IS BPO 311- Fundamentals of Business Process Outsourcing 101

Chapter 4: Managing Outsourcing Transitions

INTRODUCTION

Employment is an intrinsic part of our human identity. Therefore, significant

improvements to our working conditions are improvement in our perception of oneself.
Job is also a position where we try to meet some of our most fundamental needs, such
as income needs, socialization, respect and more. So it should not come as a surprise
that any change in our work – or just the suggestion of a change – will have a significant
impact on us. During outsourcing the process of transferring employees from one
company to another is often referred to as a transition process. At the end, a
transformation phase has three targets. The first is to ensure smooth transfer of
responsibilities such that no interruption to the service happens to the customer. The
second is handling the people side of the transition in such a way as to treat the
employees fairly and with respect. Third, designing the workers to maximize the quality
of employment. Research shows that most transformations do not at the same time
achieve all three objectives.
In this module, we will talk about managing outsourcing transition strategies,
success factors and effectiveness. Readiness of documents and assessment as well as
the hand-offs, scales and time tracking will also discussed. This lesson will let us know
how to adjust and manage transition of outsourcing activities of IT-BPM industry.

LEARNING OUTCOMES
At the end of this module, the students should be able to:

• define and explain Transition Management

• define the migration strategies and knowledge transfer frameworks
• define and explain the transition risks
• list the critical success factors
• identify transition effectiveness
• outline the requirements for good transition documentation
• explain work-shadowing
• define the components of readiness assessment
• Define hand-off
• Explain the concept of Scale
• Explain time tracking

LEARNING CONTENT
• Transition Strategies and Knowledge Transfer Framework
• Transition Success and Effectiveness
• Document Readiness

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IS BPO 311- Fundamentals of Business Process Outsourcing 101

• Work-Shadowing
• Readiness Assessment
• Hand-offs
• Scale
• Identifying Task Candidates for Outsourcing Scale

4.1 Transition Strategies and Knowledge Transfer

Framework
Under this topic, we will discuss the transition
manager, different transition strategies and
knowledge transfer frameworks

Transition Management- A collection of activities

that accompany the signing of a BPO contract
enforcing or executing the
comprehensive movement or transition of
processes from the customer to the service provider.

Proper transitioning of tasks from a client to a service provider helps in achieving successful
business relationships.

A Transition Manager- responsible for migrating the function or process from the client
location or organization to the service provider or outsourcing organization. He/she needs to
be an effective communicator, as the role requires extensive interaction with the clients.

For discussion, Activity 4.1 HOW WOULD YOU DESCRIBE THE

RESPONSIBILITIES OF A TRANSITION MANAGER?

Transition Manager Skills and Competencies:

• Need to have strong project management skills, as the migration process are
complex projects that require expert management skills
• Needs to be comfortable to work with multicultural environment, since most of the
clients are from overseas
• Needs to have a thorough understanding of the existing business and legal
processes, current and emerging technologies to be used for offshoring of business
function

Two Common Transition Strategies

a. Lift and Shift- common methodology used when the process is mature. The Lift and
Shift approach is used for migrating. This means moving a matured process from its
current organization to a service provider.

Phases:
1. Move the current process to the service provider without changes/improvements
2. Stabilize
3. Re-engineer the process to achieve efficiency gain- produce same output, less
FTEs

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When we say “Move the current processes..”, we’re not just talking about a physical
movement. It also involves transferring a process to another performer or provider.

Example: Apple, Nokia and Samsung contracting Corning to produce variants of its
Gorilla Glass to be fitted on their iPads, iPhones, Galaxy Notes, tablets and Nokia
Lumias. These companies do not have the: hardware, software and people-ware to
produce glass on its own that is as robust, durable, vibrant and elegant as Corning’s.

Stabilize refers to a large concept involving numerous tasks that requires significant
amount of time for proficiency or mastery.

Example: If Corning decides to tap one of San Miguel Corporation’s glass

manufacturing facilities to produce X thousands of Gorilla Glass. SMC will not get this
process spot-on overnight. First, the capability of the hardware or machinery to
produce glass for personal electronics. Second, the software- meaningthe processes
or technical expertise needed to operate that hardware is not in place. Third, the
people ware/manpower – meaning the knowledge and competencies of the
personnel is geared towards glass manufacturing as opposed to glass for personal
electronics. This knowledge and competency still has to be trained. Not to mention,
when SMC acquires the appropriate machinery, they will have to rethink its factory
layout to conform with the standards required by Corning.

