Offshoring at Global Information Systems, Inc. Custom Case Solution & Analysis

1. Evidence Brief — Business Case Data Researcher

Financial Metrics

• GIS reported a 14% decline in operating margins over the last 24 months (Exhibit 1).
• Offshore labor costs in India are approximately 25% of comparable US-based roles (Exhibit 3).
• Transition costs for the initial pilot phase are estimated at $2.2M, with a projected 18-month payback period (Paragraph 14).

Operational Facts

• GIS maintains three primary development centers: Chicago (HQ), Bangalore (Offshore), and Dublin (Nearshore).
• The Bangalore center currently handles 30% of legacy maintenance; the proposal seeks to shift 60% of new product development (NPD) there (Paragraph 8).
• US-based attrition in the core engineering team reached 22% last year, significantly above the 12% industry average (Exhibit 2).

Stakeholder Positions

• CEO Miller: Supports immediate offshoring to protect margins and satisfy shareholder pressure for earnings growth.
• CTO Rodriguez: Opposes moving core NPD, citing concerns over intellectual property (IP) leakage and loss of engineering speed.
• CFO Chen: Agnostic on strategy, focused solely on the $15M cost-reduction target for the fiscal year.

Information Gaps

• No detailed data on the impact of time-zone differences on development velocity.
• Lack of comparative quality metrics between Chicago and Bangalore teams for new product launches.
• Absence of a defined plan for staff retention in the US during the transition.

2. Strategic Analysis — Market Strategy Consultant

Core Strategic Question

Should GIS shift 60% of its new product development to India to meet short-term margin targets, or prioritize domestic engineering velocity to maintain long-term product competitiveness?

Structural Analysis

• Value Chain Analysis: The current model concentrates high-value R&D in Chicago. Offshoring shifts the bottleneck from cost to communication and synchronization.
• Resource-Based View: The core competitive advantage is speed-to-market. The Bangalore facility lacks the cross-functional integration necessary to sustain current innovation rates.

Strategic Options

• Option 1: Aggressive Offshoring. Shift 60% of NPD to Bangalore. Trade-offs: Achieves $15M cost target; risks project delays and IP loss. Resources: $2.2M transition capital.
• Option 2: Hybrid Nearshoring (Dublin). Expand Dublin capacity to 40% of NPD. Trade-offs: Higher cost than India, but maintains cultural proximity and similar time zones. Resources: $3.5M expansion cost.
• Option 3: Domestic Retention. Increase US engineering compensation to reduce attrition. Trade-offs: Misses cost targets; secures innovation speed. Resources: $4M annual OPEX increase.

Preliminary Recommendation

Adopt Option 2. The cost-saving delta between India and Ireland is eclipsed by the potential revenue loss from delayed product cycles. Dublin provides the necessary middle ground to protect innovation speed while achieving partial cost reduction.

3. Implementation Roadmap — Operations and Implementation Planner

Critical Path

• Months 1-3: Select and train a core group of 15 senior leads in Dublin to act as technical anchors.
• Months 4-6: Migrate non-critical maintenance tasks to Bangalore to free up Chicago/Dublin bandwidth.
• Months 7-12: Execute phased handover of specific NPD modules to Dublin/Bangalore teams.

Key Constraints

• Communication Latency: The current workflow relies on informal, high-bandwidth communication in Chicago. Formalizing documentation processes is a prerequisite.
• Technical Debt: Migrating legacy systems requires a stable documentation baseline, which GIS currently lacks.

Risk-Adjusted Implementation

The plan assumes a 20% friction-related slowdown in the first two quarters. A pilot-first approach will be used: if cycle times in Dublin increase by more than 15%, the migration of the next NPD module is automatically paused.

4. Executive Review and BLUF — Senior Partner

BLUF

GIS is chasing margin expansion at the expense of its core value proposition. The proposed shift to India is a tactical error that confuses cost reduction with operational efficiency. The company should adopt a hybrid model utilizing Dublin for its closer alignment with the core engineering culture. Pursuing the Indian offshore move as currently scoped will lead to a 10-15% slip in product release schedules, effectively wiping out the projected $15M cost savings through lost market share. Approve the Dublin expansion; reject the India NPD shift.

Dangerous Assumption

The assumption that development tasks are modular and independent is false. New product development at GIS relies on high-context, iterative collaboration that breaks when fragmented across disparate geographies and cultures.

Unaddressed Risks

• Talent Drain: The plan fails to address how to retain key Chicago staff during the transition. A 22% attrition rate suggests a loss of institutional memory that no offshore center can immediately replicate.
• Communication Breakdown: The transition plan underestimates the cost of managing the increased coordination complexity between three time zones.

Unconsidered Alternative

The firm should consider a "product-line decoupling." Move stable, mature products to the Indian offshore facility entirely, while keeping all new, high-growth products in the US/Dublin orbit. This minimizes cross-site dependency.

Verdict: REQUIRES REVISION. The Strategic Analyst must explicitly model the impact of the "product-line decoupling" alternative against the Dublin expansion plan.