Companies sometimes disregard or do not pay too much attention to risks associated to transitions.This can signify increased costs, time overruns, internal and external customer dissatisfaction and eventually jeopardize an entire outsourcing strategy and roadmap.
It is not enough to expect your outsourcing vendor to do proper risk management. It is imperative that this is co-managed by the company and the vendor with a strong governance structure that is ready to jump into action when things get out of control.
As practice shows, the following transition risks should be considered:
Unavailability of Subject Matter Experts (SMEs): There are different ways of controlling this; fast tracking can be done in certain areas, in the case of IT, while reengineering tools can be used. Furthermore, through a correctly executed change management, rehiring critical SMEs usually overcomes obstacles.
Ramp up speed: Keeping up with the pace is important but not to overdo it. It is recommended for the vendor to do an effective Resource Management to assure the right teams at the right time backed by robust planning with appropriate lead times to allow internal training time if necessary.
Inadequate documentation: In the case of IT, a deep dive into code and pro active documentation of critical applications is a must. In the case of BPO, a pro active documentation of key processes and strong resource shadowing to ensure proper understanding of processes should be applied.
Inadequate knowledge transition: Having well defined exit criteria is important, in order to ensure all activities and necessary documentation are created for each phase. The use of play back sessions and deployment of a multi layer transition approach (self study, class room sessions, internal training, and use of knowledge transfer tools) is also a best practice to follow.
Knowledge retention: Sometimes forgotten, it is indispensable -once the transition phase is over- to have all processes/applications correctly documented. And your vendor has to provide and manage a strict process for key resources rotation and retention.
Cultural fit: It is absolutely important to consider cultural differences if you want to succeed in outsourcing. This major risk has to be tackled through cultural workshops and training for key resources, deployment of companies’ personnel into vendors’ offices and identification of cultural champions that support managers and coach team members from both companies.
It is recommended to pay special attention to these risks and mitigation strategies at early stages of the engagement including the bid process. Managers at both sides have to be conscious about it and dedicated to monitor and act throughout the entire phase and duration of the engagement.
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