MECN $5007$A Pty Ltd is a large producer of construction based equipment with an

international footprint and worldwide sales. The company uses both internal as well as

external engineering services to complete product design as well as R & D$.$ You have been

contracted to assist with reducing cost associated with outsourced engineering services. The

Engineering services have been procured for $60+$ suppliers, of which $20$ suppliers constitute

$80\%$ of the spend

PART $3$: DELIVERABLE REQUIREMENT

Answer the following related to the case

$1.$ What are the pros and cons associated with outsourcing technical services? $[2\mathrm{.}5]$

$2.$ What strategies would you suggest to reduce expenses associated with outsourcing?

$[2\mathrm{.}5]$

You have suggested that the client should explore leveraging engineering services in lowcost

countries.

$3.$ One of the main reasons to move work offshore is costs due to lower wages. What are

some other driving forces and obstacles in sending work offshore? $[2\mathrm{.}5]$

$4.$ In $2023,$ MECN $5007$A Pty Ltd purchased $500000$ hours of engineering services from

third party suppliers, $10\%$ of which was done offshore. If the onshore rate is R$600$ per

hour and the average$-$billing rate in India is R$250$ per hour. What would the savings be to

have all the work done offshore? Is this a good idea? Are there other cost factors that

must be considered? $[2\mathrm{.}5]$