While some states, such as Tennessee, have been quick to ban or limit international outsourcing of government activities, other state governments have sought to take advantage of tow-cost opportunities that international outsourcing can offer.
The 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 had completed work for other states, including Pennsylvania and New York, it had never worked on an unemployment compensation system. Also, New Mexico agreed to allow Tata to do all computer software work in India, apparently with insufficient monitoring of progress by New Mexico officials responsible for the outsourcing project.

Discussion Questions
1. Use the process in Table S11.2 to analyze what New Mexico could have done to achieve a more successful outcome.
2. Is this a case of cultural misunderstanding, or could the same result have occurred if a U.S. firm, such as IBM, had been selected?
3. Conduct your own research to assess the risks of outsourcing any information technology project.

  • CreatedJuly 23, 2013
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