Practical Roadmap for Successful Outsourcing Transitions

A PRACTICAL ROADMAP FOR
SUCCESSFUL OUTSOURCING TRANSITIONS
Pankaj Sharma
Partner & Senior Vice President
Shom Biswas
Advisory Manager
Helping Clients Leverage Global Services & Sourcing
Advisory | Supply Monitoring | Governance Support
www.NeoGroup.com | www.SupplyWisdom.com

2 A Practical Roadmap for Successful Outsourcing Transitions
Copyright © 2015 Neo Group, Inc. All Rights Reserved.
Introduction
Why is a disciplined transition management so critical to the success of a globalization
initiative? If you have an existing team with defined processes then surely it cannot be
difficult to transfer some of those processes to another internal team in a different
country or to a new supplier you have contracted to undertake this work?
This assumption is wrong. Transition management needs planning ahead of time and
careful management throughout the process when transition is taking place. In this
article we will explain what you need to plan for and monitor.
Global transition is a key step for many businesses. They are either managing
processes for the first time away from headquarters or expanding into new domains.
Unless the transition is done well the chances are that the services delivered from the
new (usually lower-cost) location will be poor or substandard.
Companies consider an offshore location for different reasons, but some of the key
criteria include cost benefits, access to a global talent pool, time-to-market
improvement, geographic presence, an expansion of customer service requirements,
building new capacity and capabilities, re-engineering processes and focusing on the
core competence of the business. The list goes on because every company has their
own reason for expanding their processes into new geographies.
As you consider the potential need
for a transition to take place these
are some of the key questions you
need to ask:
1. What: What to globalize – this step
is to identify the tasks that can be
globalized and how they may be
defined as individual defined
processes.
2. Where: Where to globalize – this
step is to identify the location and
operating model. Should you work
with a supplier or open your own
center?
3. When: What are the timelines to
globalize and transition?
4. How: how to go about it – this is
the entire transition management
we are exploring in this white
paper.
Everything in the above list will fail if the
transition is not managed properly. It
doesn’t matter how much analysis was
performed on choosing the right partner or
location. If you do not do the right phases
of hiring, knowledge transfer, installing the
optimal delivery infrastructure, and so on,
then it will be impossible to deliver on the
wider strategy.

Given the fact that transition involves the
transfer of knowledge from one set of
individuals to a different set of individuals
at a remote location it will almost always
be a complex process. Added to this
complexity is your challenge to ‘keep the
lights on’ while in the process of transition
– you can’t stop delivering to your
customers while the transition is in
progress.
If you get the transition wrong, it can
seriously impact on the entire value of the
strategic plan. So what are the main risks
and how can you plan for them?
Risks and Challenges: Why do many
Offshore Transition Programs fail?
As stated in the introduction, the transition
process is critical for the success of your
offshore strategy. It’s worth understanding
and analyzing the main risks that cause a
transition failure during the planning
process for your offshore strategy.
Summarized, the main risks to a
successful transition are:
1. Poor transition governance and
project oversight
2. Unreasonable expectation of
timelines for completion of
transition
3. Poor risk management during the
transition
4. Weak Knowledge Transfer – and
no checks and balances to check
success at every milestone
5. Lack of Leadership support and
intervention
6. Relationship/Cultural gaps
(stemming from poor choice of
vendors/poor recruitment of
leadership in captive location)
The key risks that need to be managed
during transition can be broken down into
six different areas:
1. Resource risk – It is important to
identify the critical, core, and non-core
resources operating existing
processes within the client and
similarly who will be just as essential
on the supplier side. Not identifying the
key people who can make the
transition succeed can lead to a longer
transition, a more expensive transition,
as expatriates will be needed, and low
team morale that affects service
quality.
2. Operation risk – Many operational
errors can affect the transition,
including an ineffective knowledge
transfer, non-compliance to regulated
processes, inadequate disaster
recovery or data security, and training
delays. Many operational risks can be
a serious threat to the business itself.
Lesser operational challenges may
reduce quality, increase the transition
cost, and reduce productivity.
3. Financial risk – If the transition takes
longer than planned then most of your
financial planning will be wrong. Your
planned savings will be delayed and
short-term costs will increase
dramatically. The result of financial
issues can be to lose the support of
the executives who wanted to
transition in the first place and an
inability to stick to the planned HR
strategy. If costs are not as projected
then it may be the end for your
transition.

