Management Information System
Prof. Surojit Mukherjee
Vinod Gupta School of Management
Indian Institute of Technology, Kharagpur
Week – 12
Managing Global Organizations and Global Projects
Lecture – 59
Offshoring/ Transitioning Global IT Systems
Hello everybody! Welcome back! Now, in this part 4 of the “Managing Global Organizations and Global Projects”, I will be discussing something called, known as ‘Offshoring’ and then ‘Transitioning Global IT Systems’. You must, all of you are aware of what is ‘offshoring’ because you know these foreign companies from the US and Europe-based companies, they are shifting their many of the operations to India.
So, one of the examples I will take is IT, the whole IT sector you know is a large Infosys, Wipro, IBM, Capgemini, Cognizant, TCS, etcetera, they started such large delivery centers out of India because, all the support contracts the maintenance and development contracts for developing new softwares and maintaining their existing softwares, the entire operation is being run out of these centers in India that is offshoring.
And there are some few 5 or 3, 10 percent of people actually at the site, at the physical site but balance 90 percent or more people are actually offshore, outsource. I mean it is outsource is, offshore is the right word. Now, to do that when you start, so when a company now say signs a contract I am going to offshore my service to you outsource and offshore to say a company TCS. Now, how does it start?
Because to support to maintain that system you need to have the knowledge, what has been built into that system, what is that software is about, what function it is doing, what platform it is running, what OS it is being used, which is the program and then many others so many things go into a software overall program. So, the system; and you have to be aware of all of that because whenever a problem comes, you have to solve those problems, not only that you have to solve it in a very stipulated period of time.
See if it is like let us call it a Service Level Agreement, SLA. Now, if there is a serious problem that is a major problem and the whole business is down, no nothing is happening no sales nothing. So, that is what I call a severity one situation, though the contract will tell you
that you have to solve this problem in 1 hour time or 2 hours of time it depends a company to company varies.
If it is a severity 2 ticket that it is causing has stopped some of the major functions not all some of the major functions. Then, it will probably give you some more time SLA will say you have to solve this problem in 4 hours or sometimes in 8 hours maximum, say 8 hours is just one day one working day and some of their time severity to one these are normally severity to they are worked upon 24 by 7.
So, no matter what time of the day it happens, day or night or evening you have to start working and solve it within that stipulated period of time because if you cannot do that within that time take more time you will be penalized, the company will make you pay money or when they are paying your bill, they will cut some money deduct some money.
So, to get this knowledge that is an process called transitioning. So, transitioning means from one party to another party, the whole the knowledge the system responsibility moves over along with that we are now talking about knowledge because for us management system its knowledge.
So, knowledge transfer has to take place. So, the new set of people who will be supporting that, previously it was their employees who were running that they were knowledgeable, so the knowledge they have we will have to transfer to the knowledge of this local Indian team. So, that is called transitioning.
And you can understand that solving a ticket in probably 1 hour, 2 hours, 3 hours you will have to be top of the system you have to know it through and through, so how important this knowledge exchange the knowledge sharing is. So, that is why transitioning is a very important, piece of subject within this domain.
It is part of MIS but its, I am saying within this section of managing global organizations, global project, the entire outsourcing, offshoring business starts with a very important activity called transitioning because that is where the entire knowledge has to come in because without, it’s a knowledge-based industry.
The whole thing is running, the software running, management is running is based on knowledge because it is not you know screwdriver or you maintaining something welding,
cutting, breaking, etc. The entire thing is through your brain, through knowledge. There is a problem there. So, you have to dig go into the software find out what went wrong do your studies, research, etcetera, etcetera and finally, also do the solution in the software itself.
You have to change the code or maybe you do something etcetera, etcetera. So, the entire thing is brain based, knowledge. There is no physical involvement. You are not you know replacing a part or replacing a component or replacing a chip or replacing a motherboard like the server etcetera; so, no hardware. So it is all knowledge. So, it is all knowledge based system. So, knowledge transfer is what we are talking about today.
(Refer Slide Time: 05:17)
Outsourcing, offshoring IT systems of an organization. The world has seen since the early 90s major shift. These we have a general discussion we can they decided to outsource both support maintenance as well as new developments to organizations I was talking about it. Cost saving being a major factor.
All of these services delivery organizations which is developed in countries or like India, Philippines, Brazil, etcetera the low cost centers countries. So, it is called offshore development centers. So, offshoring does become a common terminology in the IT domain.
(Refer Slide Time: 05:46)
Transition is the process of transferring the knowledge and management of the IT systems from one organization to another. So, one set of people to another set of people. Basically, it is between people. Of course, even knowledge with a human being, so organization is just a symbolic name. Activities in transition cycle.
