operational issues in it outsourcing engagements - indian service providers view
Post on 08-Apr-2018
225 Views
Preview:
TRANSCRIPT
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 1/61
ASHRIDGE BUSINESS SCHOOL
OPERATIONAL ISSUES IN IT
OUTSOURCING ENGAGEMENT INDIAN SERVICE PROVIDERS VIEW
Ravi Warrier, MBA 2010
12/3/2010
Supervisor: Dr. Mike Malmgren
Pages: 56
Words: 10253 (Excluding Table of Contents, References & Bibliography and Appendices)
The report is a submission as a requirement for the Dissertation Project conducted by Ravi Warrier as a
part of the MBA 2010 program of Ashridge Business School.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 2/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | i
Table of Contents
I. Executive Summary .............................. ............................................................................................ 1
II. Introduction ..................................................................................... ................................................ 3
III. The Research Questions ............................................................................................................... 4
IV. Literature Review ............................. ............................................................................................ 6
IV.A. Purpose of the review .............................................................................................................. 6
IV.B. The structure of the review ...................................................................................................... 6
IV.C. Summary of Literature Review ................................................................................................. 6
IV.D. The need to study IT Outsourcing issues ........................................................ ........................... 7
IV.E. A brief on the underpinning theories and frameworks .............................................................. 7
IV.F. A summary of existing studies reviewed ......................................................... .......................... 8
IV.G. Gaps in the literature.............................................................................................................. 10
V. Methodology and Research Design ................................................................................................ 12
V.A. Guiding Frameworks and Models ........................................................................................... 12
V.B. The Research Methodology .................................................................................................... 13
V.C. The Research Design .............................................................................................................. 14
V.C.1. Participant Selection ....................................................................................................... 14
V.C.2. Data Collection ............................................................................................................... 14
V.D. Data Collation for Analysis ...................................................................................................... 15
V.E. Limitations of the methodology and research design .............................................................. 15
VI. Findings and Analysis ................................................................................................................. 17
VI.A. Top 5 issues as experienced or observed by practitioners ....................................................... 17
VI.A.1. Issue 1 Inadequate or incorrect estimation or planning ................................................ 17
VI.A.2. Suggested solutions for Issue 1 ....................................................................................... 19
VI.A.3. Issue 2 Clients Lack of Clarity in Requirements ............................................................ 20
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 3/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | ii
VI.A.4. Suggested Solutions for Issue 2 ....................................................................................... 22
VI.A.5. Issue 3 Lack of mature processes or their understanding on the clients end ................ 23
VI.A.6. Suggested Solutions for Issue 3 ....................................................................................... 25
VI.A.7. Issue 4 Clients lack of commitment or support ............................................................ 26
VI.A.8. Suggested Solutions for Issue 4 ....................................................................................... 28
VI.A.9. Issue 5 Ineffective Communications ......................................................... .................... 29
VI.A.10. Suggested Solutions for Issue 5 ................................................................................... 30
VI.B. Additional issues discussed ..................................................................................................... 31
VI.B.1. Issue 6 Contractual Problems ....................................................................................... 31
VI.C. Issues that were not considered ............................................................................................. 31
VII. Recommendations ................................................................................. .................................... 32
VII.A. Contracting Activities and Best Practices...................................................... ....................... 32
VII.B. Requirements Development and Management........................................................ ........... 33
VII.C. Project Estimations and Planning ........................................................................................ 33
VII.D. Process Definition ............................................................................................................... 34
VII.E. Communication Guidelines and Protocols ........................................................ ................... 34
VIII. Conclusion ..................................................................................... ............................................ 35
IX. Future Research Potential .......................................................................................................... 36
X. References and Bibliography .......................................................................................................... 38
XI. Appendix I Implementation of MBA Disciplines ....................................................................... 41
XII. Appendix II Learning, Personal Contribution and Journey ........................................................ 43
XII.A. Learning ...................................................................................... ....................................... 43
XII.B. Personal Journey ................................................................................................................ 43
XII.C. Personal Contribution ......................................................................................................... 44
XII.D. Advantages ......................................................................................................................... 44
XII.E. Disadvantages .................................................................................................................... 44
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 4/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | iii
XIII. Appendix III Interview Process ................................................................................................. 46
XIII.A. Details about the participating company ...................................................... ...................... 46
XIII.B. Reason for selection the organization ........................................................ ......................... 46
XIII.C. Interviewee Sampling Technique ........................................................................................ 47
XIII.D. Structure of the Interviews ................................................................................................. 47
XIII.D.1. Question Set ............................................................................................................... 47
XIII.D.2. Logistics .................................................................................. .................................... 48
XIII.E. Ethical Considerations ........................................................................................................ 48
XIII.F. The Interview Process ......................................................................................................... 49
XIV. Appendix IV Interview Questionnaire ...................................................................................... 50
XV. Appendix V Quotes and excerpts of the Interview Responses .................................................. 53
XV.A. Issue 1 Inadequate or incorrect Estimations/Planning ...................................................... 53
XV.B. Issue 2 Clients lack of clarity in requirements .................................................................. 53
XV.C. Issue 3 Lack of mature processes or their understanding on the clients end .................... 54
XV.D. Issue 4 Clients lack of commitment or support ................................................................ 54
XV.E. Issue 5 Ineffective Communications ................................................................................. 54
XV.F. Issue 6 Contractual Problems ........................................................................................... 55
XVI. Appendix VI Issues not considered for the study ...................................................................... 56
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 5/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | iv
List of Tables
Table 1 - Summary of Outsourcing Literature reviewed............................................................................ 8
Table 2 - Summary of Research Methods considered ............................................................................. 13
Table 3 - Summary of responses for Issue # 1 ......................................................... ................................ 17
Table 4 - Summary of responses for Issue # 2 ......................................................... ................................ 20
Table 5 - Summary of responses for Issue # 3 ......................................................... ................................ 23
Table 6 - Summary of responses for Issue # 4 ......................................................... ................................ 26
Table 7 - Summary of responses for Issue # 5 ......................................................... ................................ 29
List of Figures
Figure 1 - Overview of the Research Process .......................................................... ................................ 12
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 6/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 1
I. Executive Summary
IT Outsourcing to India has been a subject of significant interest to organizations looking to delegate the
function to a specialist service provider in order to either save costs, focus on core business practices or
to leverage on the low cost expertise available in India to expand their IT systems. No matter what the
reasons for outsourcing, outsourcing companies as well as academicians have been intrigued by the
potential as well as the threats arising from outsourcing.
Most of the research done in the past has been conducted to determine potential and growth of the
sector, various frameworks to assist outsourcing organizations with their decisions and selection
processes, defining governance models and structures to ensure that they get the most out of the
service providers and the engagement and risks and issues faced by such organizations while
outsourcing their IT function to India. Detailed literature is available to outsourcing (or client)
organizations regarding the activities they must carry out at the alliances level in order to ensure the
success of the outsourcing engagement.
Additionally, there have been extensive studies conducted on the risks and issues faced by service
providers at such a level. Some researchers have attempted to provide some solutions or best practices
that can be implemented by the service providers to alleviate their problems.
However, very little has been studied about the issues faced by service providers (or vendors) of the
Indian IT services industry at an operational or project level. Even little has been done to discover the
solutions that need to be undertaken by client organizations to support their service providers.
This research aims to fill the gap in academic literature regarding the operational issues faced by the
service providers and attempts to recommend certain actions to the clients of Indian IT service
providers.
To uncover such problems, the research undertook extensive interviews with one IT service provider inone of the fasted growing IT hubs of India. A total of 45 candidates from all operational levels spanning 6
projects participated in the primary research.
Five key issues were identified as a result of the primary research in disciplines such as project planning,
requirements development, process definition and implementation, supporting teams and
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 7/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 2
communication. Furthermore, the primary research also captures the solutions as suggested by the
practitioners who participated in the study.
As final recommendations, the study provides readers a set of certain best practices extracted from two
of the most suitable frameworks: the CMMI and eSCM-CL
1
, with the intention of providing structure tothe solutions suggested by participants.
1For a brief explanation on CMMI and eSCM, please refer to footnote at the end of Literature Review Section.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 8/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 3
II. Introduction
Having spent the past 8 years working in the Indian IT Services industry, the author has significant
experience of every operational aspect in the execution of IT projects from pre-sales to final delivery.
The author has been a part of many successful projects and at the same time seen many of them fail.
The experience of these failed projects is the perhaps the starting point of the research. The causes have
always intrigued the author who had in very limited ways tried to understand the issues of the projects
at a very operational level; the problems faced not by the organizations or their leadership, but by the
professional who are directly involved in project execution.
This research project is the first step to formally uncovering and understanding the operational issues
faced by Indian IT Service Providers by gathering the views of the practitioners on the issues as well as
their resolution.
The primary purpose of the project is to put forth to readers, who the author considers to be the
outsourcing organizations and the service providers, a list of the top challenges faced by a typical IT
service provider in India. It does not, however, intend to rehash previous studies conducted on
organizational activities, risks and issues pertaining to IT outsourcing and does not intend to discover
additional problems faced by any other stakeholder other than the project teams working in the vendor
organizations.
The report presented here will deconstruct the existing knowledge available in existing academic
literature, highlight the gaps, describe the methodology involved in performing this study, followed by
the results of the primary research conducted by way of interviewing over forty individuals and finally
presenting recommendations for client organizations that would alleviate the problems faced by their
vendors in servicing them.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 9/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 4
III. The Research Questions
The IT Services industry in India maybe well over 10 years old, but in his experience it has still to reach
maturity and stability.Over the past 8 years, the author has worked in over seven projects and then
facilitated an additional 25 projects. And in all those engagements and projects, he has observed over
and over again many issues dogging both parties.
