Outsourcing

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While some states, such as Tennessee. Have been quick to ban or limit international outsourcing of govt. activities. Other state govt. has sought to take advantages of low cost opportunities that international outsourcing cans offer. A state of New Mexico‘s labor department hired Tata consultancy services. An Indian outsourcing firm To Redo New Mexico’s unemployment compensation computer system. While Tata has completed work for other states including Pennsylvania and New York. It’s had never work on an unemployment compensation system also New Mexico agrees to allow Tat to do all computer software work in India. Apparently with insufficient monitoring of progressing by New Mexico officials responsible for outsourcing product. The new system has been completed in six months, which put the due date in December in 2001. Unfortunately, things did not work out well. The initial system was delivered one year later. But in late 2004 it was still not working. Also the outsourcing project went t way over the budget of $3.6 million up to $13 million. The warranty for the system ended I n2003, leaving new Mexico with the situation for either suing Tata to complete project (it was estimated at 80% completed) or hiring to someone to fix it. Tata piston was that it had complied with the outsourcing agreement and was willing to continue fixing the system if it could receive additional compensation to justify additional work TABLE—The Outsourcing Process and Related Risks

Outsourcing Process| Examples of Possible Risks|
Identify non-core competencies| Can be incorrectly identified as a non-core competency.| Identify non-core activities that should be outsourced| Just because the activity is not a core competency for your firm does not mean an outsource provider is more competent and efficient.| Identify impact on existing facilities, capacity, and logistics| Failing to understand the change in resources and talents needed internally.| Establish goals and draft...
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