4. Cultural risk – Especially true when
working with a new organization in a
new location, so both global culture
and corporate culture can affect the
way people work together. This can
lead to increased production time,
slow response times, and a lot of re-
work to fix errors. The consequences
can be that the client expenses soar
and the client needs to send more
people on-site.
5. Control risk – Effective management
of the client-supplier relationship is
critical. If the client misunderstands the
process or the supplier start moving
away from the project plan then
interventions are necessary. Failure to
monitor and control this can lead to
executive stress in both the
companies, a reduction in trust, and a
slower than planned for transition.
6. Issue effort – Related to the
additional management effort from
unseen risks such as the difficulty of
remote monitoring, a steeper than
planned for learning curve, poor
morale and employee resistant to
change. These issues can result in a
much slower than planned for
transition and an ineffective knowledge
transfer.

Mitigating the risk
Although these risks are real and need to
be planned for specifically, there are
several ways that risks can be managed
initially by considering that a guiding
principle for the transition should be to
manage it in waves. This concept of wave
sequencing allows the transition to take
place in phases:
1. Wave 1: Quick wins – roll out anything
without critical dependencies and
where the process is easy to deploy.
This phase can also be used as a
proof of concept to give more
confidence that it is wise to progress
further.
2. Wave 2: Manage the readiness to
leverage globalization by transitioning
processes with dependencies and
those too complex to initially transfer.
3. Wave 3 and beyond: Transition all
additional areas, including those that
require additional investment for
transition to take place. This will
involve processes with a significant
customer interaction or where deep
industry knowledge is required.

The Solution: An Offshore Transition
Management Roadmap
This is the real heart of your transition, the
roadmap that will guide your team from
merely planning the transition to being
able to undertake it with full monitoring
throughout.
The transition roadmap will have three
distinct parts: strategic, operational, and
tactical. They will run together, but allow
the project management team to consider
the various critical paths and
dependencies more effectively.
Your roadmap needs to initially define
how you will create and manage these
documents and outcomes:
1. Transition Awareness Sessions
2. Transition Governance Model
3. Transition Program Plan
4. Tactical Transition Plan
5. Transition Processes (including
issues, risk management,
escalation procedure)
6. Transition Check Lists, Guidelines,
Supporting documents and
templates
7. Transition Score
Cards/Dashboards/Status Reports
8. Change Control Procedures
9. Transition Quality Audit
Process/Checklist
10.Faster and quality hiring
11.Successful knowledge transfer
Ultimately your transition roadmap is
intended to take your business, and
especially the specific processes that are
being transitioned, to a future state.
Defining and agreeing on the desired
future state is one of the most important
initial goals and will feed immediately into
your definition of a strategic roadmap.
Although the planned future state will
initially set the strategic vision, it is
important to enable flexibility during
transition. Operational or tactical changes
may require feedback to the overall
strategy and this can redefine your
desired future state.
This may be because the team can action
certain tasks quicker than planned, or
difficulties have emerged that make the
initial plan unfeasible. Whether good or
bad, it is important to ensure this
mechanism exists otherwise the
executives following the broad strategic
plan will not be alerted to potential
changes in the final transition plan.

The Strategic Transition Roadmap
The strategic roadmap needs to focus on
these elements:
1. Pre-Transition: Clarity of Transition
within SOW
a) Scope: defined clearly and in detail
b) Resources: retention strategies
c) Processes: changes required
d) Technology requirements
2. Expectation Setting
a) Stakeholders’ map
b) Department/Process
interdependencies
c) Clients
d) Vendors
3. Effective Communication
a) Communication plan, internal &
external
b) Active Championing of Transition
Program by Leadership
This plan outlines the overall vision for the
transition, providing clarity on how it will
work, who is responsible for each part of
the project, how they report progress, and
how the target future state is defined.
© 2015 Neo Group Inc. Proprietary
TRANSITION ROADMAP: IMPLEMENTATION11
Setup Transition
Governance
Plan Transition
People
Process
Review Scope
Transition
Baseline
Technology
Knowledge Transfer
Shadow Support
Reverse Shadow Support
Steady State (Stabilization)
Transition Governance
Change Management
Time
EXECUTEMOBILIZEPLAN