The literature review provided some insights on this quest. It was clear that there had been adequate
studies done on the subject with new studies and theories published frequently addressing the issues of
IT outsourcing. However, as it will be seen from the next section, the studies provide knowledge on only
certain areas of this business practice and at best certain levels. The gaps in the academic and business
research are clear, i.e., operational issues faced by Indian IT service providers front line practitioners.
IT outsourcing services can be finely categorized into various disciplines such as Infrastructure
Management Services, Application Development, Application Maintenance, and some newer service
offerings such as consulting and R&D (Das & Saji, 2009). However, the scope of this research is limited to
Application Development (AD) and Application Maintenance (AM).
The primary focus of this research is to identify the most pressing project-level issues in an outsourcing
engagement and determine the solutions thereof . However, this research is undertaken to determine
the issues as faced and observed by the service providers and not as such by client organizations.
In summary, there were two key reasons for undertaking this research.
1. Issues faced by the clients or the outsourcing organizations have been thoroughly researched in
the past, as it will be seen in the following section. Many studies, observations and case studies
have been conducted and documented to illustrate the issues faced by client organizations with
IT outsourcing, in particular, IT outsourcing in India. Thus, leaving very little to uncover under
the subject.
The literature available also elaborates on various measures that the outsourcing organizations
can and must undertake to avoid, minimize or mitigate the risks faced while outsourcing their IT
development and maintenance activities to India.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 10/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 5
A few details of the above mentioned research and literature will be illustrated in the following
sections.
2. However, studies to identify the problems from the vendors perspective, especially those faced
by professionals executing projects are limited. This is evident from the literature available on
the subject. Additionally, the researcher was piqued by the subject due to his personal
experiences. Having seen the vendors perspective, he believes there are solutions that require
a committed effort on the clients end to improve and monitor their own processes and
capabilities along with those of the vendors.
It is due to the two reasons mentioned above that this research project will undertake the study of the
issues and risks from the service providers stand point.
Thus, before we begin, it seems prudent to clearly state the question(s) that fuels this research project.
1. What are the problems Indian IT Service Providers are facing at operational and project-level in
their outsourced engagements?
2. What are the recommended solutions to avoid, minimize or mitigate the risks and hence
improve the performance and reliability of such outsourced engagements?
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 11/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 6
IV. Literature Review
IV.A. Purpose of the review
The primary purpose of the review is to identify any existing studies conducted on or in the periphery of
the topic on hand to identify gaps in the existing knowledge base. Such gaps are critical to the
emergence of a precise area of focus to perform further and more detailed studies. Additionally, by
referring to the existing literature on the subject, one can avoid redundant and duplicate research and
concentrate primarily and mainly on the identification of various models, frameworks and data
collection techniques that can aid the definition of a robust and well-structured research design and an
approach to conducting the research.
IV.B. The structure of the review
The primary objective of this research is to identify gaps in existing academic and business literature
regarding issues, if any, faced by the service providers in an outsourcing engagement. To have clearer
results and a better insight into the subject, the literature review should attempt to shed light on the
following questions:
a. What are the generic IT outsourcing issues? What is the need to study them?
b. Who or which parties are impacted by such issues? What is the impact?
c. What can be done to resolve the issues? By whom?
d. How were these studies conducted? Are those research methods valid for the current study
undertaken?
e. And finally, what is not being covered by the literature?
IV.C. Summary of Literature Review
The literature review proved to be very interesting in terms of understanding various issues related tooutsourcing ventures. Contrary to the expectations of the researcher, the existing literature uncovered
multiple problems and risks that arise from the very nature of outsourcing. Research on hurdles to
effective alliances and their solutions has been a subject of study since the 1970s (Harbhajan & P.,
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 12/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 7
2006). Additionally, studies on risks and issues pertaining to IT Outsourcing in general have been equally
extensive.
IV.D. The need to study IT Outsourcing issues
Considering that IT is the second most outsourced function (Lewin & Peeters, 2006) with an average
revenue (with BPO) of US$ 70 billion (a growth of 12%) in 2009(NASSCOM, 2009) and that a vast number
of such engagements fail (Heimeriks et al., 2009), such studies does indeed seem to be necessary in
order to ensure that outsourcing as an industry and as a practice reaps benefits for those involved.
IV.E. A brief on the underpinning theories and frameworks
Most of the studies conducted, in the authors opinion, seem to be based on pre-existing theories and
frameworks, even if not explicitly mentioned by the researchers. While new frameworks and models are
developed by adopting such pre-existing knowledge, it is important to understand the construct in order
to understand the new outputs as well as the gaps in the existing literature.
The academic literature reviewed and referred to in this research, based on the authors understanding
rely on frameworks and models that guide the decision-making and setting up of a successful
outsourcing venture. Holmberg and Cummings (2009)proposed a 4-step process to building strong
strategic alliances based on concepts of firm-specific and environmental considerations to developing
alliance objectives (Todeva & Knoke, 2005), Value Net(Brandenburger & Nalebuff, 1996) and Critical
Success Factors (Rockart, 1981).
Other researches on governance alliances provide novel frameworks based on the Control vs Trust
theories of Das and Teng(1998)that take into consideration various performance and relational risks that
direct the levels of control (or trust) placed upon service providers by outsourcing organizations(Lewin &
Peeters, 2006).
Many studies recommend various organization and alliance structures to create a successful outsourcing
venture, giving various recommendations based on multiple criteria based on distance, culture and
capabilities of the outsourced organization(s).
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 13/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 8
Most outsourcing related theories and frameworks concentrate on building strategic alliances for
outsourcing. However, none of above frameworks and models can be used decisively for the purpose of
this study; the reasons for which will become clearer towards the end of this section.
IV.F. A summary of existing studies reviewed
Table 1 - Summary of Outsourcing Literature reviewed
There has been a significant amount of research undertaken by scholars to underpin business and
relational issues from the client or the outsourcing organizations perspective. Issues related to alliance
governances (Heimeriks et al., 2009; Hipkin & Naude, 2006), performance (Wah, 1999), human resource
management (Mehta & Mehta, 2010), creativity and innovation (Yan & Gray, 1994; Cui et al., 2009) and
cross-cultural interaction (Krishna et al., 2004) are amongst many others that have been widely studied.
Additionally, academicians have also conducted researches on various tools, techniques and adoptive
measures to alleviate or minimize the impact of these issues and risks. Extensive studies indicating the
right approach to selecting countries (Beim & Levesque, 2006), outsourcing partner selection (Holmberg
& Cummings, 2009), defining the appropriate governance structure and control mechanisms (Heimeriks
et al., 2009; Man & Roijakkers, 2009; Hipkin & Naude, 2006), providing cultural training staff to work
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 14/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 9
with vendors overseas (Krishna et al., 2004) and managing contracts and human (Mehta & Mehta,
2010).
The studies have been conducted are from the perspective of outsourcing organization and provides
recommendations for these organizations to implement. The academic literature has mainly focused onthe client organization so far (Das & Saji, 2009).
An offshore outsourcing relationship has primarily two entities 1) the client that outsources its
practices offshore and 2) the service providers or vendors that provide services to the former. Very little
has been attempted to uncover the risks and issues involved in being a service provider in an
outsourcing engagement and even less to determine solutions to resolve them.
Das and Saji(2009) and Mehta and Mehta (2010) were the only two articles found by this researcher that
delved into the issues of IT outsourcing from the service providers perspective. Mehta and Mehta
conducted an in-depth study by interviewing IT professionals asking them to describe the risks and
issues as they foresee. Interview questions were based on four primary areas of concern or Critical
Areas Human Resource Management, Leadership and Management, Costs and Information Security
and Frequently Changing Requirements, uncovering several issues and recommending to the client
organizations to invest into the relationship to make it more fruitful.
Additionally, possible risks for service providers can be categorized as Relation-specific risks, Project-
specific risks and Macro-economic risks (Das & Saji, 2009). Das and Saji uncovered in their study many of
the issues that this researcher has faced in his experience of working in the industry, ranging from
schedule and budget management, requirements management, staffing, asset specificity, clients
culture and client size (determining its bargaining power).
It was noteworthy that the above mentioned studies cover only either one or some of the following
areas:
a. Outsourcing in general
b. IT Outsourcing to India
c. Limited critical areas of concern
d. Discussion of issues at organization-alliance levels
e. Measures to be undertaken at organization-alliance levels
f. Discussion, in part, of issues at project or operational level
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 15/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 10
IV.G. Gaps in the literature
However, none of the studies undertaken discuss measures to undertake to mitigate risks or alleviate
issues at the project or operational level. The literature falls short in providing us with a comprehensive
list of issues faced by the Indian IT service provider and ways to resolve them. None of the studies
indicate detailed research from the lowest levels of hierarchy to determine the everyday problems these
professionals face while working on an outsourced project.
While operational risks and issues such as managing client expectation (relationship management),
planning and budgeting, managing changing requirements have been raised (Das and Saji, 2009), the
literature yet does not provide us with definite guidance based on actual experiences of the
practitioners at even the lowest levels.
With the exception of one, none of the frameworks and models used in the referenced researches can
be decisively applied to this study. The study aims to look at operational issues that occur much after
outsourcing decisions made, partner selection, establishing a governance structure and contracting,
which have been the primary focus of the prior studies mentioned earlier.
The issues of concern for this research arise when the projects are operational and are executed, not by
senior level executives, but by junior members of the organizations such as engineers and project
managers.
However, even at this level and stage of the outsourcing engagement, decisions and actions of the
individuals and teams involved reply primarily on this risks they perceive, thereby guiding the levels of
confidence that is placed upon the project stakeholders. Here, Das and Tengs Trust and Control
framework (1998) can be applied to determine the drivers behind certain decisions taken by either
client or vendor teams.