Items to Consider
1. Process change will not affect process control points or output can be done by
service provider independently
2. Major effort: post go-live reengineering
Transition phase can be easy especially if people and processes are moved.
Onshore has the risk of losing political will to reengineer processes after a while.

b. Re-engineer and Migrate- fundamental rethinking and radically redesigning of the

business process to achieve dramatic improvements in critical measures of
performance such as cost, service and speed.

Items to Consider
1. Useful when the process is either broken and requires fixing, or is due to undergo
significant change in the near future (systems change or process change)
2. It may be important to utilize the expertise of the existing team (which built over
several years ) to drive the change , before it is handed over to the new team.
3. Company that outsource industry common processes to a market-leading service
provider will generally follow service provider processes
4. Company changes its processes as part of the transition to service provider.

Example: Jenny has been in laundry service for 10 years. When it comes to washing
clothes, everyone knows that she is an expert however, she realized that the quality of
her work can still be improved so she got her sister Tina to help her. Tina’s a bit
inexperienced compared to Jenny. Before, Jenny tells Tina to help her out, she tried to
modify some of the processes like adding more time soaking the dirty clothes, changing
the detergent brand and putting a fabric conditioner before putting the clothes in the
dryer. It would be difficult for her to do these changes alone, but with Tina’s help she was
able to improve the quality of service.

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Management of knowledge is an important factor during the design of the services to be

offered. When designing a service offering, various objects such as plans, procedures, models,
resources, and roles are described. Those can be tailored during the service transition according
to the needs of the companies.
a. Service transition- Knowledge transfer process
Knowledge Transfer (KT) is a central process in any transitional service program- for
a new service or service shift. New services may only commence after completion of
the necessary information transfer process. a.1 Entry Criteria
Knowledge transfer begins as soon as the customer is engaged during the service
design phase but the service transfer phase begins with a comprehensive plan and
formal beginning of knowledge transfer. a.2 Input
The following table defines different Information Transfer Inputs and Mechanisms:

a.3 Process
Service transition manager creates the knowledge transfer strategy in line with
the needs of the service to be transferred. An effective knowledge transfer
strategy should address the following key areas:
• Creating a governance model
• Establishing roles and responsibilities
• Finding policies, processes, procedures, and methods for knowledge transfer
• Identifying expertise and knowledge required to deliver a service effectively
• Finding technological, administrative, and functional knowledge transfer
requirements
• Determining KPIs

Based on the KT strategy, an appropriate KT plan is created. A knowledge

transition plan contains the following:

• List of documents (user manuals, deployment guides, ready reckoner for

incidents, technical documents, process documents)
• Target completion date
• Plans for instructor-led training, web sessions, and any other training
document (presentations, videos), if required
• Details of the knowledge management tool (like SharePoint), and artefacts
(repository/tool location, access, intended audience)

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After sign-off, the knowledge transition plan is executed and tracked.Regular

feedback is a necessary part of tracking the plan and necessary changes are
made to the plan, training material and methodology. Templates and checklists
are developed to help in creating a knowledge transition plan, capturing the
training requirements, and assessing the effectiveness of the trainings. Reverse
knowledge transfer sessions/quizzes/tests which assess the efficacy of the
activities, are a critical component of a robust knowledge transition plan.

b. Continuous knowledge management

During service operations, an effective service knowledge management system
allows managers to make better decisions, improve service availability, optimize
capacity utilization, and fix problems. It is imperative that the process of gaining
knowledge should not stop while moving from service transition to operations. It is
the responsibility of the service manager to ensure a seamless transition.

c. Templates, checklists, and tools

A well-established knowledge management tool and repository is necessary to
effectively execute a knowledge transfer plan and knowledge management plan.
Tools and repository should be identified at the time of service design. The
methodology of how we use these tools can mature during service transition and
operations.

