The MGS Blog

Monday, February 27, 2012

Ways to avoid outsourcing failure...

According to Robinson and Iannone (2007) Transition is the most challenging period in an outsourcing project. Over two thirds of projects encountered problems that began at the transition stage. They suggest three approaches to address issues that germinate at the transition stage

"1.Refocus and retraining of the retained organization is critical. In most cases, the retained staff consists of IT professionals who have been "doers", with strong technology management roles in service delivery. Now they must shift gears and reconstitute themselves as managers and liaisons between their organization and the service provider. Special training may be necessary so that members of the retained organization understand and can operate effectively in their new roles.
2.Use acceptance criteria. Tactically, a key success factor at the transition stage is the use of acceptance criteria: What are the marks that the service provider needs to hit, by what dates? Unrealistic transition timetables are a frequent source of trouble. Both buyers and providers should look with a sceptical eye at the viability of their transition timeframes.
3.Choose the right transition economic model. A milestone-based, achievement-based economic model is a better approach than a time-based economic model."
(Robinson & Iannone, 2007)

Reference
"9 Ways to Avoid Outsourcing Failure" by Robinson & Iannone, 2007. CIO Magazine (link)

"Understanding Transition Performance During Offshore IT Outsourcing" by Beulen et al (2011).