Additionally, issues at project levels also stem from the lack of clear processes and procedures for
execution of the project. Hence, frameworks such as Capability Maturity Model Integration2
and
2Capability Maturity Model Integration (CMMI) is a process improvement approach that helps organizations
improve their performance. CMMI can be used to guide process improvement across a project, a division, or an
entire organization. See http://www.sei.cmu.edu/cmmi/
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 16/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 11
eSourcing Capability Models3
(for both client organizations and service providers) prove to be better
frameworks to adopt.
Hence, what is not clear from the literature review are the following:
1. A detailed list of pressing issues faced by the service providers at an operational level
2. Solutions to such issues
3. Models, frameworks and theories that can be used to identify the above
This gap in the literature is substantial, as without building the bridge from end, the gap between the
clients and their vendors will never be filled.
3eSourcing Capability Model (eSCM) (ITsqc, 2008) is a best practices model developed by ITSQC, Carnegie Mellon
University, as a means to provide guidance to organizations with respect to their outsourcing activities. The eSCM
is divided in two volumes, one for the Client organizations [eSCM-CL] and the second for Service Providers [eSCM-
SP]. While the model was initially developed and still is primarily used for IT-Enabled Outsourcing, most of the best
practices are generic and can be interpreted and applied to IT Outsourcing engagements as well. See
http://www.itsqc.org/
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 17/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 12
V. Methodology and Research Design
This section describes the methods and the research design that was selected and implemented for this
dissertation. It will attempt to briefly discuss the importance of theory in this research and then proceed
to discuss the various methods evaluated in order to carry out the study and then the rationale behind
selecting the particular methods and design. It will then attempt to illustrate in detail the steps involved,
what had been done and what were the outcomes at each stage, in order to give a holistic view of the
methodology and design.
Figure 1 - Overview of the Research Process
V.A. Guiding Frameworks and Models
A well-considered research strategy and process can be the difference between a well-structured and
articulated study and one that fails to appeal any intellectual reasoning of either academicians or
practitioners.
As mentioned in the previous sections, none of the frameworks and models used by previous
researchers prove useful as this study is about operational issues rather than relational, contractual or
strategic issues of outsourcing. Additionally, this study not only attempts at uncovering problems faced
by practitioners but also attempts at asking them about solutions that they perceive to help resolve
them.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 18/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 13
However, having conducted the study and analyzed the responses, it seems that most of the problems
faced are those that arise from the lack of clear, standardized and stable processes for IT engineering.
Hence, frameworks such as Capability and Maturity Model Integration (SEI, 2010) and models such as
eSourcing Capability Model for Service Providers (ITsqc, 2006) and Clients (ITsqc, 2008)seem appropriate
to identify best practices that would most likely resolve the issues brought forward.
V.B. The Research Methodology
Having determined the guiding framework to conduct the study, it is imperative to further determine
the appropriate strategies for data collection and analysis. The previous studies mentioned in the
Literature Review section had implemented various methods for collecting primary data in order to
derive a conclusive outcome.
The researcher had various options regarding the methodology to be implemented in order to conduct
the study. However, it is necessary to understand the various methods, their advantages and limitations
before we proceed to method selection. The following table represents the summary of various
methods as analyzed by the researcher.
Table 2 - Summary of Research Methods considered
The researcher adopted Interviewing as a method for data collection in this study for the following
reasons:
a. Limited duration to conduct the study: The study was to be conducted and completed within a
span of two and half months.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 19/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 14
b. Limited participants: Based on the scope of the research and the time available to it, the
research required participation of not more than 50 professionals from an organization.
Additionally, due to constraints only one organization was approached for their involvement in
the research.
c. Qualitative data: The study is structured in a way to uncover the issues faced by the
practitioners and hence a quantitative study method would not have suited the purpose.
d. Individual participation: The research required individual replies from practitioners to
understand and uncover problems as faced by them. This required personal interactions and
data collection at an individual level rather than at team or organization levels.
V.C. The Research Design
V.C.1. ParticipantSelection
The research question as defined above aims to identify operational issues in outsourcing projects and
hence it was decided to seek participants that work directly or indirectly on the projects or interact with
client teams. Based on this criteria and the role structure of the organization, four key roles were
identified Engineers, Leads, Project Managers and Account Managers.
To read additional details on the participating organization and the reason for selecting it, sampling
technique, interview structure and process and ethical considerations, please refer to Appendix III
Interview Process.
V.C.2. Data Collection
The questionnaire for the interview (see Appendix IV Interview Questionnaire) was designed to derive
key points from the participants. Wherever possible, the previous studies were reviewed carefully to
understand the design of those studies in order to determine what was covered and what could be
probed further to gain more insight on the subject.
For the purpose of the research the following information was important.
1. Role: The role the individual was performing in the project. Since the research intended tocapture key operational issues faced by practitioners, it was imperative to understand their role
and level in the hierarchy of the project. A typical AD or AM project executed by an IT services
vendor includes broadly four roles, i.e., Engineers, Leads, Project Managers and Account or
Engagement Managers.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 20/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 15
2. Projects Experience: To conduct an fair research and produce unbiased results, it is necessary
to have participants that collectively have a varied experience with their current or past
projects. Interviewing individuals who have never faced problems or are always unsatisfied with
their work yields in skewed and extreme data.
3. Client Interaction: Knowledge of direct and regular interactions with the client is also necessary
to eliminate data points derived from practitioners who have never faced any problems first
hand. Including individuals who have never regularly interacted with clients would results in
responses that would have been hear-say.
4. Issues and Suggested Solutions: Having laid the stage for a fair study, these sets of information
are imperative and the basis of the entire research and the analysis conducted.
V.D. Data Collation for Analysis
All the data that was collected was tabulated for easier referencing and analysis. However, since the
interview had a subjective approach to querying, the responses received, especially for Issues and
Suggested Solutions were lengthy. For the purpose of the tabulation and analysis, the researcher
meticulously categorized each response appropriately. At the end of each interview, each participant
was asked to confirm if the categorization of their responses were correct and changed in case of
differences.
V.E. Limitations of the methodology and research design
The researcher acknowledges the boundaries of the study conducted due to the following limitations of
the methodology and research design:
Extending the research methodology to include other methods such as case studies and observations
could have proved useful. Observing these teams in action could have uncovered issues that the
participants may have not considered as critical, or forgotten or may consider confidential or
compromising to themselves or the organization. Had such observatory exercises been undertaken, the
researcher believes that additional insights and information could have been discovered with regards to
the study at hand.
Additionally, the researcher believes that incorporating the following could have shaped the study
differently if taken into consideration for research design:
1. Expanding the study to other IT Service offerings such as R&D, IT Infrastructure Maintenance
and Consulting
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 21/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 16
2. Expanding the participants group to include onsite (personnel working for vendors but at client
or deployment sites) could have provided information from a different perspective
3. Including multiple vendor organizations in the interview process
4. Incorporating client comments to the problems put forth by vendor organizations might give a
complete view of the issues.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 22/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 17
VI. Findings and Analysis
This section will take the reader through the various insights gained from conducting primary research
for the study. The section is structured in three parts:
A. Top five issues (in descending order of the cumulative responses received), any examples cited,
followed by the solutions as suggested by the interviewees.
B. Additional issues discussed
C. Issues raised but not considered for the purpose of the study
VI.A. Top 5 issues as experienced or observed by practitioners
During the interview many issues were uncovered. On reading them, one will realize that the issues are
very practical and plausible, and perhaps also relate to them from their own experience of being a
vendor in an outsourcing engagement. To read few responses from the interview, please read Appendix
V Quotes and excerpts of the Interview Responses.
The issues listed below are in a descending order of the collective responses that were received during
the primary research.
VI.A.1. Issue 1 Inadequate or incorrect estimation or planning
Table 3 - Summary of responses for Issue # 1
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 23/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 18
While this problem is related to the inadequacies in the competencies of the vendor in performing
effective project management, the interviews also uncovered additional variables that are related to the
client-vendor relationship and the influence exerted upon the activity by the client.
Most of the participants who raised this issue cited examples from their experience in either theircurrent project or past. Following is a summary of those
examples in an attempt to explain to the reader their
(participants) viewpoint.
Multiple participants from at least three projects pointed out
that their client insisted on providing high level estimates for
the project, which are calculated based on the capabilities and
resource availabilities of the client team. However, the leadsand the project managers interviewed stated that the
estimated effort and schedule almost never is enough. They
claimed that the processes followed (activities performed), skill
levels of the team members and the dependencies at the
vendor end are never taken into consideration and hence fall
short during the planning phase.
Two of those projects also mentioned the reluctance of the client representatives to negotiate on the
timelines or the effort.
Almost all the projects verified that their client does not allow buffers for risk mitigation activities or for
resolving dependencies. In no cases, did the client allow including non-project activities such as
meetings or trainings and even R&D time into the schedule estimates. This of course results in relative
shorter duration than that would normally take the project to be executed.
Some of the participants, from their experience, also cited cases where the client forced certain projects
to reduce their effort and schedule timelines beyond the acceptable limit.
Participants concluded that negotiation is discouraged at times by their senior managers, and most
other times fails due to imbalance created because of the clients superior hold over the language or
based on grounds of having the final authority.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 24/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 19
The outcome due to such situations is also detrimental to the execution of the project. Not only does
the project fail to execute correctly meeting its objectives of schedule, incorrect estimations can also
have the following effects:
A.
Further problems with resource management activities, such as allocation of the right resourcesduring given periods and fluctuating utilization levels.
