Reference no: EM13738445

Assume that you work for a manufacturer of Smartphone technology in the Global Procurement area. The company R&D staff developed a very unique secure communications concept. The company takes common components made by a strategic supplier in Singapore and imports the parts to the United States. The assembled components then receive a unique U.S. made technology chip and U.S. developed software is uploaded at the company's California facility outside San Fransico. This concept provides a very cost effective secure encrypted Smartphone that has proven hard for cyber security firms and cryptologists to compromise. The company provides call center operations at the plant outside San Franciso with a back-up call center outside Chicago, IL. Both locations have high costs compared to other locations in the United States.

The military has discovered your company's Smartphone technology for potential military applications. Sensing a large federal sales opportunity, your Chief Marketing Officer agreed to contract with the United States Army for a research & development (R&D) effort using your Smartphone technology for controlling logistics on the battlefield. Your federal government contract addresses export control and ITAR along with over 37 different requirements from different parts of the Federal Acquisition Regulations (FAR). One of the requirements in the federal contract states a back up call center must be maintained. While the federal contract allows components to be made overseas, assembly and control of the secure technology must be retained in the United States per the contract's "Made in the USA" clause. The company is struggling to find a consultant to train everyone on the demands of ITAR.

Mean while, your Chief Operations Officer just discovered your biggest competitor has just outsourced their Customer Call Center to India, giving them a some cost advantage. The competitor has not agreed to federal contracts yet. In order to remain competitive and to gain cost advantage, the Chief Operations Officer is pressuring the entire staff for cost cutting ideas. He has requested that the procurement staff play a key role in determining the organization's best course of action for gaining cost advantage. Your procurement team must determine what should be included in the recommendation back to the Chief Operating Officer.

Your team should discuss:

1) The short-term and long-term implications of the Chief Operating Officer's assignment on corporate direction, future sales and federal sales in particular.

2) The various courses of action quickly suggested by the Chief Operating Officer that include:

a) Keeping the call center(s) insourced in the United States with continued use of company employees, but closing one of them.

b) Outsourcing the call center to one of your strategic suppliers in another part of the world (Possibly at a Singapore facility where your electronic component manufacturing and assembly is located. This plant is totally run by Singapore citizens. Remember, final assembly and software upload are accomplished in the United States by U.S. citizens to enable to secure communications capability.)

c) Outsourcing the call center(s) within the United States in lower cost areas than the company locations.

d) Outsourcing the call center(s) to another part of the world (Possibly India like your competitor).

3) Determine the impact of ITAR and export control on the options your team considers.

4) Determine the impact of the options your team considers on your federal contract.

5) The impact of a developing Congressional job protection bill must be considered. If passed and signed into law, any company that outsources its call center overseas when holding a federal contract will be penalized . Your electronics assocation is keeping a close eye on this developing legislation. A revision of H.R. 3596, the United States Call Center Worker and Consumer Protection Act, is s being brought through Congressional committee(s) in the current session through the leadership of a Repreasentative from New York. It has strong backing by a major communications worker union. The bill states employers that relocate a call center overseas become ineligible for Federal grants or guaranteed loans and to require disclosure of the physical location of agents engaging in customer service within the call center.