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4.2 Transition Success and Effectiveness

In this topic, we will the risks and pitfalls of transitions, the critical success factors, and overall
transition effectiveness.

a. Transition Pitfalls and Risks

Any transition is in jeopardy if any of the following occurs:
1. Inadequate investment and sponsorship- Example here is a manufacturing
company expecting volume sales from agency that provides manpower- the
sales force, but fails to invest on proper equipment to allow product
demonstrations so potential buyers can freely experience or try out the
products.

2. Unclear scope of work- and unclear roles and responsibilities- These are
doubt, serious concerns that can torpedo your efforts for successful
transition. A good solution is through proper documentation and process
mapping.

3. Training shortcuts- As future leaders expected to develop people, be mindful

of the following training dimensions:
• Timing and duration
• Content and delivery
• Skills practice and learning evaluation
*Just imagine what is going to happen o your subordinates if we try to do
shortcuts in these dimensions?

4. Not retaining the experts- Having subject matter experts in a company gives
benefits. The breadth and depth of experience of your resident SME that is
exactly what they leverage. With that experience comes perspective,
discipline, temperance, analysis, decisiveness, rigor, and compassion-
meaning maturity.

For discussion, answer Activity 4.2, related to transition pitfalls and

risk.

Activity 4.2 wants you to understand that, an activity can be done dependent on the task holder/s.
For example, for ironing clothes, does the chore imply that nothing else beyond ironing clothes?
Or the chore similarly includes retrieving the clothes form the clotheslines, ironing the clothes,
and placing of the clothes in the cabinet or drawers’ owner? Another scenario, your family has a
car and you are given the task to clean the car. Does the cleaning of car mean just the outside via
dusting or just outside via washing? Or cleaning the cars means washing the exterior and
vacuuming the interior? Therefore, it is important to have a well-defined scope of work and
roles and responsibilities to avoid this pitfall.

b. Transition Critical Success Factors

The success or failure of a transition project is fundamentally measured in two
aspects:
1. Technology Readiness- state of readiness of the enabling hardware and
software to support the ongoing operations
The following questions may give us assurance to this aspect:

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- Do we have right type of computers?

- Do we have the right number of computers?
- Do we have generators in place just in case there is a power
shortage? - Are we using the latest or most compatible applications?

With these questions, managers and leaders can now have a guide as to
how they picture the big perspective of transition in their company.
Having enough resources depending on the needs is very important for
the success of the transition.
2. Manpower Readiness- state of the readiness of the operating staff- hired,
trained and skilled for the service processes.

In this aspect, we are looking at the knowledge and skill of the workforce. It
would be a challenge getting things done if your operations have the most
powerful desktop PCs for animation and rendering but have workforce with little
experience using such equipment. A good example is, Efren “Bata” Reyes and
Francisco “Django” Bustamente would beat an amateur at billiards even if they
took turns using the same cue-stick.

c. Transition Effectiveness

2 ways to measure transition effectiveness:

1. Financial Benefits- It is important to quantify the real cost of the function

before off-shoring (baseline costs) and the cost of the offshore team on an
ongoing basis.
- Cost related to moving the function to the new team should be
tracked separately as project costs
- Capturing these cost elements enables comparison of baseline costs
with current costs, and provides an accurate measurement of the
saves.

2. Performance of the Team- primarily done by developing performance metrics

and usually subject to a testing phase to determine reasonability of the
service measures- known as “baselining period”.

Can you recall our example about Corning tapping San Miguel Corporation.
This requires SMC to transform and migrate operations from beer bottle to
manufacturing Gorilla Glass production for smartphones and tablets.

With enough training and guidance from Corning, SMC is expected to

produce outputs that are within the quality standards that Corning has.

4.3 Document Readiness

Proper documentation helps us have a smooth and effectiveness transition. We should
look the bigger picture in mind, like asking ourselves, “What should be documented?”.

The following are guides for proper documentation:

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a. Inputs- It is important to know where the inputs are coming from, how they are given
and who uses the inputs, including when inputs are to be delivered and what to do
when challenges arise to maintain its quality are to be carefully considered also.
Source systems and dependencies are inputs to be documented. Timing of the
delivery quality assumptions and work-around in case of failure in delivery of some
inputs.

b. Processes- these are documented using the industry standard format and in
complete detail. Hand-offs to other parties, internal and external are documented
including timing and format. Internship/flash reports, if required, are also documented
as deliverables.
Delivery time, day-of-month, period targets are documented.
With enough details and information based on the company’s standards, processes
will be clear to everyone who needs it. Even on processes, updates and tasks endorsed
with its deadlines should help the company have smooth and consistent process.