Key questions and issues to think of when
defining the strategic roadmap include:
1. The executive leadership must be
involved. They may have set the
direction and then delegated the
transition to a subordinate, but at the
strategic level then need to remain
involved. Without the support of the
people setting corporate strategy it is
very hard to achieve a successful
transition.
2. Your project is likely to affect your
internal customers, changing the way
the team actually does business, so
the business leaders from affected
areas need to be included in setting
the strategy.
3. Expectation setting at a strategic level
is vital; so all parties from the
executives to the supplier to the
project team all understand what is
being aimed for and when success is
expected – including an agreement on
what success looks like. Sometimes
there will be short-term service
difficulties during transition – this
needs to be communicated so
expectations are set correctly.
4. Your clients also need to be aware of
the transition plan if there is any risk
that your service level changes will
affect their business. Processes may
need to change and clients need to be
educated on why the change will
enable you to provide them a better
service in future even if there are
short-term headaches during the
transition itself.
5. Companies that provide you with
services may also need to change how
they interact with your team. Suppliers
need to learn how they can work with
the new team or how their service can
be discontinued.
With these questions answered and
various actors informed, the strategic
definition of what should happen, when,
how, why, and who will be affected will all
be answered. With agreement on the
broad strategic vision for the project you
can proceed to define the operational
roadmap.
The Tactical Transition Roadmap
The tactical roadmap needs to focus on
these elements:
1. Monitoring & Reporting
a) PMO
b) Roles and responsibilities (RACI)
c) Meetings: subject, attendees,
cadence
d) Reporting: frequency,
responsibility, metrics
2. Transition Risk Management
a) Issue and escalation management
b) Risks identification and mitigation
strategies
c) Change control

3. Resources
a) Retention and rebadging strategies
b) Job descriptions and hiring plans
c) Recruitment: no show
management
4. Create Baseline
a) Process maps – “as-is” process
before transition
b) Performance benchmarks
c) Current productivity and utilization
d) Technology requirements
e) Statutory & regulatory
requirements
5. Transition Training and Knowledge
Transfer
a) Training process and success
parameters
b) Training tools – documents,
process maps, modality
c) Transition Training Feedback
Mechanism
6. Time Zone Management
a) Time zone requirements
b) Expectations realignment
c) Operating model – new vs. current
7. Holiday Work Allocation Mechanism
After considering the strategic and
operational roadmap, the tactical roadmap
needs to drill deeper still. Typical
questions and issues to consider at the
tactical level are:
1. How will the PMO run effectively?
2. How are issues and risks escalated?
3. How the key client resources will be
kept on board during transition?
4. How the new team will be most effectively
trained as part of the knowledge transfer?
5. How to get the new team on board quickly
enough?
The tactical transition is where the change
is being applied on the ground and is
therefore critical, but at this tactical level it
is also essential to plan how you can
measure on-going success. On a day-to-
day basis how can you ensure that the
strategic vision is on track when the real
parameters you can measure are tactical?
These are the four key areas of
parameters that you need to consider
measuring to track success:
1. Ongoing Relationship Management
2. Transition Quality Check
3. Benchmarking
4. Organizational Health Check (During
and Post-Transition)
The most specific parameters that need to
be monitored during the transition include:
1. Performance (SLA/KPI/Quality/CSAT)
plus training success and Knowledge
Transfer
2. Resources
3. Financial
4. Contractual
5. Risk/Issue/Escalation Management
6. Relationship
One of the biggest tactical challenges is
always how to keep the lights on while
moving house, in other words how do you
manage the transition without your

