Some provinces in Canada have discouraged the outsourcing of certain functions on the part of the provincial government to firms in other countries. Yet others have been more open to the idea as a means of saving taxpayers’ money. The government of Prince Edward Island (PEI) thought it might work for them while they sought advice on a new payroll system. In so doing, PEI accepted the lowest bid from Mumbai Consultants Inc., a firm residing in India and one with non-specialized experience.
The specifications of the project called for the completion and launch of the new system within nine months. Once the agreement was signed, no one from the PEI government office kept a close eye on the progress of the implementation, and assumed no news was good news. As the launch date approached, a new manager from Mumbai Consultants contacted the appropriate person in the PEI government indicating the project would be over budget and about 4 months late. The reason provided for the delay and the budget challenges included high employee turnover at Mumbai and a lack of knowledge-transfer throughout this turnover. Moreover, it was suggested that they did not have the necessary expertise in-house, and the little they did have was swept away during the turnover. The Mumbai manager advised that if the province wished to shorten the new timeline they would have to pay an additional 35% of the original contract price because Mumbai Consultants Inc. would also have additional costs.
1. Use the process in Table S11.2 to analyze what the provincial government of PEI 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 Canadian firm, such as Accenture Canada, had been selected?
3. Conduct your own research to assess the risks of outsourcing any information technology project. (Computerworld is one good source.)