This case study is about a French automotive supplier which outsourced its IT activities in order to reduce costs. After the consultation with a consulting firm in Paris, the supplier chose India to outsource its IT activities as it looked like a good bet. However, for reasons which will be specified later, the strategy implemented by the French automotive supplier was a failure.
Despite the fact that the outsourcing project failed, we must note that India has become the choice of destination for countries to outsource work to. This is justified because of its position as a market leader in the field of computers and new technologies. Indeed, 80% of foreign investments that are made in India are related to computer software.
India being the destination for outsourcing is also explained by the existence of inexpensive and skilled labor in the nation.The failure of such a project despite a judicious choice of location, can be explained by management methods developed by the OEM, and by not taking into account local cultural particularities.
Why the project did not work as expected?
Several reasons can be cited to explain the failure of the project implemented by the OEM. We will resume these reasons in the chronological order of the project.
1st reason: Poor definition of objectives
Indeed, originally, it is only stated that the OEM wants to reduce its costs and has therefore decided to opt for a relocation of its activities related to computer science. The second objective, namely, to test a new model for computer network to meet its internal needs, appears later, once the choice of India was established. This second objective is not negligible and should be defined at the outset.
Tags: India as a favored outsourcing destination, Objectives of outsourcing.
[...] Another point that seems crucial: security contract.We must caution that a contract contains clauses: - Non-competition - In exclusive - To ensure privacy protection technologies It also requires that this contract is accurate in terms of price and production time and delivery, so there is no risk of change. Finally, greater caution should be observed by the OEM. He would have been better to wait over a year before investing more in the operation and make it the flagship of the group. Bibliography Undertaken in emerging high-growth India and China, French Documentation, Paris Chamber of Commerce, June 2007. [...]
[...] It is possible that the contract was written in Paris by a French model, without taking into account the specific Indian, we will develop them later in our analysis. th reason: TOO MANY CHANGES On numerous occasions, the case discusses the changes and adaptations that are required by the equipment to its subcontractor. These changes are clearly too many. Indeed, these amendments require great adaptation and considerable flexibility of the staff of the subcontractor. These changes may explain the repeated extension of the duration of production and higher prices. We must retrain staff, may be making new investments . [...]
[...] This rapid decision making is also reflected in the choice of India as a country of location. Indeed, the equipment is based on a single visit to a Parisian firm which offers a range of countries, in which India is finally chosen. One reason is evoked to justify this choice, the fact that India is a leader in the field of informatics. Finally, the last choice that does not seem enough thought and that was taken in haste, that of the subcontractor. [...]
[...] A first conclusion can be drawn about the lack of details from the supplier, who has not properly defined its objectives. Such a definition is essential to good project management. Moreover, this lack of specificity in the goal setting may also explain the many changes and modifications requested by the supplier to its subcontractor and that we will analyze later. The character "unorganized" of the equipment can be found here. (2nd reason: SPEED IN DECISION-MAKING The choice of relocation may be relevant, it is also clear that this choice was made by many competitors. [...]
[...] The failure of the relocation of an automotive supplier in India: causes Introduction The case study concerns a French automotive supplier wishing to limit its costs through the outsourcing of its IT activities. After consulting a consulting firm in Paris, his choice fell on India. However, for reasons which will be specified later, the strategy implemented by the equipment has failed. Yet we must now note that the choice of India is justified because of its status as market leader on the computer and new technologies. [...]
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