A multinational headquartered in continental Europe had decided on…

Question Answered step-by-step A multinational headquartered in continental Europe had decided on… A multinational headquartered in continental Europe had decided on the followingstrategy: its IT-services division located at headquarters serving domestic clients neededto become more cost efficient. Hence, management has embarked on a program totransfer the whole bundle of IT-services, including the support for the EnterpriseResource Planning system SAP R/3, to a low-wage country, namely India.The areas which were part of this transfer were:1 First level support for SAP R/3 users (employees of external customers): When anSAP user encounters a problem with the system, they can call the helpdesk forsupport. The helpdesk usually issues a so-called ticket registering the call and146describing the issue. As quickly as possible, the user will receive feedback on thesolution to the problem.2 Second level support for SAP R/3: If the problem the user has encountered is morecomplicated to solve, the ticket is passed on to the second level support people whoare responsible for fixing the problem as soon as possible. They inform first levelsupport of their solution, and first level support gives feedback to the customerabout the problem resolution.In an attempt to reduce fixed costs quickly, it was decided to transfer both levels ofsupport from headquarters to the wholly owned subsidiary in India. This was done in aseries of international projects which were all part of the overall cost reduction program.Due to the fact that the customers in continental Europe wanted to continue to talk tothe SAP support in their local language, the Indian subsidiary had the task of recruitingemployees who had the required language competencies. The project managers of thesub-projects were assured by the Indian subsidiary that feasibility in terms of personnelwas given: employees with the right skills, including language skills, were available.The transfer of the support activities was started. Each manager of a sub-project hadthe target of moving the activities and tasks within eight months to India. Thecontinental European employees were transferred to a domestic spin-off of themultinational with a 16 per cent lower salary and the prospect of being laid off after thetransfer completion. The time estimate for the complete transfer was two to three years.After a while, customers started to call staff at the new spin-off in Europe,complaining about the support they had received from India:1 One client got really impatient with the fact that his employees first had to spelltheir names up to ten times before they were allowed to describe the problem. TheIndian counterparts frequently could not understand them. This, however, was amutual problem, as the customers also had difficulties understanding the Indianhelpdesk people.2 Another corporate customer said that his employees were receiving tickets whichcould not be understood at all. Translated back to English it was something like:’Acknowledging running figures on the screen’3 The next company complained about a lack of support from India. They had theimpression that they were not taken seriously by the Indian helpdesk. In a veryfriendly manner, the helpdesk people said: ‘Yes, Madam, yes, Sir. … This is veryunfortunate. Does the system work now? … No, I hope you are ok. Yes, wecertainly will take care of it …’Many times, however, they never got any feedback as to whether the problem hadbeen resolved or not. There were also strong doubts regarding the technicalcapability of the Indian helpdesk. Some problems were not resolved at all, orresolved very late. The process usually needed to be followed up by the customerwhich was a nuisance.4 Yet another client pointed out that the helpdesk came back a couple of times to askfor screenshots. This was perceived as a waste of time and not the usual procedure.Moreover, the request for screenshots frequently only came after one or two days,leaving the users with a dysfunctional system in the meantime.The employees at the spin-off in Western Europe who were not yet laid off wereunhappy, as they sometimes had to work 14 hours a day to fix the problems their 12Indian colleagues could not get to grips with. In addition, they received all the customercomplaints.After the first year, management was alarmed due to the fact that some corporateclients had changed their supplier for IT-support. The program manager figured out thatmore training for the Indian staff was needed. Therefore, training programs for theIndian staff were arranged, mainly in Continental Europe. For two months, the Indianemployees were trained in application management, and the different modules of SAP.However, the effect of the trainings was not as positive as expected. A consultant foundout only by coincidence that many of the Indian trainees did not sufficiently understandthe English spoken by the Western European trainers with their thick local accents. Inorder not to cause any embarrassment, no feedback on this matter was provided by theIndian subsidiary. In only one sub-project, this resulted in an additional training cost ofroughly 81,600 Euros. Of course, this was a comparably small amount compared to theloss of a whole range of customers. Still, it was an unbudgeted, additional cost.The program manager had to realize that more non-budgeted costs needed to beaccounted for:Due to the fact that the fluctuation in the Indian support teams was at about 20 per centper annum, training measures needed to be carried out on a continuous basis.The salary of the Indian support staff had to be increased by an average of 18 per centannually in order to attract any people at all and to retain staff for at least one or twoyears.Training in the local language of the European headquarters had to be carried out, ashardly any personnel could be found who possessed adequate language skills.More staff from headquarters needed to be sent to the Indian subsidiary in order tofacilitate the knowledge transfer, but also in order to bolster up capacities in India. Dueto the economic boom, it turned out to be increasingly difficult to hire the necessarynumber of people there.Another headache was security. It happened that some temporary staff was ‘smuggled’into the Indian subsidiary in order to help out without undergoing the proper procedures.They were also granted access to the intranet and other electronic data of the company.The problem was uncovered by a customer in Europe who had insisted that only internalstaff would support his company. The whole incident revealed security gaps for themultinational as a whole. In addition, passwords were shared and passed on within theIndian subsidiary, resulting in a loss of transparency and control regarding who wasresponsible for which changes in the SAP system. This posed a threat to quality.Having laid off most of the staff at home, the multinational had difficulties takingback responsibilities and tasks from the Indian subsidiary. There were no short-termfixes to the above mentioned problems either. The whole program looked to be doomed.What had they done wrong? After all, other multinationals, mainly US- or UK-based,have transferred parts of their business successfully to India.what is the summery and characteristics for this case study? International Project Management By Kathrin Küster  Business Management Project Management PMGT 728 Share QuestionEmailCopy link Comments (0)

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