customers noticing a dip in service
quality? Even if you warn your clients that
there may be some temporary issues
during the transition, it is not acceptable to
expect their understanding – they are
paying for your service and that’s what
they expect.
Planning a successful transition will
ensure that your ongoing delivery is not
hampered. The incumbent high-cost-
location employees cannot be retrenched
(if needed) until the new location is
completely ready. This is also a factor of
good transition governance – to know the
optimal time for knowledge transfer cut-off
and a transitioned go-live so the new
location comes on stream gently.
Depending on criticality, it is usual to
transition gently by having both the old
and new site work in parallel until the new
location is ready to go it alone.
The Operational Transition Roadmap
The operational roadmap needs to focus
on these elements:
1. Set up of Transition PMO
a) Committees at different levels
(Strategic, Operational, Tactical)
2. Communication Management
3. Performance Management
a) SLA and KPI Management; Quality
Management; CSAT
b) Measuring and reporting SLA/KPIs
during Transition, and immediately
post transition (as established per
SOW)
c) Measuring and reporting SLA/KPIs
at the Post-Transition steady-state
operation stage
d) Financial Management –
Comparison of Expected vs Actual
savings due to Globalization
i) Transition Spends
ii) Billing Schedules
iii) Deployment Schedule
e) Resource Management
f) Contract Management
Transition Scorecard
Transition Plan
Documentation
Risk Assessment - FMEA
Issues and Escalations
Skill Matrix and Resourcing
Performance Indicators
Knowledge Transfer
Change Management
Reporting
Readiness Checklist
TRANSITION
SCORECARD
The Client Scorecard
will encompass each of
the following areas
15

Once the strategic roadmap is
established, you can now start getting
your hands dirty. The operational
roadmap drills down further into the
operating procedures for the transition in
much more detail. Here you need to
define exactly who will be managing each
task within the project, how the Project
Management Office (PMO) will be formed
and how it interacts with the team to guide
and control the transition, and how
ongoing progress can be measured.
Key questions and issues to think of when
defining the operational roadmap include:
1. Team communication is essential and
needs to be as early as possible. The
client-side team must understand what
the expected outcome is and how they
can help to achieve this. The supplier
team needs to be fully briefed on what
is expected of them and by when.
2. Don’t always think in terms of the Key
Performance Indicators (KPIs), during
or after the transition. Retain a focus
on the existing quality of service to the
customer and focus on ensuring that
this can be matched or exceeded
through a successful transition.
3. Baseline the existing process cost to
the best of your ability. Many internal
processes are not well documented so
it can be difficult to calculate their cost
to the business, but this baseline cost
before any transition takes place will
be important during and after
transition. It can be an important
reminder of just how much these
processes used to cost and a finite
measure of the benefit of the transition

program when executives are asking
questions about progress.
4. Finance management is not just
related to the baseline. If you are
planning from the client perspective
then be aware of your targeted new
cost environment, especially since you
intend to make savings in future. From
the supplier perspective ensure you
have an awareness of how much small
changes in the project – for example a
one-week delay – can affect your own
project finances.
5. If you are transitioning to an offshore
location then it is likely that you need
to retrench existing resource. Ensure
that you will have the offshore team
ready in time for a knowledge transfer
to take place and agreements worked
out with key individuals on the client
side so that even if a team member
stands to lose their job, they are
incentivized to help achieve a
successful transition.
6. As you move from strategic planning
to operational transition management
you need to ensure that the formal
contract is in place and agreed.
A transition can be a difficult and complex
project, but it cannot be understated that
emotional and psychological factors may
come into play at the operational level that
can affect the project success. At the
strategic level, retrenchments are just a
process within the transition, but at the
operational level the existing team and
new team both need to be handled
carefully and respectfully so the transition
can succeed.
What can happen if you lose the support
of the resource?
The issue here depends on which team -
the knowledge recipient team (the
supplier, or captive center personnel) or
the knowledge provider team (the client) –
is involved.
If the knowledge recipient team is not
100% supportive then the transition
almost certainly cannot work. It is
therefore extremely important to (1) find
the right supplier through a rigorous
selection process or (2) relocate and hire
the best people for your captive center.
If the knowledge provider team is not
100% supportive then the transition can
still succeed. In fact, this is likely to be the
case in many transitions, as people dislike
being asked to train their own
replacement before facing redundancy.
However, to make this work you need to
consider two key points. (1) The retention
strategy you will use to incentivize the
onshore team and (2) how best to perform
the training and knowledge transfer.

