Abstract

In November 2005, Roger Deen, the CIO of GlobShop, and his team of IT Directors sat in a conference room at the company’s headquarters in Boston to discuss the imperatives facing them. GlobShop was a five billion dollar firm that operated over 200 duty-free and general merchandise shops in airports, hotel lobbies and downtown locations across Asia, Australia, North America and Europe. Being a niche player in the travel-retail industry, the company’s performance swayed with changes in air travel, tourist traffic and related economic events. Since the events of Sep 11 2001, GlobShop has been engaged in a series of cost-reduction efforts, including offshoring a significant portion of its IT work. Roger was contemplating moving more IT work offshore. GlobShop has been working with an Indian vendor, Indo- Systems Solutions (ISS), to take care of application development, support and maintenance of merchandising and retail systems, and technical support for the company’s IT infrastructure. These initiatives have helped reduce IT expenses by over 35%. The business leadership has demanded additional cost-reductions and has suggested Roger to examine the possibility of pushing more projects offshore. Within the next few weeks, Roger will have to decide if GlobShop should extend and renew its outsourcing agreement with ISS. To reduce the risk of becoming ‘over-dependant’ on ISS, the company has been mulling over using multiple offshore vendors rather than exclusively relying on ISS. Another issue that needed Roger’s attention was the future role of the internal IT function at GlobShop. If the company decides to move more IT activities offshore, it should carefully assess its implications for the internal IT group. GlobShop had reduced its IT workforce by over 50% and additional cuts could simply decimate the IT function. With over 60% of the IT spending concentrated on offshore activities, Roger wondered about the future steps.

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