Description

Sitting at his desk, John looked intently out the window. He thought to himself: “I should be thrilled. I was just made global head of IT for the bank’s most profitable division. I’ve dreamed about this for years. What’s wrong?” Deep inside John knew the answer. He questioned his own ability to succeed. He was responsible for a large project to completely replace the key division’s legacy IT system. Not only did he need to develop the new solution, but he had to do it on a very aggressive schedule. Worse, he had inherited a small team in a high-cost location and had been given the mandate to significantly reduce the department’s cost. The dream had turned out to be a nightmare. John wondered how to get his mojo back.

John’s Options

John’s small team of 25 experienced IT gurus simply didn’t have the capacity to get a project of this size off the ground. John began to review his options.

• Option #1: Contracting. John could reach out and bring in the needed resources from one of the big IT service companies to augment his team on site at the New York offices. With the right contract, he could set priorities and measures to assure that the team was motivated to meet the tight schedule. However, when the vendor quotes came in, the fees took his breath away. At those prices, he’d never hit his cost goals.
• Option #2: Offshore Contracting. As John benchmarked other companies’ IT initiatives, he noticed that many opted to leverage the IT service companies’ offshore centers. That model relied on keeping one account manager onshore for coordination. Offshoring would significantly reduce rates as well as ensure scalabiltiy. However, John worried he would be giving control and intellectual property to the IT service company.

Seeking Advice

Perplexed, John decided to call his mentor, Anne, the bank’s CFO. When Anne answered, she said, “Hi, John. Congratulations on the promotion. I’m excited for you.” John thanked Anne for all her help over the years, concluding, “Do you have a minute to act as a sounding board?” Anne replied simply, “Certainly, what’s up?” When John explained the options and the tradeoffs, Anne asked, “Have you heard about what we are doing with our captive center in India? We’ve been up and running about a year and our costs are roughly 20% what we’re seeing in New York! We’re growing the team to take over most of our operational tasks. When we’re done with the transition, we’ll only have a few small, specialized teams onshore. They’ll handle the relationship management with senior stakeholders.”

John asked, “Aren’t you afraid to give up the control?” John could hear the smile in Anne’s voice as she said, “Sure, at least at first. But we set up a global steering board and established a clear governance structure with regular cadence calls to keep everyone on the same page. And, we plan on annual executive-level reviews at least once a year in India. The India office is an integral part of our operation, and we treat them that way—as a global Center of Excellence, not just a cheap factory.” This time John smiled, saying, “That’s a very interesting model. Thanks so much for listening—and for sharing.”

John next reached out to Wayne, a close friend he had met in his onboarding training. When they met for coffee, they shared war stories. When John told Wayne he was thinking about setting up shop in India, Wayne frowned before exclaiming, “You don’t have any idea what you are getting youself into! I’m in the process of relocating a team to our India office and it has been a nightmare! Just because it’s the same company doesn’t mean it is less effort than outsourcing to a vendor. After three months I’ve yet to see any savings!”

More Perplexed Than Ever

As John walked back to the office, he wondered, “Wow, two trusted colleagues, two drastically different perspectives. Where does that leave me?” John had three options on the table—one he hadn’t planned on. He was more perplexed than ever. He knew, however, that he didn’t want to mess up. First impressions were everything. And this was his first big decision on the big stage. The good news: He had a couple of weeks before he needed to present his plan to the division steering committee.

Questions

1. What are the pros and cons of each option? What additional information do you need to help make a decision?
2. What do you recommend John should do? Why?

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