Besides robust planning and structured
governance, change management and
exhaustive communication plans play a
critical and important role for successful
transitions. At the most simple level, when
large teams of people know that their
company is changing the way things are
done they will usually assume the worst
case scenario. Your project plan needs to
ensure that rumors are met with facts and
where the facts are difficult – such as
retrenchment – then those who are to lose
their job know how they will be valued
throughout the transition.
The change management plan should
address all constituents and stakeholders
– people, process and technology – and
both internal and external stakeholders –
including internal and external clients.
Transition Governance: Activities Required for Effective Implementation
So all of them – current and future -
employees, contractors, suppliers, clients,
the market, investors, etc. have to be
addressed. Your support functions such
as HR, Legal, Procurement, Facilities, and
Technology can all play an important role
in this.
Communication plans should convey the
need and requirement for change. What
are the expected effects – good and bad?
What are the risks and the mitigation
applied? What support you would like and
examples of how similar projects have
helped other companies. The
management team needs to effectively
communicate that this transition is the
best thing the company could be doing in
the present business environment.
34
!
Transi' on)Governance)through)several)key)ac' vi' es)required)for)effec' ve)implementa' on)

Recommendations
This almost concludes our white paper on
successful transitions. Clearly the heart of
the project is to get the three roadmaps
right for your own transition, but before we
finish, it is worth pointing out some other
areas where we feel it is particularly
important to pay attention. These can
make or break your transition program.
Start early
Planning for the transition is never too
early. It is important to allow sufficient
time for necessary communications,
adjustments, and planning to take place.
Define the scope clearly
Document what to retain and what to
globalize through a collaborative and
trusted process and methodology. All
stakeholders, including client and
supplier, need to have a full
understanding and be in agreement of key
milestones so that progress can be
tracked accurately and any issues can be
identified early on. Ultimately, the client
and supplier need to agree when the new
team is ready to take full ownership of
service delivery, marking the end of the
transition. It is helpful to document the
expected triggers that will confirm that go-
live can take place:
1. When both parties (client and vendor)
are ready and comfortable that the
offshore delivery team is completely
competent to take over delivery of the
service. Both parties need to sign off.
2. There is generally a timeline that is
established beforehand at the start of
the process as to when the
handover/go-live will occur and so long
as each milestone has been achieved
then the project plan should be
followed.
Involve all stakeholders in transition
planning
A transition program involves change and
especially a change to people’s jobs and
responsibilities. It is critical to include all
key management, operations, supporting
functions, clients and vendors in the
planning stage to ensure buy-in.
It is especially helpful to involve HR right
from day one of the project. There may be
special cases where you need a lot of HR
bandwidth, such as:
1. Rebadging of employees from the
client to supplier
2. Headcount reductions that need to be
planned
3. Retention plans that might require
special incentives or bonuses
4. Large-scale hiring, particularly at an
offshore captive center
5. Organizational restructuring that
changes reporting lines
In addition, if the client is publicly traded
then several teams need to be included
from day one, including marketing and
PR.

Invest in transition PMO/Governance
Having the necessary skills and
experience on the PMO and Governance
team is critical to success. Seek
individuals with deep knowledge of the
organization, clear vision of the end state
and, preferably, previous experience
leading a transition.
Set-up a structured governance to
manage transition
In order to successfully manage a
transition, it is necessary to establish a
baseline from which to monitor and track
progress. There are four key stages
required to create a baseline:
1. Tracking and measuring the ‘as-is’
process (before transition) – are there
volume metrics and KPI/SLAs that
were being tracked? If yes, they serve
as one pillar for the benchmarking
effort. If not, measure them for 3
months and set up an ‘as-is’ SLA/KPI
standard. Also talk to the stakeholders
and clients (internal and external) to
understand and set up realistic service
levels.
2. Eventual expectation from
Globalization. If the LAN connectivity
was at 95%, and you as a client would
want that after the transition, you will
want improvement to 99.5%, then that
is what needs to be stated on the
Statement of Work (SOW). This
expectation (and what the payment will
hinge on) serves as the second pillar
for benchmarking. Obviously this is
extremely important if the future
expectations are much higher than
they are today.
3. For standard processes – example:
On-call support; F&A R2R (record-to-
report); there are industry benchmark
SLA metrics – globalization advisory
firms should have this. This is the third
pillar for the baselining exercise.
4. Typically Companies do not have
structured and well published service
levels or KPIs. Advisory firms (such as
Neo Group) can help set these up,
working along with the client
organization, along with the necessary
transition governance framework to
monitor and report.
Embrace a continuous improvement
mindset
Maximizing the value from an outsourcing
initiative requires a continuous
improvement, mindset. This eagerness to
relentlessly evaluate current processes
and identify ways to improve will yield
added value in strategy, people,
operations, technology and compliance.
Promote and practice the “one team”
concept
How close should your supplier be? Close
if you want the transition to succeed. You
might feel that you are paying the supplier
to just deliver a service, but during such a
critical stage it is far better to consider
them a partner in your success. If you can
maintain this approach on an ongoing
basis then that’s even better for your
future relationship.
Ensure that you include the supplier
inside the governance PMO so they have
oversight of the entire project, not just

