8/19/2019 CASE - Outsourcing to Tata

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CASE: Outsourcing to Tata

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 low-cost

opportunities that international outsourcing can oer.

 The state of New Meico!s "abor #epartment hired Tata $onsultanc%

&ervices, an 'ndian outsourcing (rm, to redo New Meico!s

unemplo%ment compensation computer s%stem. While Tata had

completed work for other states, including )enns%lvania and New

 *ork, it had never worked on a n unemplo%ment compensation

s%stem. +lso, New Meico agreed to allow Tata to do all computer

software work in 'ndia, apparentl% with insucient monitoring of

progress b% New Meico ocials responsible for the outsourcingproect.

 The new s%stem should have been completed in months, which

put the due date in #ecember /001. 2nfortunatel%, things did not

work out well. The initial s%stem was delivered 1 %ear later. 3ut in

late /004 it was still not working. +lso, the outsourcing proect went

wa% over the budget of 56. million, up to 516 million. The

warrant% for the s%stem ended in /006, leaving New Meico with a

situation of either suing Tata to complete the proect 7it was

estimated at 809 complete: or hiring someone to ( it. Tata!sposition was that it had complied with the outsourcing agreement

and was willing to continue (ing the s%stem if it could receive

additional compensation to ustif% additional work.

What could New Meico have done to achieve a more successful outcome;

's this a case of cultural misunderstanding or could the same result have

occurred if a 2& (rm, such as '3M had been selected;