B. Unless there is a defined process that states that representatives from both parties would work
on estimations and planning, the work must be left to the designated party and roles within it.
Multiple inputs in any activity only cause further confusion and disarray.
C. Having estimates or plans that are unrealistic and stressful can demoralize even the most
efficient teams.
D. Lastly, most of the individuals agreed that inadequacy in planning stages leads most often leads
to compromising on quality activities to meet targets. This seriously hampers the quality of
deliverables, which can lead to further problems such as non-acceptance of the deliverable, loss
of trust in the project team or vendor, etc.
VI.A.2. Suggested solutions for Issue 1
As a part of their response, the interviewees were asked to suggest possible solutions to causes they
stated. To remediate the issue with incorrect or inadequate estimations, the suggestions provided were:
a. Jointly develop estimates and plans: Estimates can be developed jointly by members of both
sides, therefore ensuring accurate estimates that would be acceptable to both parties.
While this may increase the effort invested into the estimation and planning activities, the team
members felt that the extra effort would be negated by the reduced effort in reviewing,
negotiating, rework and accepting the deliverables.
b. Involved the right or experienced professionals: Responses received suggest that including the
right people, such as the ones performing the tasks regularly or personnel in specific
technologies or domains will result in more accurate outputs.
c. Consider all factors: Factors such as team capabilities, skills, availability of other resources,
including infrastructural and IT resources must be considered while estimating. Additionally, all
activities and dependencies must be considered such as risk mitigations, indirect quality
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 25/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 20
assurance activities such as management reviews, trainings, resolving or wait-times for
dependencies must also be taken into account to develop a more realistic output.
d. Provide adequate training or support: At times, even the most experienced individuals are
incapable of envisioning the entire project. At such stage, experts and leadership from both
sides must provide their support and coach or train the planning and estimation team.
VI.A.3. Issue 2 Clients Lack of Clarity in Requirements
Table 4 - Summary of responses for Issue # 2
Everyone understands the importance of clear and concise requirements for a project. Without such
distinct requirements no project can be expected to be executed within its defined boundaries and
targets. However, requirements pose an additional level of importance for an IT project. It is not a myth
when IT professionals casually comment on the volatility of
an IT projects requirements. IT as an industry and as projects
has not yet reached maturity as its closest counterparts in
manufacturing and construction.
Based on the analysis of the responses sought in the
interviews, it can be observed that the lack of clarity in
requirements is the second biggest concern of project teams.
A total of 23% of the responses pointed to this as a cause of
many of the problems that a team faces while performing
their duties in a project.
Multiple respondents stated that they presumed that their client or their representatives were not clear
as to what they required of their software. This, they claimed in their experience, is because the client
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 26/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 21
organization or unit that outsourced the work to them without meticulously pre-considering their needs
or those of the users of the application for the following reasons:
i. Inability to develop their requirements; not involving experts
ii.
Not deliberating on what is considered as effective working softwareiii. Pushing work offshore to meet their own internal targets, such as schedules or cost-
reductions, or other business decisions guiding their actions
Finally, another reason cited by a batch of interviewees claimed that in some cases where the
requirements were developed by the clients, they were developed in a monolithic process trying to
cover all requirements as a single deliverable. This, in the participants view, is a traditional and an
ineffective method, as creating a vast document of requirements tends to have more errors and
loopholes than it should generally have.
The respondents were also asked about the impact of this problem on their work. Their answers are as
follows:
A. A majority of the interviewees stated that unclear and unfrozen requirements lead to delays in
execution and the final delivery of the project by means of:
i. Change Requests: The requirements become clearer to the clients as the project progresses
and as they see some parts of the working software and as a result make multiple and most
times frequent changes to the existing requirements. For fixed-price projects as observed
during the research, this causes significant billing issues and losses.
ii. Rework: Due to changes in requirements, many project team members claimed that they
spend most of their time updating or re-engineering the software based on the changes
requested. This causes additional delays as the team members are always back-tracking their
work instead of proceeding ahead with the work at hand.
B. Changes and rework often result in loss of quality in deliverables, state respondents. Patchwork
never looks nice, said one project manager. Working to resolve defects and errors utilizes
additional time and causing further delays.
C. One set of individuals from the same project team stated that their client updated the requirements
so often, that there was a state of constant confusion in the team. Leads and project managers had
to spend extra effort keeping vigil over the latest versions of requirements and changes requested.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 27/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 22
Despite which, they claimed, there have been instances where the engineers proceeded with an
incorrect version resulting in the rework of the entire module.
D. The project manager from the same team also stated the dipping levels of morale in the team due
to constant defect fixing and rework activities.
VI.A.4. Suggested Solutions for Issue 2
a. Jointly develop requirements: Developing requirements need expertise knowledge of
business and technology. While the clients might undoubtedly have the best knowledge
of their business, the vendors are hired for one reason their technical expertise. A
team should be assembled consisting of members of both parties to jointly develop the
requirements.
b. Invest adequate time and develop iteratively: The respondents suggested that any
team that develops the requirements need to invest good amount of time in the
activity. They also suggest an iterative approach, whereby detailed requirements can be
developed in shorter cycles. This allows for greater depth and clarity while envisioning
detailed requirements. If needed, experts, either from the team or from outside must
be involved in the activity.
Additionally, it is suggested that not only enough time is spent on requirements, butadequate time must be spent on review and sign off as well. Reviews and sign offs
must involve all stakeholders (including users and IT Systems personnel).
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 28/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 23
VI.A.5. Issue 3 Lack of mature processes or their understanding on the
clients end
Table 5 - Summary of responses for Issue # 3
Having worked as a Process Consultant, the author has personally experienced and at many times
attempted to resolve this issue for projects and their clients. It is, in the authors view, one of the biggest
challenges that project teams face in Indian IT services industry.
Client organizations seek partnership with the other organizations that can provide evidences of their
robust processes, high end performances, skilled workers and accreditations to various quality standards
and certifications. Many Indian IT companies that the author has worked with have to address an entire
section on their processes, quality management systems andaccreditations while filling request for proposals from various
clients.
IT services company that can show such evidences are
granted contracts and tenders raised by clients all across the
globe and the inability to prove capabilities results in losing
turnkey projects and contracts.
However, quality is everybodys responsibility (ASQ, n.d.)and
that includes the clients as well.
A majority of the projects team members complained about
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 29/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 24
the lack of maturity displayed by their clients with regards to understanding the need for, defining and
implementing standardized processes.
Two of the six projects had attempted to implement Agile Software Engineering practices by the means
of methods such as Scrum and Extreme Programming as per the clients requirements. However, theyclaimed that within two months they had to drop the processes. While their client insisted on following
Agile practices, they themselves werent aware of Agile practices and hence did not operate in an agile
and lean manner. The team members of these two projects stated that such ignorance caused delays
and defects that could have been avoided if the client had accepted to implement agile at their end as
well.
Leads and project managers of the remaining three projects stated similar problems. The projects were
awarded to this organization based on its CMMI accreditation, however, when it came to executing theactivities, the client clearly expressed that it did not want the project to spend time following lengthy
processes and quality assurance such as detailed documentation, management reviews and quality
audits. A project manager said, This is our process, for which they hired us. Now they dont want us to
follow it and still deliver high quality products. How can we be responsible for quality when we are not
allowed to implement our processes?
The last project that was carrying out development activities was asked to follow clients procedures and
processes. The team, however, claimed that the processes were not stable and could not scale to
working in a large, multi-located environment. The processes were defined at the client organization
considering their size and capabilities and were not upgraded to meet the needs of an outsourcing
venture. They insisted that we use their systems for managing and monitoring all development
activities and results, but those systems cannot handle the load and crash frequently of course, we are
blamed in case the deliverables are delayed, said one irate team leader.
All the examples cited above are a common problem across all mid-size Indian IT services provider.
Larger organizations that the author had worked in have the ability to leverage on their size and
superiority to negotiate factors like these. Of course, the results can have detrimental effects on the
overall projects.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 30/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 25
All individuals who brought light to this issue claimed that the primary outcome of their clients
immaturity is the negative impact it has on the quality of deliverables, as would any disruption in
processes implemented to develop those products.
Ambiguity and confusion amongst the team and in their communication with the client is another resultof having an entity that is not equally mature in an engagement or a project that is critical.
Lastly, managing and consulting projects on defining robust processes, the lack of maturity in one
partner, leads to miscommunication, loss of trust and respect for the entity. It also, in his opinion, leads
to demoralizing frontline engineers who are bounced around and made to work harder to cope with the
inability of the project and client leadership to resolve the issue.
VI.A.6. Suggested Solutions for Issue 3
a. Educate: It was suggested that adequate education be provided not only to the project teams,
but their client counterparts on the importance of defining, implementing and adhering to
processes. The reasons behind selecting the vendor and objectives of the engagement must be
intimated to all the members of the client team in order to seek their engagement in achieving
and maintaining quality targets. Additionally, responsibility must be evenly spread amongst all
relevant stakeholders to ensure their active participation in process and quality compliance.
b. Jointly define processes: It is very likely that each organization has their set of procedures;
however, careful evaluation of both these sets must be undertaken to determine apt processes
that meet the project objectives. Co-defining such processes also increases buy-in from
members of both teams.
c. Understand Importance of Standards and Certifications: Clients must understand that merely
selecting a vendor based on their accreditations is not enough. They must understand the
importance of such accreditations and encourage their vendors to continue implementing what
they best at and hired for. As one of the account managers stated, Dont ask for CMMI
certifications if you dont want us to implement the best practices as laid down by it.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 31/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 26
VI.A.7. Issue 4 Clients lack of commitment or support
Table 6 - Summary of responses for Issue # 4
Another issue dogging the team members in the front line of IT projects in the industry is the one that
affects them at multiple levels. While this may not be a
problem cited by a majority of the respondents, it is however
an issue that may have low frequency but a high impact on
the work and deliverables of outsourced IT projects.
