Transition Processes & Keeping PACE with the local Case Study

Tiwari, V. (2009) Transition During Offshore Outsourcing: A Process Model. ICIS 2009. Phoenix, Arizona, USA., International Conference on Information Systems.

UtilCo outsourcing the CUSTOMER project to Global Vendor (both onshore & offshore). This involved specific application development and maintenance activities.

Transitioning from onshore to offshore involves a combination of three inter-related organizational processes: Transfer, Learning, and Adaption.

The transition stage was split into three phase. Below I have outlined the main difficulties that were encountered throughout these stages and some of the steps taken to rectify them. 

1. Familiarize

Knowledge transfer:

There was difficulties with uncooperative contractors & a lack of tracking tools.

2. Adapt

Modifying Operating Model: Task division, communication structure, and delivery process:

Pilot stages - splitting team functions across geographies - complicated matters - maybe they should have keep activities that related closely and overlapped with one another together in one region.

There were problems with communication and role responsibilities - adaptive measures taken to resolve these.

Increasing knowledge and Understanding: High complexity work:

New pilots - higher complexity, lower volume - combining more functional consultancy along with technical development activities - facilitated further learning

Achieved Managed Operations (MO) state - UtilCo have official management responisibility of the entire delivery process (from Business requirements to business testing) but are using Global Vendor for all their activities from Functional design to functional testing

Restructuring retained organization: roles and internal processes:

Problems with changing the internal organization structure in terms of communication and operations - loss of flexibility - stages have to be complete before sending them offsite - makes amendments a lot more complicated

Shift from doing the activities to monitoring the activities - loss of creativity  autonomy. Reviewing rather than designing - new roles defined - professionals, specialists, and forecasting professional

3. Accelerate

Validating Modifications: pseudo service delivery and ramp-up

Aimed to progress to Managed Services (MS) - (including delivery & giving them more responsibility) 

Needed to hire new onshore and offshore personnel to handle increased work volume that came with the increased responsibility - mainly junior developers that had to learn quickly. Issues with knowledge imbalance between global vendor who could hire experienced contractors and Uticle whose contractors had left and new hired were inexperienced.

Redefining roles and ramp down of contractors - additional stress on retained personnel

Utilco intended the transition to be staged - but felt like big bang to staff

Outcome: Service delivery

Two months of psuedo delivery. Actual service delivery was achieved with satisfied performance from both firms (vague on the details!)

In class we considered the following questions through group discussion:

What is the contribution?
What led to success?
Key Quotes.
Whats the basic story?
What would you do differently?
What would you do?

Issues:
Transparency
Contractors
Knowledge transfer (resolution - knowledge transfer document)
Communication/Resp
Contract

Biggest risk a company can take is change. Here in this case we have organizational change, it involved a lot of plugging in and out of parts. There has been a number of pieces of literature written about organizational change such as what we witness in this case. One such example is Lewin's change management model which consists of three stages; unfreeze, change, and refreeze. 

The potential value for technology and outsourcing in this case is big (not marginal/instrumental). You have to trip up sometimes to figure out how to work. Its ok to fail as long as your prepared to addressed that. Its all about what attitude you have; instrumental rigor, attentiveness, etc

PACE Case Study 

The transition to offshore was problematic - transition period was too long and PACE don't make money until they move offshore.

With PACE the clients got everything, competency, rare skills. For them making transition was all risk, and why risk it when they were getting everything they needed onshore.

Possible solutions:

1. A differential cost model; ramp-up cost model if clients decided to stay on-site.
2. Maybe they should have pivoted and become a research company rather than an engineering company