Role Play Scenario: The Outsourcing Contract
The Danish Viking Electronics Team
Your team represents Viking Electronics A/S, a high-tech Danish telecommunications company. You are now in Noida, near New Delhi, to meet with Anand Desai, managing director of Desai Services Unlimited (DSU) and his chief engineer.
Three months ago Viking placed a major knowledge-process outsourcing contract with DSU. Your company selected DSU from a short-list of three potential Indian vendors recommended by Commercial Counsellor Paul Hansen of the Danish Embassy. Hansen assured Viking management that all candidates were highly qualified and good track records.
You selected DSU when the other two Indian candidates were unable to assure delivery of this urgent project within 90 days. The project outsourced to DSU is an integral part of a bigger
project for Viking’s largest customer.
Managing Director Anand Desai of DSU guaranteed delivery within 90 days after Viking granted them a loan of DKK 12 million to finance the additional personnel they would need. You insisted on adding a contract clause calling for the loan to be repaid within 48 hours if the project was not satisfactorily completed on time. While saying this clause was unnecessary, Desai agreed to sign.
For the first two months DSU reported steady progress in its weekly updates. Three weeks before the delivery date DSU engineers reported that a technical glitch was slowing work, but still predicted on-time delivery. Further semi-weekly updates mentioned the ongoing technical problem but continued to predict completion per schedule. On that basis you continued to assure your very anxious customer that the India project work was proceeding according to plan.
But two days ago – the contract delivery date – Desai phoned you with bad news. “Sorry. Until the very last moment our engineers were sure they would be able to solve the problem in time. But it is now clear that we will need a couple more weeks. We have found the solution; by working around the clock we’ll deliver the entire project two weeks from now exactly to spec.”
News of the missed delivery date caused Viking’s marketing director to explode: “This delay could lose us our biggest customer! Let’s enforce the contract terms and call in the loan right now. Maybe DSU will think twice before guaranteeing on-time delivery next time!”
You and your team flew to India the next day. This morning in Noida your chief engineer reviewed the production process at DSU and reported to you that “There is a very good chance they will finish the job in 10 more days.”
In a few minutes you will meet with Anand Desai and his team. Your task is to find the best possible solution to this problem today.
The Indian DSU Team
Your team is headed by Managing Director Anand Desai of Desai Services Unlimited (DSU) in Noida, near New Delhi. You are about to meet with a high-ranking team from Viking Electronics A/S, a Danish high-tech telecommunications company. Three months ago Viking placed a big knowledge-process outsourcing contract with DSU. Viking selected your company from a short-list of three Indian vendors recommended by Paul Hansen, commercial counsellor of the Danish Embassy in New Delhi.
Hansen assured Viking management that all three candidates were highly qualified and well-recommended vendors. Viking chose DSU because the other two candidates were unable to assure delivery of this urgent project within 90 days. You understand that this project is an integral part of a bigger project for Viking’s largest customer.
You guaranteed delivery within 90 days after Viking granted DSU a loan of DKK 12 million to finance the additional personnel needed to complete the job in such a short time. Viking management insisted on adding a clause to the contract calling for the loan to be repaid within 48 hours if the project was not satisfactorily completed on time. You accepted this clause because 90 days would certainly give your highly capable engineers plenty of time.
For the first two months your staff reported steady progress in weekly updates to Viking. Three weeks before the delivery date your engineers reported that a technical glitch was slowing work, but still predicted on-time delivery. Further semi-weekly updates mentioned the ongoing technical problem but continued to predict completion per schedule.
But two days ago – the contract delivery date – you had to personally phone the Danish management with bad news. “Sorry. Until the very last moment our engineers were sure they would be able to solve the problem in time. But it is now clear that we will need a couple more weeks. We have found the solution; by working around the clock we’ll deliver the entire project two weeks from now exactly to spec.”
News of the missed delivery date seemed to cause the Danes great distress. Their marketing director said, “This delay could lose us our biggest customer! We plan to enforce the contract terms and call in the loan right now. Maybe you guys at DSU will think twice before guaranteeing on-time delivery next time!”
This morning Viking Electronic’s chief engineer reviewed your Noida production process in detail and reported that “There is a very good chance DSU will finish the job in 10 more days.”
Now in a few minutes you will meet with the Viking team. Your task is to find the best possible solution