Relationship and openness: key ingredients for successful offshore transitions
Jeroen Jacobs, René van Kleef and Samir Kumar Parija look at success factors in the offshoring process…
Transitions of IT services are always a challenge to execute successfully, but intercontinental transitions contain some specific challenges to deal with. There are cultural, communicational and emotional factors inherent to offshoring that influence the complexity and success of the transition. Although the use of IT closes some gaps, the physical distance is a major factor in the difficulty of intercontinental transitions. In the approach described in this article, we will give some best practices, directives and a clear structure to organise transitions in a standard methodology. This approach is especially based on experience from transitions between the Netherlands and India.
From agreement to offshore operations
Before the start of a transition, there is always a set of preceding activities. First of all, an organisation decides to outsource and offshore parts of their activities, and most of the time there is a vision and strategy behind this decision. In most situations these are cost-driven, but factors such as lack of capabilities, 24/7 services or flexible resourcing are also reasons why offshore could be an interesting option. The next step is the selection of an offshore outsourcing partner who best fits the organisation and the confirmation of the type of activities that are to be offshored. Later, this will result in a contract between the offshore party and the outsourcing organisation. When this contracting phase starts, the base for the transition is formed.
In general, the scope of the outsourcing process comprises several basic steps:
- Identify… the offshore opportunity
- Validate… the scope of the offshore deal
- Negotiate…the service levels
- Qualify… the scope
- Transition… the project
- Operate… deliver the service
In this article we will focus on the transition itself; nonetheless, the adoption and understanding of these steps from deal to operation are essential for the success of a transition. Clearness and an agreement regarding scope, quality, timelines, costs etc. is essential to overcoming ambiguities during the transitional phase. During this process, immense understanding, open-mindedness, and the eagerness to learn should continually be adopted alongside robust documentation.
When we talk about transition in this article, we are especially focussed on the transfer of knowledge, capabilities and the start-up of operations at the offshore party, and depending on the situation and scope for a transition to offshoring there are also other streams to run. We have had offshore programmes that involved the following streams:
- Security & compliance
- Client communications
- Retained organisation
- HR – reduction
For the benefit of this article we will solely focus on the transition phase, excluding other streams including those aforementioned.
Ingredients for a successful approach
To make an intercontinental service transition more successful, it’s important to understand the extra dimensions to manage. As aforementioned, cultural, communication and emotional factors heavily influence the transition performance, with the respect and identification of each other’s cultural positions paramount to success. The Indian culture, for instance, is more relation-based with respect to hierarchies and without blaming a person, whereas in the Dutch culture it is more usual to be direct, and to focus strongly on business results and timelines. Each country has its own cultural aspects, so it’s important to create a transition plan which suits both cultural areas.
During transitions between the Netherlands and India, we have identified the following best practices to improve transition results:
- Execute the transition together as outsourcer and service provider; a clear understanding of each other and mutual respect is essential in order to be able to solve emotional, cultural and communication issues.
- Be very clear, detailed and specific to each other, as due to cultural issues, and other risks of miscommunication, it is important to state to each other what you expect, and how and when you expect it. This decision then needs to be clearly documented.
- Building relationships on several levels during the project is very helpful to identifying and solving issues that may arise; involved and committed people are very proactive in a transition.
- Continuously measure the results and communicate these outcomes on a daily basis.
We have embedded these major best practices as much as possible in the transition method, but as a transition manager you should always keep these in mind.
Now, let us focus on the approach.
The five-staged transition approach
In our common approach, there are five major stages during a transition project where each stage has its own goals, deliverables and characteristics. In order to move to the next stage there is always a tollgate to pass in the form of a list of criteria with deliverables and quality criteria. Each tollgate per stage must be signed off by the steering committee. In the role as transition manager, you should always think and plan one stage ahead; the first stage of preparation will give you this opportunity.
One of our best practices is that in all of the stages, the outsourcing organisation and the service provider should work closely together on several levels. This is especially valid for the transition project team, but also important for the rest of the organisation.
The five stages of the transition are depicted in Figure 1 below.
Figure 1 – Transition Steps
We will now clarify the stages:
- Transition preparation: in this stage the transition project will be prepared and planned.
- Knowledge acquisition and knowledge transfer: in this stage the service provider comes over to the onshore location and a group of technical experts collect the knowledge that is in scope for the offshore team.
- Shadow Support: in this stage the service provider starts with shadow support on the onshore location, to ensure and prove that the knowledge is gained.
- Assisted Perform: the service provider starts to take over the activities of the onshore employees back in the offshore location.
- Primary Support: the service provider is completely responsible for the activities in scope of the offshore. The first three months are the stabilisation stage.
These five stages focus on the main part of the transition, the transition of knowledge and the work in itself and this forms the blueprint for the planning of the project. Across these stages there are five major activities to focus on continually, these are:
- Project management (including risk management etc.)
- Measurement of the daily progress
- Management of stakeholders and communication
- Emotional and cultural awareness
- Continual evaluation of the business case
In each transition stage, you can define tollgate criteria for these activities as well.
In the following sections, we will describe the transition stages in more detail by detailing the activities and deliverables, as well as best practices.
In the preparation stage before the transition, both parties make preparations for the project, deciding about the timelines, ways of communication, project governance and risks etc. – the preparation of logistics and infrastructure is also part of this. At the end of this preparatory stage, a mutual understanding of the transition plan is then established. It is very helpful to involve the key players of the transition team to prepare the next knowledge acquisition stage in detail. The technical specialists on both sides also need to prepare questionnaires and daily schedules with several technical subjects to discuss.
