Titan – the Outsourcing Journey

Background:

Titan is the leading manufacturer of watches, clocks and jewelry. Started jointly by Questar Ltd, Tata Sons, Tata Press and TamilNadu Industrial Development Corporation in 1984 at Hosur to manufacture watches in collaboration with French company. Focused on cost reduction, as competitive advantage to improve operational profitability and Titan is the Market leader in India for watches.

Many Challenges were faced by Titan, Post’ 1999 after the Govt.Of India changed the EXIM policy as the market was open for many foreign competitors to enter in India and offer their products at a cheaper price than Titan. Titan zeroed on outsourcing as a competitive differentiator to reduce costs

The Case discusses in detail about various outsourcing initiatives taken by Titan successfully

a. Explain the concept of outsourcing and reasons for its growing popularity in manufacturing. Briefly comment on the Pros and Cons of Outsourcing in manufacturing industry. Explain why Titan had decide in favor of outsourcing its manufacturing activities despite having state of the art manufacturing setup

Outsourcing refers to getting those things done by outside which were done internally. Outsourcing suggests that organizations focuses on few chosen core competence supported by long term outside partnership to do the rest. An organization can decide to outsource any of its day-to-day operations by analyzing and deciding a Make or Buy choice. Any “Buy” choice is an activity that can be outsourced. Its as simple as doing it in-house and getting it done outside.

Earlier, the cost management in manufacturing was achieved by backward integration and gaining ownership of manufacturing facilities. When the competitive pressure started growing, Customers started demanding quick delivery, companies realized the need to optimize their operations and supply chain to reduce costs. This was one of the major factors manufacturing to choose outsourcing. For manufacturing it is...