their section. Meeting cadence, reporting
format and escalation should all have both
the client and supplier leadership
involved.
Communicate
In order to attain buy-in, communication
plays a critical role. Communicate often
and repetitively the objectives of the
outsourcing initiative, the expected gains,
and the importance of the globalization
program in the overall business strategy.
Communication is important for any
transition program, but in a public
company it is essential to get the external
communication right so it matches the
internal information.
Conclusion
A successful transition requires many people from different organizations to work
together across great distances. These projects can be extremely complex and can be
emotional for the client company. Often the company will be undergoing a wave of
change that means the team is not settled and this can be amplified when a team
knows that as soon as they train their replacements, their own job is lost.
However, these projects can also be extremely rewarding. The client company has
decided on a new future state and is intent on getting to this improved status. The
supplier will be keen to demonstrate their competence, and these projects usually
involve globalization.
For every aspect of global transition projects that makes them complex, there are others
that make them exciting and rewarding projects to work on. The sense of transforming a
business is never felt quite so keenly as when you can sit and design a strategic vision
for how the business should work, rather than how it works today.

Neo Group Can Help
The global sourcing landscape is constantly evolving. For a deeper
discussion on planning and executing a successful outsourcing
transition, contact one of our lead advisors.
Pankaj Sharma
Partner & SVP
Pankaj@NeoGroup.com
Shom Biswas
Advisory Manager
Shom@NeoGroup.com
About the Authors
mmmmmmmmmmmmmmmmmmmmmm
Pankaj Sharma is a Partner and Senior Vice President at Neo
Group, where he is responsible for assisting clients in the
development of their outsourcing strategies and governance models.
Pankaj brings over 20 years of experience in Management
Consulting with a strong focus on operations and solution delivery.
Shom Biswas is an Advisory Manager at Neo group, with extensive
Globalization Consulting experience, having worked with and
consulted leading global companies, including Comverse, Time Inc,
True Value, Northern Trust, and many others, in the areas of
Sourcing Strategy, Transition Strategy and Post-Transition
Governance.
About Neo Group
Founded in 1999, Neo Group helps organizations meet business
objectives and address business challenges by leveraging global
services and sourcing. To learn more about Neo Group, please visit
www.NeoGroup.com.
About Supply WisdomSM
Supply WisdomSM is a unique cloud-based service that provides data
and intelligence for sourcing risk and opportunity monitoring of global
countries, cities and suppliers. To learn more about Supply
WisdomSM, please visit www.SupplyWisdom.com.
No part of this report may be reprinted/reproduced without prior permission from Neo Group.
Contributors
Pankaj Sharma
Partner & SVP
Shom Biswas
Advisory Manager
Editor
Laurence Blanchette
Marketing Manager

Practical Roadmap for Successful Outsourcing Transitions

Recommandé

Recommandé

Contenu connexe

Tendances

Tendances (20)

En vedette

En vedette (8)

Similaire à Practical Roadmap for Successful Outsourcing Transitions

Similaire à Practical Roadmap for Successful Outsourcing Transitions (20)

Practical Roadmap for Successful Outsourcing Transitions