When both parties are ready and aligned with the preparation, it’s time to sign off the first tollgate and to go into the next stage.
Knowledge acquisition and knowledge transfer
The second stage is knowledge acquisition. In the knowledge acquisition phase, the transition project really starts, and the outsourcing organisation will experience the transition in a very short time due to the visibility of it in the workplace. The offshore service provider will come over with a select team of highly experienced and motivated people for a couple of weeks in order to learn and capture the knowledge of the employees from the outsourcing organisation in the Netherlands. This is a very crucial stage in the transition, but also very risky on the emotional side. The employees from offshore, who will take over the work in a couple of weeks, will meet and have to work together with the employees that are potentially unemployed in a couple of weeks. To mitigate this openness regarding the planning, scoping and also regarding cultural differences is crucial; starting this stage with a cultural workshop, for example, can help to talk about these differences as there is a lot of contact between on and offshore technical employees on a daily basis. And at the same time, a team abroad is busy setting up the infrastructure, facilities and organisation.
Additionally on a daily basis, the team from India that has come over has meetings, discussions, presentations, training and learning on the job etc. in the workplace in the local offices in the Netherlands. It is a good approach to close each day with a wrap-up session and some reversed presentations; in this wrap-up there would be a daily double-check on the progress and precision of the knowledge acquisition.
In our transition projects we have experienced that the emotional factor during this stage can be very visible; it is difficult to ask people who are very much at risk of losing their job to teach colleagues from India how they can take over their jobs. For this reason, we try to be as open as possible with the employees and keep the start-up of the transition formal with respect to their emotions. Commonly, we also organise a culture workshop and plan some time for the on and offshore employees to get to know each other in a more informal way through lunching together for instance, and for most of the employees some type of relationship will begin to grow after a couple of days. We have even had situations in practice where employees of the offshoring organisation were organising weekend activities with the people from the Indian company. This worked wonders for the project and to date, people maintain these relationships – there have been instances where people onshore were actually in tears when their offshore counterparts were leaving for India. The personal understanding between both sides is the key to the success of a transition.
After the sign off of the knowledge acquisition stage, the shadow support phase will begin. During the shadow support stage the main goal is to assess whether the offshore team is able to apply the knowledge they have acquired. In this period we keep the team in the onshore location and let the offshore employees work next to their onshore colleagues for shadow support. At the end of this stage all the offshore team members will be undergo an “examination” and will be assessed by the onshore team regarding the shadow support quality and performance.
After a period of knowledge collecting and the formal sign off, you can begin the next stage; it is time to start with the assisted perform stage.
In the assisted perform stage it is time to ramp up the services in the offshore location. Before the start of this stage, it is necessary to begin an operations test (tests on connectivity, logical access, process flows in service management tooling, reporting etc.). After a successful testing, you can then ramp up the services in a number of weeks, although it depends on the type of activity in terms of what the best strategy is for ramping up. In the schedule below, we will describe the activities of this stage.
It is essential to have a team from the Netherlands in India during the assisted perform stage to deal with issues that will appear during the start-up of activities in a live environment, especially in the beginning during the testing and start of the services.
Having this team from the Netherlands in India is especially helpful during this stage as a lot of small issues are likely to surface because of the fact that in this stage the offshore supplier works in real customer environments. An onshore team on the offshore location will be able to solve 80 per cent of the operational issues on a technical and organisational basis. For the other 20 per cent of problems, the team is able to interact very quickly with rest of the organisation in the onsite location.
The “go live moment” is the moment when the assisted perform turns into the primary support stage. Of course, during primary support the on and offshore partners can agree on a stabilisation period after the formal SLAs are applicable, but in this stage the offshore partner is accountable for the services. In this stage, close watch from the Dutch demand management organisation is important. The new demand organisation should then take over the demand function from the project.
After a predefined number of weeks, the primary support will transform into the steady state of normal operations. The project is then completely finalised.
The success factor in this transition model
Of course a model alone is not the sole answer for a successful offshore transition. As described in the introduction there are some extra aspects to focus on; the most important of which we have embedded in this approach. For example, reversed presentations and daily wrap-ups is a result of the fact that in the Indian culture blaming a person is not fully acceptable, and with this daily wrap-up, we have created a platform to deal with this.
On the other hand, there are still a lot of things that are not possible to describe in a transition method; for example, respectful behaviour between the two parties is always personal and situation-dependent. But what we have given with this described transition model are directives to organise and structure a transition and to mitigate the main issues that may arise. Don’t forget that the most important thing is the vision behind the transition approach which suggests the right answer in every situation; we call this the overall success factor.
The overall success factor in our transitions is a good balance between business and relationship – let us call this business partnership. During the entire transition and operation, both parties should work together based on the principles of partnership. Of course it is all about business, but to achieve a transfer of a lot of knowledge in a short period of time and to run a project efficiently, it is necessary to work very closely together and to be able to trust each other. In the Indian culture the value of relationship is very important in doing business. In the Netherlands it is just an enabler and Dutch people will primarily focus on results in a direct way. In this combination partnership, fact-wise directness and real trust is very useful to solve unexpected issues. To gain this, we have a strong preference for organising personal contact during and after a transition. At the bottom line, as on and offshore party there are common goals to achieve.
About the Authors
Jeroen Jacobs is Offshoring Business Consultant at KPN Getronics and is active in roles as transition manager and business consultant for offshore projects.
René van Kleef is Senior Offshore Program Manager at KPN Getronics and has led several offshore waves.
Samir Kumar Parija is Service Consultant & Transition Manager at MindTree Ltd and is leading transitions from the service provider perspective.
The authors thank Roger Tournois for the review he did on this article.