Approximately 17% of the interviewees claimed to have
faced this issue at least once in their experience, whether in
the current project or previous ones.
By the lack of commitment the author infers, based on his
understanding of the responses during the interview, that the client or its representatives sometimes do
not consider the tasks or activities assigned to the outsourced team as important, compared to other
tasks and hence came across as not being serious about the work sent to their outsourcing vendors.
The author has experienced this personally in almost all his previous employments. In his view, the work
sent to India is sometimes non-critical, tertiary work that is not top priority for the client organization.
Hence, the assistance and support and even the time needed to be invested into the project is not as
much as one would expect. The responses received echoed the authors experience.
In many of the instances, engineers and leads stated that primary concern was the delay in response
received from the other end in many instances respondents gave many examples from their
experience where responses and answers took anywhere between 6 to 16 business hours that
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 32/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 27
translates to anywhere between almost one to two business days. Added to the delay anyway is the
time zone difference of anywhere between 5 to 14 hours depending on where the client operates from.
In projects that work on tight deadlines, optimum resource utilizations and stringent performance
metrics, delays like this result in billing losses.
Furthermore, two leads also stated that the answers provided were either not clear or adequate
enough, which meant the need of additional correspondence leading to even more delays.
This habitual (as one of the respondents put it) delay is not only for email queries, but applies to
documents and deliverables as well. Reviews or sign off from certain clients, as claimed by the
participants, is never on schedule. Of course, such a delay cannot be included as buffer in the estimates
and plans, creating further problems, said one project manager. So, if a design document is supposed
to take 2 days to complete, with a day for reviews, rework and signoff each, instead of 5 working days,the document sometimes takes as much as 10 days to complete. Thats 100% schedule variance! And
this is because the reviewer on the client end has other things to attend to.
Having worked closely with many project managers over years, the author has experienced such a
situation first hand. Billing losses were escalated to the client leadership and heavy debates and
negotiations took place before the matter settled. In the authors opinion, a task which could have been
completed in a day and for a certain dollar-price, now costs thousands of dollars over phone calls and
personal visits between client and vendor offices, in a ploy to resolve issues and salvage the relationship.
A sheer waste!
The third striking result of this issue was the dwindling of team members morale. Many engineers and
their seniors expressed grief over having to work on a project that is of no importance. Further, they
stated that because of the low profile of the assignment they felt the treatment that they received in
terms of support was not only dissatisfying, but also sometimes insulting.
Lastly, the concern which all the respondents raised was the quality of the deliverables. With pressure to
complete work on time coupled with the delays, team members were asked to cut corners and work
extra hours, resulting in loss of quality. Examples cited were instances, where project managers asked
the team members to assume certain things (regarding their queries to the client) and proceed with
their work. When the response arrived negating the assumptions, the defect rates increased and thus
the rework effort.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 33/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 28
VI.A.8. Suggested Solutions for Issue 4
There were no clear recommendations provided for this issue. The participants were clearly aware of
the problem, but were unclear as to what could be done to ensure higher commitment levels from the
client. However, upon extended discussion the following came up implicitly.
a. Client team(s) must agree and follow the plan that was reviewed and approved by them. If they
cannot ensure meeting the stipulated deadlines, then this must be communicated in advance
and must be considered during estimations and planning.
b. It was also implied that the client team havegreater appreciation and value for the individuals
working at the vendor organization. In the authors opinion, this is a generic characteristic that
each and every member of both teams must possess in order to maintain mutual trust and
respect.
c. Defining clear roles and responsibilities for individuals of both teams to work in tandem with
the agreed plan for effective execution and performance.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 34/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 29
VI.A.9. Issue 5 Ineffective Communications
Table 7 - Summary of responses for Issue # 5
This issue has roots in language and culture barriers and differences faced by the two organizations,
however, upon listening to the responses, the author concluded that it is a problem on its own.
While linguistic understanding between two people or a group of people on two different hemispheres
of the world, or the lack of it can create issues for the
smooth execution of any task, there are other hurdles that
these individuals must overcome.
Technology has improved vastly in the past few years.
Internet speeds in developing nations like India have
become faster and bandwidths are now large enough to
carry out video-conferencing. However, participants feelthat minor glitches in connections can cause heavy
disruptions in effective communications. None of the participants stated that technology and
infrastructure as problematic, however, they did occasionally expressed their desire to have better
communication infrastructure and protocols.
When probed further, some of the participants echoed what one of the project managers put in a
concise and clear manner. He stated that it was not the technology that was an issue, but the availability
of it. With limited conferencing facilities, projects have to book them in advance and thus miss theopportunity to have urgent or ad hoc meetings with their clients.
While, this might seem as an infrastructure issue of a vendor or a client in particular, upon seeking
further clarifications, it was found that in certain cases, the issue arises because the clients demand
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 35/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 30
communicating via protocols and technology that is not easily available to the project and expensive to
acquire for the vendor organization, despite the availability of cheaper and easily available alternatives.
In few instances, across almost all the projects, the complaint was the number of hops a piece of
information makes or the number of people involved in that communication. Grapevine effects comeinto play and eventually there is a huge difference between what was said and what was understood.
Another cause of the problem was cited to be inconsistencies in communication platforms and protocols
- incorrect versions of documents, misplaced emails, non-identification of the right person to query or
respond and not setting acceptable timelines for communication, both within and between the two
parties.
VI.A.10. Suggested Solutions for Issue 5
a. Establishing Systems: Infrastructure requirements for communication must be identified at the
start of the engagement and clearly communicated between the two organizations. This would
allow sufficient time to build the infrastructure needed or communicate and adopt alternatives.
Protocols and platforms must be jointly agreed to by both parties to ensure effective
communications and to avoid any obstacles. Additionally, any other elements such as software
and hardware must be mutually agreed upon and used effectively.
b. Co-defining Communication Guidelines: Defining a communication plan and guidelines is an
effective method to avoid pitfalls of miscommunication. Factors such as roles and
responsibilities, contact persons for various activities, frequency and method of communication,
and formats and templates of such communications and their exchange and storage
requirements can be defined to ensure that correct information reaches the right audience at
the right time.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 36/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 31
VI.B. Additional issues discussed
During the research interview, participants also shed light on an additional issue that concerns the
study. However, it is not described in detail in this report as the objective of the study was to uncover or
rediscover only top 5 issues as discussed in the previous sub-section. Nonetheless, for the purpose of
providing the reader with a complete view of the research, the additional issue raised will be discussed
briefly in this section. It must however be noted that the response received for it was just over 5% of the
total responses.
VI.B.1. Issue 6 Contractual Problems
From the research it was determined that few of the projects were troubled with regards to creating
and amending supporting artifacts such as the statement of work and acceptance criteria. These
documents, as explained to the researcher, are documents that define the boundaries of work for a
project, provide high level non-technical requirements and also determine acceptable quality standards
for each agreed deliverable.
Despite being extremely important documents, the project teams stated that the activities involving the
creation and finalizing of these artifacts did not seem to be top priority for client teams, thereby
delaying sign-offs for these documents.
It was explained to the author that delays in sign-offs or non-existence of these documents cause
problems like unclear requirements and boundaries to work within, delays, extensive rework and non-
acceptance of deliverables. All of these are grave issues for vendor as they ultimately result in huge
billing losses.
It must be pointed out to the readers that only one of the six projects raised this issue and hence the
author doubts the validity of such a sample. Nevertheless, it was pointed out as a key issue for the
particular project and hence considered as an input to the study.
VI.C. Issues that were not considered
As with any research, this author gathered issues and data points that were irrelevant to the study. For
details on these, please refer to Appendix VI Issues not considered for the study.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 37/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 32
VII. Recommendations
Based on the literature review, the primary research conducted and the experience of the researcher,
this section will put forth recommendations that should be strongly considered by both client and
vendor organizations. These recommendations should alleviate any problems faced by the service
providers in an IT outsourcing engagement, thereby paving a path for a successful and effective
relationship between such clients and their vendors at an operational level.
A lot of the recommendations here would not be a surprise to most organizations, whether they be
client or vendor organizations. However, what is key to this study and the clearly reflects from the
responses received from the participants is that the contemporary studies on IT outsourcing and its
issues are detailed on high-level operations of the organizations. The knowledge gained by the team in
charge of establishing the outsourcing venture, such as the objectives of the venture, strengths and
weaknesses of either parties, cultural or language differences affecting core business activities, etc.,
does not to be disseminated to the front line teams.
Additionally, the best practices learned and implemented during the course of developing the alliance,
such as establishing defined procedures, meticulous planning, building trust and collaborative
relationships, etc., to seem to meet the same fate.
This report in itself provides the solutions as suggested by the practitioners from the IT services industry.
Nonetheless, there are a few recommendations that it would like to put forth to readers and
practitioners based on the collective insight gained from executing this research. These
recommendations, though aimed at the client organizations, would benefit both organizations in the
outsourcing alliance.
VII.A. Contracting Activities and Best Practices
Contracting activities do not end at the sign off of the agreement by both parties. Contracts are live
documents and they need to be managed and maintained throughout the life of the alliance(ITsqc,
2008). Good practices such as planning and establishing procedures for contract amendments have
been suggested widely. Additionally, both CMMI (2010) and eSCM-CL (eSCM-CL AGR05; eSCM-CL
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 38/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 33
AGR07, 2008) suggest that client organizations must define formal service level agreements (SLAs) and
performance measures for various services.
