You are the project manager for a software development project for an updated management system. The cost of doing it in-house is $27,000. You estimate you'll spend $2,000 per month updating the software with client information, government regulations, and maintenance.

You know that a contractor do the programming for your company and charge a fee based on the number of personnel using the program every month. This contractor will charge you $4 per month per user of the accounting system. You will have roughly 1,000 employees using the system each month. You'll need some additional in-house resources to manage the contract, per se, at a rate of an extra $1,100 per month.

(a) How many months can you use the system before it's better to do it in-house instead of hiring a contractor. Show your work! USE THE ALGEBRAIC FORMULATION OF THE PROBLEM! In other words, set the cost of contracting it out equal to the cost of doing it in-house, and solve for the break-even time.

(b) Outsourcing involves more than just possibly saving money. List at least five other factors that should be considered in making this outsourcing decision.