Company xyz Pty Ltd is a large producer of construction based equipment with an international footprint and worldwide sales. The company uses both internal as well as external engineering services to complete product design as well as R & D. You have been contracted to assist with reducing cost associated with outsourced engineering services. The Engineering services have been procured for 60+ suppliers, of which 20 suppliers constitute 80% of the spend

PART 2: DELIVERABLE REQUIREMENT Answer the following r

Answer the following related to the case

1. What are the pros and cons associated with outsourcing technical services? [5]

2. What strategies would you suggest to reduce expenses associated with outsourcing? [5]

You have suggested that the client should explore leveraging engineering services in low

cost countries.

3. One of the main reasons to move work offshore is costs due to lower wages. What are

some other driving forces and obstacles in sending work offshore? [5]

4. In 2023, company xyz Pty Ltd purchased 500 000 hours of engineering services from

third party suppliers, 10% of which was done offshore. If the onshore rate is R600 per

hour and the average-billing rate in India is R250 per hour. What would the savings be to

have all the work done offshore? Is this a good idea? Are there other cost factors that

must be considered? [5]