Furthermore, as mentioned above such information and practices must be distributed and implemented
at all levels and to all personnel involved in the engagement, thereby ensuring that project-levelagreements such as SLAs and Acceptance Criteria (performance measures) are documented and
followed.
VII.B. Requirements Development and Management
Lack of clarity or stability (high volatility) in requirements can have substantial negative impact on the
execution of the project. Hence, both teams from either organization must ensure that there are clearly
defined procedures, including roles and responsibilities and distinct yet flexible plans to develop and
manage requirements (CMMI-RM, 2010). Establishing robust systems can ensure that changes are raised
and implemented efficiently and need to be jointly implemented.
VII.C. Project Estimations and Planning
There are some well-tested and documented best practices laid down by the CMMI with regards to
project management activities such as estimation and planning.
Along with engineering activities, project teams must ensure that they identify lifecycle and processes
adopted by the project, thereby determining the quality assurance and control activities to be
performed, project risks, the mitigation plan and effort to execute such a plan, knowledge and skills
requirements of the project and additional infrastructure and dependencies amongst other things
(CMMI-PP, 2010).
All stakeholders should and must accept and sign off on the various plans and thereby ensuring that
each of the activities are performed as per the responsibilities and timelines assigned. Client teams have
to be aware that successful outsourcing projects require complete cooperation and involvement from
their end as well. This can be achieved through careful selection of team members, communicating the
objectives of the venture and the projects to all personnel with the intent to provide all required
support in the executing of activities.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 39/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 34
VII.D. Process Definition
It is equally important for client organizations to invest effort in defining current and future process
models in tandem with the service providers as it is to define the alliances governance structure and
service delivery models(eSCM-CL OCM03; eSCM-CL OPA01, 2008). Careful evaluation of processes of
both organizations must be undertaken jointly with the intention of defining and tailoring processes that
are beneficial to the venture. Additionally, certain projects may require specialized processes that must
be taken into consideration and jointly defined accordingly (CMMI-PP, 2010).
Effective delivery can only be assured if the delivery processes are complimented with systems that
enable trained personnel to carry out their tasks in accordance to the defined procedures. This includes
not only chains of communication and command, but hardware and software systems that make it
easier to carry out responsibilities related to operations.
Clients must also define guidelines for collaborative relationships with their service providers and ensure
that their personnel are following such guidelines for effectiveness (eSCM-CL REL06, 2008).
VII.E. Communication Guidelines and Protocols
Definition of various plans, processes and guidelines mentioned earlier will aid organizations to define
stable and reliable communication guidelines. As seen from the responses of the interview,
miscommunication mostly occurs when individuals are not aware of their role or role of others in the
chain. Well defined guidelines and systems for communication will alleviate problems related to
communication (CMMI-PP, 2010), such as unwarranted changes and loss of information.
The recommendations provided here are based on the responses received during the interview that are
mapped to certain best practices suggested by models such as CMMI and eSCM-CL. These
recommendations are generic and made with the assumption that other client-vendor alliances for
outsourced IT work may face similar issues. However, it must be kept in mind that different alliances
may face a variety of different issues and hence it is recommended that organizations work together to
proactively identify possible risks and implement actions to address them.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 40/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 35
VIII. Conclusion
The initial purpose of this research was to determine if the service providers for IT projects that are
outsourced to India have issues pertaining to the engagements they are involved in.
From the primary research, it was clear that outsourcing in general, as well as IT outsourcing in India are
riddled with issues that involve multiple organizations, cross-boundary cultures and languages, different
skill levels and various other environmental factors that affect a typical supply chain.
The answers sought as a response to the primary research question belowseem to indicate that the
service providers do have pressing issues that affect their overall performance. And the issues range in a
variety of categories that have been uncovered during the interview.
What are the problems Indian IT Service Providers are facing at operational and project-level in
their outsourced engagements? and,
What are the recommended solutions to avoid, minimize or mitigate the risks and hence
improve the performance and reliability of such outsourced engagements?
Irrespective of the issues, their categories or the impact they have on the engagement, the important
realization that this study wishes to bring about in organizations is that problems faced can be and are
created by both, client and vendor organizations. Having understood the source, the next step is to
understand the impact and what steps could be undertaken by the concerned teams.
Both organizations and their respective teams have to understand that they are just one side of the coin
and to make profitable their venture, they need to consider the other side as well.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 41/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 36
IX. Future Research Potential
This research was conducted specifically to uncover the issues with respect to IT outsourcing
engagements and those from the perspective of the Indian service providers. However, the researcher
acknowledges the vase future potential in this area of research.
Firstly, the organization that participated in this study itself offers future potential. For the purpose of
this research only development, testing and maintenance projects were considered with certain pre-
conditions such as size of the project, age of the project and engagement and the experience levels of
individuals in those projects. Expanding the study to new engagements might reveal a new Pandoras
box of problems, just as it might by expanding or relaxing certain criteria considered.
Secondly, the research was conducted with the participation of only one service provider in the city of
Hyderabad, India. Not only can additional service providers be researched, but also such organizations
operating in various locations across India. This might shed additional light on two possibilities:
1. It might confirm that the issues faced by one organization are also faced by other organizations
in different cities across India.
2. Additionally, it might shed light on subsequent issues based on factors such as location, size of
the organization, type of IT services provided, cultural and language difference (i.e., influence of
accents and traditions of more ethnic and culturally stronger cities in north and south India.
Thirdly, future research could include industries beyond that of IT services and consider the issues faced
by other strong outsourced industries like manufacturing, textiles and services like business and
knowledge process outsourcing. The author believes that despite their core differences, many of these
industries will face similar issues such as estimations and planning and contractual problems.
Next, a study on IT services can be conducted in depth by including additional countries, either co-
located geographically or in various parts of the world. IT Services industry is now a growing industry notonly in India, but also south-east Asian countries such as Indonesia, Malaysia and Oriental countries like
China and South Korea. Additionally, it is a growing industry in east European landscape and these
countries could also be researched to see issues from their point of view.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 42/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 37
Finally, the research that fascinates the author the most based on the outcome of this study is to
determine the issues based on the clients geographical origin. For example, do vendors or projects
servicing the US market face different issues than those services, lets say, the United Kingdom. It is
fascinating because, the author believes that the cultural and business orientation of the clients have a
vast impact on the engagement itself.
While it was not the purpose of this study and hence not addressed, the author believes through
personal experience that projects face different issues and at different levels when they work for clients
from different geographies. Furthermore, problems arise when team members work in projects that
serve different clients causing confusion in understanding professional practices of clients based in
different parts of the western world.
With outsourcing practices gaining popularity and velocity in todays business world, the potential forresearch on this topic is endless. The author, on a personal note, hopes to be able to undertake one of
these topics as his subject during his further academic pursuits, but encourages any interested individual
or organization to delve deeper into the recesses of the minds of the service provider to unearth ways
that can only make outsourcing engagements more fruitful than they currently are.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 43/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 38
X. References and Bibliography
ASQ, n.d. Total Quality Management - Overview . [Online] Available at: http://asq.org/learn-about-
quality/total-quality-management/overview/overview.html [Accessed 19 October 2010].
Beim, G. & Levesque, M., 2006. Country Selection for New Business Venturing: A Multiple Decision
Analysis. Long Range Planning, 39(3), pp.265-93.
Brandenburger, A.M. & Nalebuff, B.J., 1996. Co-opetition. London: Profile Books Limited.
CMMI-PP, 2010. Project Planning Discipline. Framework. Carnegie Mellon University.
CMMI-RM, 2010. Requirements Management Discipline. Carnegie Mellon University.
Cui, Z., Loch, C.H., Grossman, B. & Ru, H., 2009. Outsourcing Innovation. Research Technology
Management , 52(6), pp.54-63.
Das, A. & Saji, M., 2009. Risks in offshore IT outsourcing: A service provider perspective. European
Management Journal , 27(6), pp.418-28.
Das & Teng, 1998. Between Trust and Control: developing confidence in partner cooperation in
alliances. Academy of Management Review , 23(3), pp.491-512.
eSCM-CL AGR05, 2008. AGR05 - Define SLAs & Measures. Framework. Carnegie Mellon University.
eSCM-CL AGR07, 2008. AGR07 - Amend Agreements. Framework. Carnegie Mellon University.
eSCM-CL OCM03, 2008. OCM03 - Defi ne Future State. Framework. Carnegie Mellon University.
eSCM-CL OPA01, 2008. OPA01 - Defi ne Current State. Framework. Carnegie Mellon University.
eSCM-CL REL06, 2008. REL06 - Collaborative Relationships. Framework. Carnegie Mellon University.
Harbhajan, K. & P., S.V., 2006. Outsourcing and offshoring in the 21st century : a socio-economic
perspective. Hershey: Idea Group Publishing.
Heimeriks, K.H., Klijn, E. & Reuer, J.J., 2009. Building Capabilities for Alliance Portfolios. Long Range
Planning, 42(1), pp.96-114.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 44/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 39
Hipkin, I. & Naude, P., 2006. Developing Effective Alliance Partnerships: Lessons from a Case Study. Long
Range Planning, 39(1), pp.51-69.
Holmberg, S.R. & Cummings, J.L., 2009. Building Successful Strategic Alliances: Strategic Process and
Analytical Tool for Selecting Partner Industries and Firms. Long Range Planning, 42(2), pp.164-93.
ITsqc, 2006. The eSourcing Capability Model for Service Providers (eSCM-SP) v2. [Online] Available at:
http://www.itsqc.org/models/escm-sp/index.html [Accessed 12 October 2010].
