0021-49 Outsourcing Goes Awry-Submission

Name: Ajaya Kumar Sahu Reg No: 0021/49

1. What went wrong? Outsourcing has become a critical part in every industry. As the market places become more competitive each player wants to cut down the cost and focus more on their core activities. Outsourcing allows companies to achieve that. But the outsourcing process has to be done with great deal of deliberation. deliberation. One need to look for following following things before-after outsourcing any process/activities 1. The process is a non-core activity of the company. 2. By outsourcing the process should be done quickly, efficiently, and cheaply. 3. The company/body to whom the process is outsourced should be a stable one with good track record and one of the market leaders in that particular service. 4. The agreements terms should be made carefully taking in to consideration all possible consequences and problems that may arise in future. 5. In case of a failure to deliver services on agreed terms a strict plenty should be incorporated at the first place in the agreement paper and the company should have a backup plan. 6. The company should continuously monitor not only the service provided by the other company but its overall business and financial position. In the case of RMC Newman ignored most of the above key points. The process that they outsourced was a core activity of the company. Newamn failed to understand the criticality of the service being outsourced and its impact on the RMC performance. Also the terms on which the agreement was done, wasn’t favorable to RMC (clause (claus e like recruitment fee and etc.) PDS track record was ignored at while giving away the service and the business was awarded to PDS because of Mr. Donane past work work experience with with MNC. Mr. Newaman also failed to evaluate PDS ability to run the business before giving away the contract.

So when PDS financial position goes haywire and it failed to pay the due paychecks to Jacques’s group, RMC found itself in a very bad state and the image/reputation of the Medical center was at stake. The agreements terms also didn’t help Newman to get out of this mess. He couldn’t hire Jacques according to terms and if he changes the anesthesia group it will give out a wrong message to the customers and possibly hamper RMC business.

2. What should Newman do? Before taking any decision in this matter he has to take a holistic view and think of both short term and long term impact of it. Newman has to take following steps to get of this mess. 1. Newman shouldn’t  cancel the meeting with the Jacques group as it will give a wrong message to them and RMC’s concerns towards the Jacques problem. Listen to their queries and issues, give them the confidence and assurance that RMC is with them and it will resolve all the problems. 2. Pay PDS some amount of money and asked them to clear the due paychecks with Jacques. 3. As Jacques group have performed their task efficiently and they seems concerned about patients, Newman should try to hire them. 4. Newman has two options for a long term solution to this problem. a. Rewrite the contract with PDS and change certain terms such as recruiting the anesthesiologists. b. Stop outsourcing and build in house expertise by recruiting full time the Jacques’s group or any expert anesthesiologists. As this is a core activity of RMC it would be better if he build in house expertise and perform this task by its full time employees rather than outsourcing it.