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Transitioning in outsourcing engagements – Don’t fail to see the risks!

A transitioning program lays the stage for the setup and mobilization of an outsourcing engagement. It is during this stage that the outsource service provider is trying to get up to speed on its customers processes, infrastructure, and applications in order to provide the contracted services.The effectiveness of a transitioning program determines the successful delivery of the services engaged for the outsourcing value it generates. It provides significant inputs for shaping up the project plan and solution design. A seamless hand-off is very critical in long-term application maintenance engagements, mission critical/ multi-year application development projects or even in QA engagements. In all of these cases the service provider should ensure that it sustains the existing operations with minimal adverse impact on the customer’s business. Both the service recipients and service providers need to understand the risks and issues associated with transitioning and have to be equipped with the mitigation plan for the same.

The most common and the explicit risks relate to cultural disparities, time zone differences, travel distance, insufficient documentation, lack of support from the knowledge providers of the incumbent vendor/ in-house team of the service recipient, key resources movement out of the project, and the impact on the existing KPIs during transitioning.

The service providers’ advanced knowledge of process maturity levels, best practices adopted in documentation and higher degree of service and domain expertise certainly help in mitigating common risks in transitioning. There are also a few other complex risks that can be encountered while transitioning services to outsource service providers. For example:

· Multi-dimensional aspects of engagement that have different locations, languages and delivery teams make coordination difficult during transitioning.

· Multi-sourcing strategy of the service recipient presents a unique challenge with respect to ownership, accountability and thereby the service delivery.

· Multiplicity of delivery centers will bring in the complexity of differential stakes and vested interests of the various teams which sometimes leads to the risk of sub-optimal transitioning.

· Multiple release cycles and / or service requirements (development, maintenance and QA services) lead to multiple lines of transitioning making it difficult for project scoping.

To sum up, since transitioning is a joint exercise, both the service provider and service recipients should participate in mitigating the risks. Both parties should take ownership and responsibilities during transitioning and ensure proper planning for the hand-off. Seamless execution during the transitioning roll-out and close monitoring at all levels throughout the process will lead to success. Service providers on their side should strengthen their global delivery processes to address risks while also trying to balance the objectives of quality, agility and cost savings to their clients.