Globshop

3. Why offshore outsourcing?The events of September 11, 2001 in New York severely affected the air-travel sector. All the major airport retailers, including Globshop were hit hard by the drop in passenger traffic. The cash flow crunch, store closures and halting expansion made cost cutting that much more imperative for the firm. These provided the trigger for off shoring IT tasks and realizing significant saving. Less of a financial and operational burden allowed Globshop to concentrate on the core business and leave IT to a specialist company who can provide a better service for a lower price.Financially – Allowed them to reduce their fixed IT cost. As part of the centralisation plan business unit was already being closed but offshore allowed redundancies. Under a flexible/fixed contract Globshop employed ISS for the duration of a project, opposed to employing staff full time, incurring fixed overhead when capacity was not always utilise. Non-financially – the effective firm devoted additional efforts and had a clear agenda to manage user expectationAlternatives: in-house sourcing Onshore outsourcing In-house sourcing: this decision is made after the organization has performed independent benchmarking to determine that its costs and efficiencies are in line or better than those achieved by comparable organizations.The following graph shows the relationship between company size and potential need for outsourcing. As a company reaches 1,000-10,000 employees, the potential need for outsourcing drops dramatically. In organizations of this size, sufficient resources can usually be found in-house to perform a function, as well as having resources to handle backup coverage.Once you look at all the things a company must do to handle a service in-house, it becomes more evident why many companies choose outsourcing versus operating a service in-house. If a service is provided in-house, a company must: * Locate a qualified employee * Train the