ITsqc, 2008. The eSourcing Capability Model for Client Organizations (eSCM-CL) v1.1. [Online] Available
at: http://www.itsqc.org/models/escm-cl/index.html [Accessed 12 October 2010].
Krishna, S., Sahay, S. & Walsham, G., 2004. MANAGING CROSS-CULTURAL ISSUES IN GLOBAL SOFTWARE
OUTSOURCING. Communications of the ACM, 47(4), pp.62-66.
Lewin, A.Y. & Peeters, C., 2006. Offshoring Work: Business Hype or the Onset of Fundamental
Transformation? Long Range Planning, 39(3), pp.221-39.
Man, A.-P.d. & Roijakkers, N., 2009. Alliance Governance: Balancing Control and Trust in Dealing with
Risk. Long Range Planning, 42(1), pp.75-95.
Mehta, N. & Mehta, A., 2010. It Takes Two to Tango: How Relational Investments Improve IT
Outsourcing. Communications of the ACM, 53(2), pp.160-64.
NASSCOM, 2009. Indian IT industry: NASSCOM Analysis. [Online] NASSCOM (1) Available at:
www.nasscom.in/upload/5216/IT_Industry_Factsheet-Mar_2009.pdf [Accessed 10 October 2010].
Rockart, J.F., 1981. A Primer on Critical Success Factors. The Rise of Managerial Computing: The Best of
the Center for Information Systems Research.
SEI, 2010. Overview . [Online] Available at: http://www.sei.cmu.edu/cmmi/ [Accessed 12 October 2010].
Todeva, E. & Knoke, D., 2005. Strategic Alliances and Models of Collaboration. Management Decision,
43(1).
Wah, L., 1999. Most IT projects prove inefficient. Management Review , 88(1), p.7.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 45/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 40
Yan, A. & Gray, B., 1994. Bargaining Power, management control, and Performance in United States
China joint ventures: a comprehensive case study. Academy of Management Journal , 37(6), pp.1478-
517.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 46/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 41
XI. Appendix I Implementation of MBA Disciplines
The MBA program has proven fruitful in a few ways for conducting the research undertaken as a basis of
the project. The subject area of the research primarily stemmed from my personal experience working
with various organizations in the Indian IT Service sector. However, the precise research questions were
defined by the combination of personal experiences and literature review performed.
There were many aspects of business, operations, finance, strategy and human resources that I did not
fully comprehend before the program. The program not only has helped me broaden my view but has
also helped me in analyzing the results of the research and putting forth various recommendations.
As I interviewed participants and noted their responses, I mentally observed my thought processes and
the difference in my views. From experience, I was aware that issues like poor planning and estimation
have an impact on billing, however, having understood various financial concepts during the program, I
could now begin to understand the impact of the such problems at a project levels on the contribution
margins of the engagement and the organization as a whole. It was now somehow more clear as to the
financial implications of operational problems even the lowest levels. In retrospect, I can now
understand better many financial aspects of the business discussed in various meetings that I attended
whilst I worked for my previous employer.
My concepts of team motivational issues and their solutions were limited to basic theories based on
monetary compensations. However, as I l istened to a multitude of participants talk about low employee
morale and motivation, I was mentally beginning to view things in a different light and saw myself
formulate solutions based on deeper levels of motivation. Additionally, as I heard people talk about
leadership and management, I could relate to various leadership styles, compared to how I perceived
leaders in my previous organization good or bad.
Having worked as a process consultant for over 6 years, I consider myself to have substantial knowledge
about software engineering processes and those of project management. Nevertheless, this knowledge
was limited in terms of not understanding the connectedness of various processes implemented within
the projects to other aspects of the business such as finance, resource management and business
strategies. Now, at the end of my MBA journey, I can visualize the pieces fall and fit into their place as
my personal view now expanded from pure operations to a wider perspective of the business.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 47/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 42
I would say that subjects like Organizational Behavior, Finance, Operations and Strategy helped me think
differently as I carried out my project.
Being a research project that was primarily aimed at uncovering and voicing issues of the practitioners, I
must say that I have used very little of what I learned during my MBA; however, the change in me, whichis not entirely visible through the project report and results, is a more internal one. Concepts of the
subjects mentioned above helped me to see the issues raised in a different light and from a wider angle
that encompassed more business functions than just project operations. As mentioned earlier in this
section, those concepts helped change my thought process and improve my analytical skills, so as to
provide more holistic solutions than I would originally have.
Hence, in summary, I would say that the entire MBA has helped bring about an internal change in me,
my views and my thoughts about even the finest aspects of the business. While, I did not have theopportunity to demonstrate it in my dissertation, I am assured that I am now better endowed with
knowledge and skills that I would need to implement to perform my duties in the consulting career that
I wish to pursue.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 48/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 43
XII. Appendix II Learning, Personal Contribution and Journey
XII.A. Learning
My reason for doing a research project, apart from finding answers to questions fostered for over a
period of time was to provide a stepping stone for my future ambitions to start a consultancy
providing end-to-end outsourcing/offshoring consultancy.
While, I had known that a typical research project was fundamentally different from projects that were
of a consulting or entrepreneurial nature, I have to admit that the insights that I gained from executing
my first academic research project have been overwhelming.
I believe that my MBA journey has taught me many things as mentioned in the previous section. While
this may be the same for most of my peers in the program, the additional value that I gained from doing
the project are as follows:
a. Providing glimpses into the academic world and the thought process of these academicians. I
find this particularly useful to develop my own theories and frameworks from a highly rigorous
academic standpoint.
b. The insights gained from the project help me understand further the dilemma faced by the
Indian IT service providers (within the limitations mentioned in the main section) and hence
provide a stepping stone for further research to develop my own outsourcing models.
c. Conducting primary research that is professional and meets the high academic standards set by
my predecessors.
XII.B. Personal Journey
Doing a research project has helped me tremendously; however, I realize the downsides of doing such a
project in retrospect. I opted for the project due to personal future ambitions, however, comparing my
journey and work with my peers gives me certain clarity of the disadvantages of such a project. While
there are a few, the one that strikes out is the missed opportunity to work with real clients and the
experience of interacting in a real live business scenario.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 49/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 44
As a part of executing this project, my interactions with the outside world were limited to the
participants of my primary research.
My role in the project was central as I had no external stakeholders, such as clients or sponsors, to
interact with. However, I do value my interactions with my supervisor.
If there is any merit in the project, it needs to be attributed to my supervisor without whom, I would not
have been able to produce a deliverable worth assessing.
My earliest meeting with him cleared a lot of air and helped build a rapport which I truly appreciate. It
was in the same meeting that Mike provided some guidance and clarity regarding how I should structure
and approach my dissertation. However, during the course of the execution, I faced many personal
challenges at a domestic level that took my focus away from the project. This cost me dearly, as I had to
rewrite my entire report. The guidance given by him was extremely useful and comforting.
Through perseverance and a lot of edits, I finally reached the end of the project with the result you have
read so far. I would not have made the journey successfully without the aid and assistance of my family,
friends and my supervisor.
XII.C. Personal Contribution
Unlike a consulting project, a research project revolves around the author and this case is no different.
With the exception of some assistance received from my supervisor, I was central and sole contributor
to all the research activities.
XII.D. Advantages
The advantages of working alone on a dissertation project is summarized as follows:
a. More exposure and experience to set up the project, the secondary research and performing
primary research.
b. No interference from unwanted elements and individuals
c. The opportunity to highlight personal contributions and achievements easily
XII.E. Disadvantages
a. Missed opportunity to work in live scenarios and with live clients
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 50/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 45
b. Missed opportunity to earn money during the project period
c. Missed opportunity to learn from a team
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 51/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 46
XIII. Appendix III Interview Process
Based on the various insights gained from the literature review, it was conclusive that an in-depth study
of the problems faced by service providers has not yet been undertaken. Without adequate data, it was
not possible to perform comprehensive analysis of the issues and their solutions.
Hence, to further the study, extensive interviews were conducted. This researcher interviewed multiple
professionals from one company operating in the Indian IT Services sector. Details of the company can
be found in the next section.
XIII.A. Details about the participating company
The organization that was approached to conduct these interviews is a mid-sized IT services company
operating from the city of Hyderabad in India. For confidentiality purposes, upon the companys
request, the name of the company as well as the details such as project names, clients and the
individuals who participated in the study is kept anonymous.
The organization has been operating since over a decade, with many clients in the United States and the
United Kingdom. It recorded revenues of over US$ 200 million in the past year and has a head count
(from global operations) of over 4000. It operates from various locations in India and other parts of Asia
and Europe, of which Hyderabad is one of the development centers.
It executes small to large scale IT projects for its clients providing end-to-end IT services from software
engineering, maintenance, testing and IT consulting.
XIII.B. Reason for selection the organization
The reasons for selecting this company are as follows:
1. Location: Hyderabad is considered to be one of the four largest IT hubs in India. With thousands
of IT Services companies, ranging from small to multi-nationals, Hyderabad in this researchers
opinion is a good location for conducting this particular research.
2. Previous Employer: This researcher was formerly and employee of this organization, deriving
most of the experience here, which inspired the research question. Due to previous ties with the
organization, it was easier to contact and connect to individuals still working there.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 52/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 47
3. Varied Service Offerings: Some of the companies considered for this research provided limited
services, such as only development, testing or maintenance of enterprise applications. For the
purpose of the study, this researcher wanted to gather information from individuals working in
various projects to gain a wider perspective.
4. Clientele: The US and the UK are two of the worlds prominent IT Outsourcing nations. And it is
on the companies that operate in these countries that various studies to uncover client issues
and perspectives on outsourcing have been conducted. It only seemed rational to perform this
research with the assistance of an organization that served clients in the US and the UK primarily
to fairly identify issues on this side of the contract.
