, outsourcing savings, improved productivity and customer service are estimated to amount to Rs. 38,04,000 in the first year, resulting in a payback period of 8.28 months.

Uploaded by

Pragya Singh Baghel
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

Revision of COST-BENEFITS ANALYSIS

WeDeliver Warehousing (P) Ltd. is an80 employees organisation and operating as logistics
partner for Mazon India Ltd., a subsidiary for Mazon Inc. of US.

WeDeliverhadseen a growth of almost 35% per year since last three years in a row. The
organisation enjoys a flat structure and is fairly competitive in the overall supply chain and
logistics business in India. The span of control generally follows a 1:16 ratio across its six
divisions. Over the last two years the business has seen tremendous shift in terms of adopting
technology in logistics and major other functions of the organisation.

The top team is considering development of a fully customised HRIS, to begin with, to meet
the increasing complexity of managing various teams of employees spread across India. A
Cost-Benefit Analysis is being suggested by the HR and Logistics expert here.

Assumptions

 Currently, the company has more work than it can cope with, and part of the work is
being outsourced to other firms at a cost of Rs. 50 per assignment. The company
outsources an average of 100 such assignments each month.

 Top team estimates that revenue will increase by 35 percent with an HRIS in place.

 Per-person productivity will increase by 7 percent with more time and information at
hand via an HRIS.

 Customer services and satisfaction would further add another 6 percent to the overall
revenue.

 The analysis horizon is one year: that is, WeDeliver expects benefits to accrue within
the year.

Costs

Category Details Cost in First Year

1200 square feet available next door at Rs.


Lease. 55 per square foot (per month) Rs.

Leasehold Knock out walls and reconfigure office


improvements. space Rs. 1,50,000.00

Hire two HRIS Salary, including benefits Rs. 12,50,000.00


designers.
Category Details Cost in First Year

Recruitment costs Rs. 25,000.00

Orientation and training Rs. 3,000.00

Furniture and hardware Rs. 75,000.00

Two additional Software licenses Rs. 30,000.00


workstations.

Construction Two weeks at approximately Rs.


downtime. 1,50,000.00 revenue per week Rs. 3,00,000

Total Rs.26,25,000

Benefits

Benefits Within
first 12
Benefit Months(after
HRIS
implementation)

35 percent revenue increase.(150000*52)*35/100 Rs. 27,30,000

SavingRs. 50 per assignment outsourcing (100 assignments per


month on an average)5000*12 Rs. 60000

7 percent improved productivity foremployees 1500000*52*7%= Rs.546,000

Improved customer service and retention as a result of 100 percent


in-house design. (additional 6% in revenue ) Rs. 4,68,000

Total Rs. 38,04,000

The HR expert calculates the payback time as shown below:

COSTS / BENEFITS = 26,25,000/38,04,000 = 0.69…. of a year, or approximately


….8.28.months.

You might also like