IT OUTSOURCING STRATEGIES

GlobShop IT Outsourcing Strategies

GlobShop IT Outsourcing Strategies

Should GlobShop continue to move more value-added IT work offshore?

An Analysis of the current IT outsourcing strategy

Data warehouse: GlobShop requested a new data warehouse to be created. This was to improve functionality and transfer of information and reports within the organization at higher levels. Business leaders were pleased with visible results in productivity and efficiency. Time was saved and hence overall costs were reduced.

Overall costs reduced by 35% so far.

Working with Business Partners: When requested, more team members were brought onsite by ISS to allow a smoother integration of work with business partners. ISS dealt with the situation with agility, and the outcome was effective.

Concerns that GlobShop is becoming heavily dependent on ISS for IT operations.

Concerns about the role of internal IT department in GlobShop.

Concerns about the quality of current and future onshore team.

Initially all goals have been met. Costs have been reduced. Productivity has been increasing overall so far, and the work is of a higher quality than in the past. ISS have provided flexible support adjusting to GlobShops' needs as and when asked. However, there are new rising concerns due to the size increase in ISS. Employees within IT are also finding it difficult to see possible future roles in the company (Ranganathan 2007, pp. 440-450).

Assessment of Various Options available

Outsource to a new company

GlobShop can restart the research process and completely change to a new company in a similar position to ISS when they started off. This would rid the problem of a growing firm. However, it would involve heavy time and cost investments, along with new risks. ISS is already in operation and GlobShop as happy overall with the progress to date.

Outsource everything

GlobShop could extend its contract completely and give all IT responsibility to ISS, keeping a small inshore IT team to monitor ISS. However, this comes with higher risks than rewards (Müller 2011, pp. 49-80). Costs may significantly reduce due to benefits from using a large, highly skilled workforce, which is also cheaper and benefits from economies of scale. However, a scenario similar to that of the US Navy may occur where EDS/HP took complete control of the IT systems and gave extremely poor service. The problem was that the Navy became so dependent on EDS/HP that they were unable to leave even when they wanted to, have to put up with all the inconveniences caused. ISS could become more and more relaxed and lapse in the service provision. The implications of this could not only be expensive for GlobShop, but could also disturb the operations.

Outsource to more than one (3) firm(s)

GlobShop could team up with other partners (bidding would not achieve overall company outcomes as seen in the report). It could choose 2 other companies, offshore or onshore and outsource alternative IT functions to them as well as ISS. This would instigate healthy competition and keep each firm on its toes (Amberg 2006, pp. 188-217). The risks will be spread across 3 companies, and ISS ...