Global outsourcing of information technology is a phenomenal business strategy for most countries all over the world, especially the developed. Companies within these states have limited development areas and resources to erect facilities that will maintain all levels of products and services development within the state, hence the aspect of offshore mergers. Various reasons as (Carmel &Nicholson 2005) identifies are as a result of cost reduction strategies due to easy and cheap transit of information and other related products.
Edgell, Meister and Stamp (2008, p. 174) argue that, rise of outsourcing is based on cost benefits since most business operations operate on ...view middle of the document...
GlobShop a multi National Company is a billion Dollar organization that uses India firms specializing in Information technology to develop its own infrastructure, as a cost management strategy.
The study aims at evaluating the management perspective of GlobShop firm in relation to the success of outsourcing information technology services and product. As portrayed by, (Carmel & Nicholson 2005) corporate strategy to develop their business through outsourcing is geared towards cheap costs and easy transit, in respect to resources, production cost, market expansion, diverse skills in ideas and development of technology. On another perspective this business strategy in the approach of the potential partner impacts greatly on the relationship that is fostered first hand. Other factors are realized once the coast is clear in relations to mutual understanding, hence no hurdles that may foil the venture. Cost reduction is one of the factors that emanate from good relationship, with market advancements, integration of new advancements and skills leading to innovations.
Though all may appear well in the outsourcing venture, unpredictable occurrences may cause disability in the operation or pose irreversible risks in cases of natural disaster, political instability, offshore financial crisis and competition.
Prior to outsourcing the corporate must review its policies against the policies of the offshore destination to deal with issues such as cost, legal aspects, employees rights, contractual agreements and many others. Hanna and Daim ( 2009, p.882) contend that, the business of outsourcing in other states, for production and other services connected to products enhancements of strategic change, involves most developed countries. The initiative is to seek for cheap and easily accessible labour, resources and incentives that assist in costs reduction. Most of the offshore countries that provide these services have reduced costs in workforce, resources and skills are equivalently high. Major countries such as United States, United Kingdom, Denmark, and many others gage their attention to major outsourcing destination such as India and Taiwan whose economy is advantaged by these opportunities (Ranganathan et al 2007).
According to (Ranganathan et al 2007) GlobShop being a multi billion dollar company have sought for outsourcing to enhance cost reduction efforts in its information Technology activities, after instability led to low performance due to terrorism. For any organization seeking offshore services in technology, management consideration of the new subsidiary propels research of matters that may lead to failure since policies differs in varying states. Cost effectiveness is the policy that most organizations aim at addressing to reach above par, hence more returns. GlobShop destination of offshore subsidiary was supported by merging with an Indian Company, Indo- Systems Solutions to develop its IT systems (Ranganathan et al...