Les Cahiers de Recherche - HEC Paris
Frédéric DALSACE, William T. ROSS Jr. and Erin ANDERSON
Should you set up your own Sales Force or should you outsource it? Pitfalls in the standard analysis
Abstract: Should you set up your own sales force or should you
outsouce it? The standard analysis uses a cost basis to answer this
question. It assumes that the direct sales force is largely a fixed cost
and that the outsourced sales force is largely a cost that varies with
sales. It then calculates the sales quantity at which the costs associated
with the direct sales force are equal to the cost associated with the
outsourced sales force. It suggests that for sales above that quantity,
firms should have their own direct sales force. This analysis has two
serious problems. First, it is too simplistic; this paper details other
cost factors not considered in the standard analysis but that should be.
Second, the standard analysis is based only on cost; it ignores differences
in coverage efficiency and selling effectiveness between the two sales
forces, two important factors that are developed in this paper.
Keywords: sales force; standard analysis; outsourcing; (follow links to similar papers)
JEL-Codes: M12; M31; (follow links to similar papers)
31 pages, April 19, 2003
Questions (including download problems) about the papers in this series should be directed to Sandra Dupouy ()
Report other problems with accessing this service to Sune Karlsson ()
or Helena Lundin ().
Design Joakim Ekebom