If we are to outsource a task to internal or external partners, it would be helpful if our

partners would be informed on what things are used and how it I used to perform a
certain task in process.
c. Outputs- A checklist or list of guidelines could be helpful to ensure that outputs are
made on time and comply with the
company’s standards before it is
endorsed to next final steps.
Interim/flash and final outputs are
completely documented. Formats,
control steps and quality
assurance checklist are
completely defined. Delivery
time/day-of-period are reviewed to
ensure they are
achievable/consistent with
input timelines. Service provider and transition project manager should validate
that timelines are current and not “aspirational”. This could put in
desired/unrealistic deadlines when outsourcing.

d. Communication- people inside the company know who to communicate with and how
is very important. Communication channels for output to be explicitly defined. Clarity
here minimizes misunderstanding during early production period, especially if the
output is an input to another process.

e. Supervision- It is also important to document how we manage people who plays an

important role in our business. Onshore supervision points and what will be
reviewed/checklist should be defined. Supervisory review paves the way for transition
into “center of excellence” mode where supervisory control rests offshore.

4.4 Work Shadowing

Work Shadowing is the activity of spending time with someone who is doing a particular
job so that you can learn how to do it (Campbridge Dictionary). Meaning, you need to get quality
work experience or do some work shadowing.

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In IT-BPM Industry, work shadowing is a term usd for “learning-by-doing” activity of

service provider personnel, generally done at the same location as current company performer.

Phases:

1. Onshore personnel doing the activity- This is about performing activities and
conducting trainings by the onshore personnel. Service provider staff reviews
documentation provided against actual activity done by Onshore Personnel.

Example: Our school decides to contract a security agency to install CCTV camera
system. The school administration and the vendor(security agency) agreed to install
21 cameras feeding back to the servers the videos of all offices and classrooms. The
vendor will be installing the proper software (meaning processes alongwith the
applications). Peopleware – providing the school personnel proper training on how to
use the system. All together, the entire process (installing hardware, software and
peopleware) would take 144 hours with the cost of 280,000.00. During the installation
process, the observed actual hours worked was only 102 hours. This discrepancy in
work hours will be documented. On the second item; if addressing those
discrepancies would improve the quality of the process, then a modification of the
process documentation can be done. Thus, the third item suggests that it would be
an advantage for the company to
resize the staffing doing the training
based on the modified
documentation.

2. Guided service provider network- The service

provider performs while being observed by the
service provider. This may be done onshore or
at service provider site. This phase complete 1
or 2 full cycles. If output is monthly, guidance is
given for 2 month-end, if daily, guidance is given
for few days. In general, 1 to 2 months of guided
work.

3. Go-Live- Service provider performs on its own but is still closely monitored by the
client company for a certain period of time to ensure good quality of the task being
performed. Setvice provider performs the activity independently in the service
provider site. This phase needs to closely monitored for a period of 3 months to
ensure stable performance.

4.5 Readiness Assessment

The purposes of readiness assessment is to verify if
the process to be outsourced is adequately documented,
correctly sized and with right level of quality assurance and
supervisory control.

Adequately documented means if documents are

properly documented with sufficient information, the current
process will result in ungroup knowledge. Service providers
with sure certainty of process premium in their proposals will
lead to very clear on what will be delivered, how and by when.

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Take note that unclear processes, misunderstandings and uncertainties are more likely to
happen without adequate documentation. This results to poor quality of outputs and additional
costs.

Correctly Sized in generic resources, most current processes done in-house operate with long-
experienced staff (veterans in role). Without readiness assessment, the company will estimate
the current cost low. The receiving provider may incorrectly size the role, may have initially 2
performers (with very structured role) to do the same 1 FTE job until knowledge is
gained/documented.