XIII.C. Interviewee Sampling Technique
As mentioned earlier, interviews were conducted in this organization due to their varied service
offerings. Keeping this in mind, this researcher selected 6 projects based on the following criteria:
1. Duration: It was with an assumption that longer running projects would be able to provide more
insights on their relationship with their clients and problems in the project due to the multiple
instances of opportunities. Hence, for the purpose of the interview, projects that were being
executed for over six months were selected.
2. Size of the team: From experience, this researcher assumed and thus concluded that larger
team sizes are relatively more difficult to manage and control, thus giving rise to multiple risks
while executing the project. Hence, for the purpose of the study, project teams with a head-
count of 12 and above were selected.
3. Project coverage based on type: Projects selected fell in either one of the three categories:
Development, Testing (only) and Maintenance. Two projects from each of these categories were
selected with an attempt to determine if project types have an impact of the issues faced by the
vendor organization and project teams.
4. Tiers: From each of the projects, professionals working at different levels in the hierarchy were
selected. The different levels are as follows: Development Engineer or Test Engineer (lowest),
Development Lead or Test Lead, Project Lead, Project Manager and Account Manager (highest).
While, a minimum of 5 individuals were sought in each project, due to time constraints on either
end, in certain instances, such a parity was compromised.
XIII.D. Structure of the Interviews
X III.D.1. Question Set
The question set was pre-defined before the start of the interview. Care was taken not to collect any
information that would give an indication to the organization, its clients, projects or employees, and
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 53/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 48
hence no such questions were asked in the interview. For the format of the questionnaire, please refer
to Appendix IV Interview Questionnaire.
However, details such as the individuals level (engineer, lead, etc.) was collected as the research also
intended to study the pattern of problems faced at various levels.
Furthermore, additional questions were asked during the interview for one of the reasons given below.
These may not have been explicitly captured in the notes taken during the interview, unless this
researcher felt that the answers provided were pertaining to the subject of the study.
1. To probe further or steer the discussion towards the topic
2. To put the interview at ease
3. To understand the context of the answers provided
X III.D.2. Logistics
The interviews took an average of 43 minutes, with the shortest last 31 minutes, while the longest
lasted around 58 minutes.
The interviews were mostly conducted on the premises of the organization, with some exceptions
whereby the interviews were conducted outside office hours and office premises. 12 interviews were
conducted outside the office in a coffee shop of mutual agreement.
XIII.E. Ethical Considerations
A. Permission was sought from the organization to contact their employees. The leadership team
involved in the decision were given details about the process, the ethical requirements,
confidentiality and anonymity and various other aspects of the interview, such as duration and
question sets. However, while the organization tried to influence the questions to be asked,
these were not changed and the organization was informed so.
B. The interviewees were not provided any reimbursement for their time and effort. They were
also not provided with any incentive to participate in the interview or allocate time for it. The
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 54/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 49
interviews conducted outside the premises were also conducted with professionalism, wherein
this researcher did not pay for or offer to pay for the expenses incurred by the interviewee.
C. All conditions as laid down by the Ethics Committee of Ashridge Business School were followed
and the interview process was defined keeping guidelines provided. For details on the
requirements of Ashridge Business School for Ethical Practices in Research projects, please
contact Ashridge Business School.
D. In addition to guidelines provided by Ashridge, this researcher also implemented additional
steps as described in the next section.
XIII.F. The Interview Process
The interview process followed the steps and tasks mentioned below:
1. Each of the interviewees were given a brief about the study. The reason behind conducting it,
both academic and professional curiosity of this researcher. They were also informed about the
confidentiality and anonymity clauses (for both the thesis and their organization) and were
informed of various ethical requirements of the project. They were informed in advance of the
interview the estimated duration of the interview and were asked to clear their schedules for
such duration.
2. Informal chat proceeded in cases where this researcher felt that the interviewee was not at
ease. This included various topics as per the interest of the other person and the flow of the
conversation.
3. The interviews were all in person and notes were taken down to the best of this researchers
abilities.
4. At the end of the interview, any concerns that were raised by the participants were cleared.
5. As an additional measure, each of the interviews concluded with a summary of the discussion
based on the notes taken. This was to ensure that correct information was noted down, as well
as to assure the participant of the same.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 55/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 50
XIV. Appendix IV Interview Questionnaire
Ashridge MBA 2010 Project Research Questionnaire
Project: Issues in IT Outsourcing from Indian Service
Providers View
[Ashridge Logo]
Guidelines
y Introduce the topic to the interviewee
y Inform the interviewee that the interview is optional and that they may quit at any time
y Advise the interviewee of his/her rights regarding the interview and answering questions
y Inform the interviewee regarding the anonymity and confidentiality of the interview data
y Do not force or direct answers from the interviewee
y Summarize the answers at the end of the interview
Date and time of the interview:
Location of the interview:
Questions
1. What is the role that you are currently playing in the project that you are assigned to?
F Development /Test Engineer F Lead F Project Manager F Account Manager
2. How is your experience of working on this project for this particular client?
F Very Good F Good F Bad F Very Bad
3. Why do you feel so?
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 56/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 51
4. Do you interact directly with any of the clients representatives?
F Yes F No
5. If Yes, how frequently do you interact with them?
FMultiple times a day
F Once a day
F 2-3 times a week
F Once a week
F 1-2 times a month
F Dont know
F Never
6. If No, do you attend, if not participate in any of the interactions with them?
F Yes F No
OK, now for the main part of the interview. (Ask if the interviewee wishes to continue)
7. Do you face any issues with regards to
working for the client?F This Q
8. Did you previously work in any projects
that faced problems?F This Q
9. Based on observation what could be the
various possible problems a project could
face?
F This Q
Issues (sorted by degree) Possible Solutions
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 57/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 52
1
2
3
4
5
Ending guidelines
y Summarize all the answers and adjustments made
y Remind of confidentiality and anonymity
y Give contact information
y Thank the person!
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 58/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 53
XV. Appendix V Quotes and excerpts of the Interview Responses
This section highlights some of the quotes from the interview. Full transcript of the interviews
conducted is available on request. The quotes highlighted are some that support the analysis presented
in the main section of the report.
XV.A. Issue 1 Inadequate or incorrect Estimations/Planning
Engineer It's not possible to work as per the estimations given by the client. They estimate based on
their capabilities and not ours.
Lead They have never done documentation and don't include that effort in estimations. But we
have to do it as per our processes.
PM 1Quality maybe free, but it does take time. The client refuses to include review effort inestimations, but we still have to do them. We work overtime without charging them.
PM 2
Everyone wants trained professionals, but (they) don't want to set aside time for training.
AM We lose significant billing amounts because of all the free services that they expect us to
give but don't want to pay for.
XV.B. Issue 2 Clients lack of clarity in requirements
EngineerI want blue. No, I want red. Today, I want green. Why can't they just make up their minds?
Lead 1 If they don't know what they want, they should consult us. We'll tell them what works best
for them.
Lead 2
We spend 10 minutes every morning just consolidating updates and change requests.
PM It's like saying, "I want a house, I want it right now. I don't know what kind of house I want,
but start building."
AM
If only they agreed to pay us for all the rework they cause.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 59/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 54
XV.C. Issue 3 Lack of mature processes or their understanding on the clients
end
Engineer Either I fix defects, or spend 5 minutes logging them. Our quality analysts want defect logs,
our client wants results. Maybe, they should talk to each other.Lead I don't know what my job is. My client wants to micro-manage everything. I think he
doesn't trust us.
PM
They want us to follow Agile. How can one wheel spin fast while the other doesn't?
AM In the pre-sales meetings, they loved our processes and CMMI. Now they compain when
we want to follow processes. How is that possible?
XV.D. Issue 4 Clients lack of commitment or support
Engineer
It's like calling customer care and listening to hold music for 30 minutes.
Lead 1 I don't know why we keep taking such work and get worked up about it. Ultimately, it's not
important to them.
Lead 2 When they want a document, we have to send it right away; but we have to wait for 2
days to get something from them.
PM
How do you motivate an idle team? And what work can you give them anyway?
XV.E. Issue 5 Ineffective Communications
Engineer Once I had to be in office at 3 in the morning, just because David (the client team member)
could not have a meeting until afternoon.
Lead At the start of our project, I didn't know whom to contact. My emails must have been
forward at least 5 times before I finally got the answer.
AM We try to negotiate infrastructure rentals into our costs, but most of the time we can't
afford it because they (the clients) refuse to pay for it.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 60/61
Operational Issues in IT Outsourcing Engagements Indian Service Providers View
An MBA 2010 Project Report submitted by Ravi Warrier
P a g e | 55
XV.F. Issue 6 Contractual Problems
PM You can't say it is not good if you didn't answer our question and tell us what good means
to you.
AM
We lose at least 1 account every year because of non-acceptance issues.
8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View
http://slidepdf.com/reader/full/operational-issues-in-it-outsourcing-engagements-indian-service-providers 61/61
XVI. Appendix VI Issues not considered for the study
These issues, even though raised by the project team members, are not reflections of the client-vendor
relation and do not stem from such a venture. In the authors opinion, these are issues that
administrative or operational problems arising out of the weak leadership and culture or capability
levels of the vendor organization. The organization would face these issues irrespective of the clients
that they serve.
The discarded issues are as follows:
1. Over commitment or over-selling by the sales team
2. Lack of support from onsite colleagues (vendors employees working from client location)
3. Team members lack of technical, communication or relational skills
4. Infrastructure Constraints
5. Team members lack of maturity towards or understanding of processes
Additionally, the following concern raised by some engineers was merged with Lack of clarity of
requirements for obvious reasons:
y Too many change requests
top related