SWPM Case Submission - Crafting and Executing an offshore Sourcing Strategy: Globshop

Submitted by: ANMOL YADAV

Roll No.: 2015PGP039

Globshop is a niche retailer in the travel industry. After Lux bought a majority ownership stake in 2000,
Globshops IT functionality changed a lot.
First change was a deliberate decision by management to reorganise and move from a decentralised
business model to a more centralised one.
The implications on IT were that a part of application support and maintenance was outsourced to ISS.
The second change occurred as a result of the terrorist attacks on the World Trade Centre in 2001.
This brings us to the current situation at the firm where all production support for the merchandising
system and some retail applications have been controlled by ISS for the last few years as well as
development.
DECISION AT HAND: 3-year contract is now due to either be renewed, extended or altogether
terminated.
GOAL: Roger Deen, the current CIO at Globshop is continuously developing and implementing an
outsourcing strategy, mainly focused at reducing company costs, while simultaneously improving
productivity, quality, speed and agility. He also wants to ensure that throughout this process the global
IT team at Globshop is responsible and accountable for IT outcomes.
When making a strategic decision, it is difficult to predict the outcome of your choices. IT outsourcing
has been a great way in order to reduce firm costs, but Globshop need to work hard to keep up with
changes in the markets and to keep risks low.
Till now ISS has given Globshop good service and is helping them to reduce costs in the current amount
of time. This is congruent with the main goal of the firm. Other strategic goals are being met too, with
ISS responding quickly to needs, showing speed and agility, as well as overall added productivity. The
company has finally begun to understand Globshops requirements and business activities, making it
highly inefficient to choose a new outsourcing company now.
Globshop used thorough research and a good strategy when choosing ISS and outsourcing IT functions
to other firms in India. It remains the most strategic solution due to its vast resource base and low
costs. By renewing the contract, they can reap the current rewards of an existing outsourcing
arrangement built over the past few years with ISS. Meanwhile they can transfer responsibilities to the
new companies as they familiarize themselves with Globshop operations. This is an example of
spreading risks and also ignites healthy competition amongst the companies.
However, in order to maintain a degree of control, it is recommended that Globshop keep some IT
tasks it is efficient at within the firm. Roger mentioned the risks involved of outsourcing supply chain
management, if it can be effectively managed by internal IT staff, then there would be no need to
outsource this. Using multiple firms gives the internal IT staff plenty to manage and coordinate
simultaneously, creating a win-win situation for existing employees too.
Meanwhile as for the concern about becoming too dependent on outsourcing companies, CIO, Roger
can create an IT outsourcing team, responsible for managing and coordinating with the outsourcing
companies. Assigning a member of staff to each function ensures a degree of awareness of every area
of IT outsourced. Having internal staff monitoring can also ensure efficient usage of time and
productivity.
It is vital to remember that there are always risks involved when outsourcing IT, but if managed well
they can be contained and continuous benefits will be seen. If each firm is tied up in a healthy win-win
contract, with great coordination from IT staff then Globshop will stay on an upward progress curve,
as other firms have experienced too.