Resource sizing already includes activity of quality assurance and supervisory control.
This means that, most in-house processes rely on veterans performers with longdeveloped
“business acumen” that allows unstructured sense-check quality assurance.
Here, most contracts (especially shared service center migrations) are under-configured because
service providers will inevitably use the “change request” process to add to the cost.
4.6 Hand-offs
This is when work is endorsed from one worker to another or from one work station to
another function. Hand-offs are transfers of output to a different performer, an approver, for futher
action prior to continuation.
Reasons for hand-offs are:
1. Data enrichment- the other performer adds data to the transaction. We can look back
at our assembly line as an example. Each segment performs a different tasks with its
own enterprise. The more hand-off the output passess, the more the output gets
completed.

2. Quality assurance- the second performer is a checker. Hand-offs can be used to check
the quality of an output.

3. Control – approval for materiality and substance is done by a separate person. It is

more like getting help from a person who is not part of the company to check the
output.

4.7 Scale
In this topic, we will be looking at scale, sufficiency of scale and some tips on how to
optimize scale. Number of employees (manning compliment, head count, full time requirements
FTE) are sufficiently of scale depends on the following:

1. Service provider – when a client considers a service provider, the client look at its
hardware, software and peopleware capabilities. If the service provider has a
favorable performance track-record to boot then this would be additional points to
influence the decision of the client.

2. Requirement of the job- The service provider might need to ask, do we already have
he appropriate hardware, software, and peopleware I place to consistently meet the
requirements of the job in a sustainable manner? Requirements can be described
through: volume capacity of transactions, complexity of the job and expected

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cycletime for job completion. Of course, the final or ultimate judge to determine
readiness of hardware, software and peopleware of the service provider is the client.

3. Client- The client can freely make decisions that will directly impact theservice
provider’s hardware, software and peopleware capabilities.

Tips to Optimize scale:

1. If the process to be outsourced is done by only a few FTEs, it is not worth

outsourcing. Example: Create Letter of Credit. But the role is only done by one
person who does everything, or one person full day plus a supervisor for 1 hour a
day.
2. Near self-contained roles have good potential for outsourcing- because more FTEs
covered complete help desk and mortgage processing (from pplication, form
acceptance to creditworthiness calculations until funda will be released).
3. End to end roles are ideal. As an example, an offsite computer repair service starts
with receiving equipment and ends with computer ship back; parts ordering, receipt
and repair are included in outsourced process.

4.8 Identifying Task Candidates for Outsourcing

a. Tool for task analysis can be:
1. Follow the performer: consultatnt follows a performer and tracks time spent in each
task.
2. Time tracking: each current performer tracks his activities, how much time is spent in
each task, ove a period of 1 ro 3 months

b. Task Candidates for Outsourcing Considerations

1. Readiness assessment
2. Level of documentation of onshore processes
3. Scale
4. Time-tracking
5. Prioritize role that are more ready
6. Lift-and-shift for less documented roles
7. Cost of low outsourcing readiness

Answer Activity 4.3, to relate task candiates considerations to

outsourcing.

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TEACHING AND LEARNING ACTIVITIES

Activity 4.1: How would you describe the responsibilities of a transition manager? Post
your answer in the discussion group for Activity 4.1

Activity 4.2: Can you name a household chore that is usually assigned to you? (In the minds of
your parents or other housemates, it is very clear that chore “A” is yours to do. So if chore A has
not done yet, they all know who to look for, do you agree?) Now, can you think of a chore at home
that you take turns doing with other family members? Do you think that chore can be fulfilled
depending on multiple task holders? Do you think, having structure to manage it increases the
chances that the chore will be done effectively and consistently? Why? Explain your answer and
post in the discussion group for discussion.

Activity 4.3: Explain the importance of each of the seven (7) Task Candidates for Outsourcing
considerations in relation to an outsourcing initiative.

RECOMMENDED LEARNING MATERIALS

To supplement the lessons in this module, you may download the following articles:

• Successful transition in outsourcing By Morten Kamp Andersen (Aspector) & Peter

Ankerstjerne (ISS A/S)
• Transition Process and Performance in IT Outsourcing Evidence from a Field Study and
Laboratory Experiments

FLEXIBLE TEACHING LEARNING MODALITY

In this lesson, the online and remote FTLM is adapted. For the online modality, the Virtual
Classroom shall be used for the purpose of delivering a lecture and allowing a synchronous
discussion with the students. For the remote modality, Gmail and Edmodo shall be used to upload
the module and to allow asynchronous discussion with the students. This will also be used as
platform for the submission of the requirements. Facebook Group Chat and Group pages,
including SMS will be used for information dissemination.

