Globshop's Sourcing Strategy
Crafting and executing an offshore IT sourcing strategy: GlobShop’s experience Submitted By : Group 12
KUSHAL KISLAY
FT151093
MEHUL JAIN
FT152088
SIDDHARTHA PAUL FT154003
VIVEK KHATTAR
FT154063
JAYANTH SATHEESH FT152025
Overview of Globshop's strategy
Why going offshore ?
• To reduce costs
• To focus on core business
• To centralize data
How ISS was selected ?
• Small size so easy to negotiate
• withLong term global agreement
• A win-win deal
Different alternatives for GS : One Vendor
Less Task
Leave ISS: stop offshore outsourcing need to reintegrate IT into
Globshop
Keep ISS: reduce offshore outsourcing and keep it at a certain
Level
More Task
Leave ISS: switch all existing outsourced activity to another vendor
Keep ISS: extend the
partnership to more critical tasks
Different alternatives for GS : Multiple
Vendor
Less Task
Leave ISS: and switch to multiple other contractors.
Keep ISS: but diversify with multiple vendors
Start a biding war among the vendors.
More Task
Leave ISS: Extend to more tasks (supply chain, ) and to more vendors to reduce cost and risk.
Keep ISS among those vendors? .
Diversify vendors or not?
PROS
• Reduce the dependance risk (fewer talented people dedicated to
Globshop as ISS grow bigger + only one partner)
• Possible to find a cheaper partner and gain in bargaining power New vendors may bring some innovation.
CONS
• Already good results with ISS
• New costs to transfer the activity and knowledge to another vendor (a part of Globshop's IT team was laid off).
• Easier to deal with a single partner (people know each other, already strong relationship)Contract with vendors are smaller so less important to them Offshore more tasks
Advantages:
• Cost reduction : allows to focus on core activity while cutting IT cost (employees and hardware) Skilled workforce: vendor's workforce, no need to recruit and train employees.
Drawbacks :
• Continue staff reductions (59 % of the IT staff), what is left of IT in the company?
• Loss of control over some tasks.
• Loss of knowledge in the long runTransition difficulty
Stop outsourcing and offshoring
• Need to reintegrate all the IT into Globshop
• Too expensive and time - consuming to reintegrate • Loss of competitivity (less expertise than specialists) • Outsourcing and offshoring has proven good results so far (35% less costs in 18 months), ending it is not the good solution to reduce the dependance with ISS
Suggestion and Future Implication
• Keep ISS
• Diversify with one other vendor
• Maintain critical activities in-house while offshoring basic tasks.
• Keep a small-sized internal IT unit
• Keep working in a close relationship with ISS and the new vendor's teams
• Keep decision in-house and the operational tasks
offshored.
KUSHAL KISLAY
FT151093
MEHUL JAIN
FT152088
SIDDHARTHA PAUL FT154003
VIVEK KHATTAR
FT154063
JAYANTH SATHEESH FT152025
Overview of Globshop's strategy
Why going offshore ?
• To reduce costs
• To focus on core business
• To centralize data
How ISS was selected ?
• Small size so easy to negotiate
• withLong term global agreement
• A win-win deal
Different alternatives for GS : One Vendor
Less Task
Leave ISS: stop offshore outsourcing need to reintegrate IT into
Globshop
Keep ISS: reduce offshore outsourcing and keep it at a certain
Level
More Task
Leave ISS: switch all existing outsourced activity to another vendor
Keep ISS: extend the
partnership to more critical tasks
Different alternatives for GS : Multiple
Vendor
Less Task
Leave ISS: and switch to multiple other contractors.
Keep ISS: but diversify with multiple vendors
Start a biding war among the vendors.
More Task
Leave ISS: Extend to more tasks (supply chain, ) and to more vendors to reduce cost and risk.
Keep ISS among those vendors? .
Diversify vendors or not?
PROS
• Reduce the dependance risk (fewer talented people dedicated to
Globshop as ISS grow bigger + only one partner)
• Possible to find a cheaper partner and gain in bargaining power New vendors may bring some innovation.
CONS
• Already good results with ISS
• New costs to transfer the activity and knowledge to another vendor (a part of Globshop's IT team was laid off).
• Easier to deal with a single partner (people know each other, already strong relationship)Contract with vendors are smaller so less important to them Offshore more tasks
Advantages:
• Cost reduction : allows to focus on core activity while cutting IT cost (employees and hardware) Skilled workforce: vendor's workforce, no need to recruit and train employees.
Drawbacks :
• Continue staff reductions (59 % of the IT staff), what is left of IT in the company?
• Loss of control over some tasks.
• Loss of knowledge in the long runTransition difficulty
Stop outsourcing and offshoring
• Need to reintegrate all the IT into Globshop
• Too expensive and time - consuming to reintegrate • Loss of competitivity (less expertise than specialists) • Outsourcing and offshoring has proven good results so far (35% less costs in 18 months), ending it is not the good solution to reduce the dependance with ISS
Suggestion and Future Implication
• Keep ISS
• Diversify with one other vendor
• Maintain critical activities in-house while offshoring basic tasks.
• Keep a small-sized internal IT unit
• Keep working in a close relationship with ISS and the new vendor's teams
• Keep decision in-house and the operational tasks
offshored.