ASSESSMENT TASK Quiz 5

Name ___________________________________________ Date __________

Instruction: Read and analyze the case/scenario presented. Answer the questions.

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Case Analysis: Family X has a fairly large home that needs maintaining and cleaning. To cope
with this need, family X hired one live-in house staff to sweep all the exterior spaces of the house.
Now, Family Y has a home that is exactly the same needs with family X. So, Family Y decides to
hire staff as well to sweep all the exterior spaces of their house, however the staff is live-out.
Unlike Family X, Family Y house staff has his own house to go to after work.

Question: All things are being equal, which family is spending more? Explain briefly your answer.
Note: You may inject other sources of costs that may affect the expenditures like electricity, water,
groceries, uniform, food, etc.

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Name ___________________________________________ Date __________

Instruction:

Quiz 6

Read and analyze intelligently each question then write your answer on
the space provided.

1. Based on the lesson discussed in this module, identify the requirements for good
transition documentation. Put a check on the box provided before each numbers.

 1. Projects  6. Process
 2. Input  7. Intervals
 3. Supplements  8. Communication
 4. Supervision  9. Output  5. Programs  10. Contributions
2. In your own words, explain in 3 sentences what is transition management?

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3. What skills are essential for a transition manager?

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4. Explain the importance of proper documentation

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Name ___________________________________________ Date __________

Instruction:

Laboratory Activity 4

Rejoin with your group mates from our previous activity. Recall topic
about, Document Readiness and read the case scenario, then answer the questions:

Case Scenario: We are all aware that we are in a new normal set-up of environment because of
the Covid19 pandemic. Almost all processes and transactions are done through online platform.
One of which is the online ordering and marketing. The transition of ordering products from
personal appearance to market into virtual market world is inevitable and rapidly growing. The
set-up became more on using online platform and the delivery company becomes in demand
also. For most individual, these kind of setting is far more convenient that the usual. However,
instead of this set-up makes individual convenient, one of the couriers made it more stressful and
hassle to some customers. Delivery of products become very untimely, some delivery boys are
quite rude and sarcastic, products delivered sometimes are damaged and the worst, lost or
unfound.

If you were the manager or company owner what are the things to be documented in order for
your company to cope up with the business set-up transition and to be successful in this new
normal environment? Consider the 5 document readiness (input, process, output, communication
and supervision) that your company should have in order to face the new normal set-up of
marketing. State your answer briefly with concise discussion.

Prepare your presentation and each group will be given 15-20 minutes to present output
for this activity.

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Name ___________________________________________ Date __________

Instruction:

Laboratory Activity 5

Rejoin with your group mates from our previous activity. Recall topic
about, SCALE, read the case analysis then answer the questions:

Case Analysis:

The illustration explains that a farmer tilling his land, records his harvest in a document, and use
cart to deliver his harvested crops. This is a system many agricultural dependent societies first
got started.

Question:

a. From the scenario, what can be identified as hadware, software and peopleware?
b. Would there be a more efficient way for a farmer to harvest his crops? If yes, explain
what will it be and how will it made the harvesting faster for the farmer? What would be
the system look like?
c. What other befits or advantages do you see the farmer can gain from your answer in
question b?
d. What do you think are the benefits when the business operator will upgrade his cart to
motorcycle delivery fleet?
e. How will you relate this to our topic, Scale?

Prepare your presentation and each group will be given 15-20 minutes to present output
for this activity.

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REFERENCES

Monmita, J. & Goel, N. Feruary 12,2020. Knowledge management during service transition and
beyond. Retrieved July 18,2020 from https://www.nagarro.com/en/blog/service-
transitionknowledge-management-system

Deloitte (2012). Global Outsourcing and Insourcing Survey. Retrieved from

https://deloitte.wsj.com/cio/2013/03/27/outsourcing-success-may-hinge-on-
smoothtransition/

Luthra, V. Knowledge transfer is the key to business process outsourcing

Tiwari,V.(2010). Transition Process and Performance in IT Outsourcing Evidence from a Field

Study and Laboratory Experiments. ISBN 978-90-5892-241-0

How to Do Business Process Modeling Notation. 2016. Retrieved from www.aiim.org

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