What are the activities? Typical transition activities are as follows. Knowledge transition is what I was talking about this involves transferring the knowledge from the implementation team to support team or from client to new service provider. Now, when we implement a software for example, like SAP. So, there is a project team which is implementing. Now, they have all the knowledge.
Now, after the implementation is over the project team will leave. So, when they leave, before they leave, they will have to document everything and train and transfer that knowledge to a support team. So, the project team will be replaced by the support, team the maintenance team, the sustaining team, who will do the sustaining, so they need to have a knowledge that is called that is also transitioning. So, this is happening within the organization.
Or maybe that sustaining is being you know given to a third party outside, so whichever. But in that same say physical location, geographic location. The bigger challenge is when you are doing it to a client to a new service provider and now you are going offshore because you want to further reduce cost. So, you are going offshore. So, that is from a company in Europe,
England and or Germany say example and that will be managed by people sitting in say India, Bangalore, Pune, Gurgaon, or Hyderabad, Calcutta. That is a bigger challenge.
Not only they are away many 1000s kilometers away, but they are different country, they are different culture. I mean they speak English fine, but otherwise I mean that their style of speaking English is different, the accent is different. I mean an American accent, UK accent you know they are all different.
So, when you communicate talk to them over phone etcetera this accent can become a problem. And in India not that everybody is good in English. Many our people have studied say in the vernacular medium schools and then they are intelligent smart people they become engineers and they have joined the IT industry.
But their English communication skill both spoken and written may not be of certain standard. So, that can be a problem and we are employing such huge numbers that we cannot ensure quality in suppose the knowledge, we know that he is good as good in java for example. So, we select recruit because we need to people in technical skills Java, dot net, etc. or database skills.
And we expect we try to bringing people with good communication skills. But since we are recruiting in such they are hired in such large numbers you may not ensure. And that the accent problem is always there, the accent from a South Indian speaking person or a North Indian or East India, within India also we have got so many types of accents. And we ourselves find difficult sometimes understanding English spoken from different regions. So, leave alone what is happening with the Americans and the UK.
So, I know from our from experience that this is a big problem, big challenge, even although we are good in English we do most of our business communication in English compared to say Japanese, Chinese or etcetera, etcetera, we are much better off, but still accent is a big problem. So, that is why in call centers etcetera there is very very specific accent training because for them accent is crucial, because that directly talking over phone to people from anywhere in the world.
But not so much in IT industry compared to the call center and the thing. But however, still it is required because you have to solve the problem and talk to the customer and find out what
it is and there are plenty of phone calls which happens every day throughout the day. So, that is a important thing you should keep in mind.
Then project documentation transition. So, that its part of the knowledge, so you have to do it through document one is through you know classroom training, you have to explain the systems because just reading a document will not help. So, like I am taking class, I could have just given you a PowerPoint presentation read it, but that is not good enough. So, I have to explain things.
So, that is the knowledge transition then we say actual project because the documentation quality is very important because after the training is over all that you will have retained probably you record the training part. So, you can repeat that, but you need to see the documentation because lot of charts process maps etcetera will be there in the document and you cannot remember that.
So, every time you have to refer to the document, go back to the document. So, that quality of the document is very important. What was the documentation quality with original implementers? So, different documents created during the project need to be stored properly and to be handed over by the implementation team to support team or the outsource team offshore team.
Human resource transition. Now, this is again a very important item which takes place. Say by a company X in US, say Germany there they have their own support team, now they decided that we will now offshore it to because again cost saving to India. Now what happens is there are rules regulation the strict labor regulations in many countries Germany is one of them that is why I took the example of Germany where you cannot suddenly retrench all your people.
So, what they will say to IBM? Say for example, I giving it to IBM or any other TCS as a part of the contract that you will have to take at least 50 percent of the employees and guarantee them employment for 1 year something like that.
So, this is called human resource transition because when they come over from that company X to join IBM or TCS they say HR transition because they will now come and join TCS. So, all the TCS employee rules will be applicable for them apart from salary which probably you
will have to protect what are the existing salary, but there are a lot of HR rules and employee rules. So, they will get have to be used to it. So, this is known as HR transition.
So, when you take in people from other countries it is called rebadging. There is a technical term or jargon I would say probably which is used in this industry is known as rebadging. That means, it is not an employment really, in that sense that he got applies gets an interview and gets hired, it is not like that its rebadged, that is previously I used to have the badge of say German company say Mercedes for example, just the name of Mercedes may not be serious.
So, I was having a employee badge saying Mercedes. Now, my badge will change, now my employee badge will read TCS or IBM, India, IBM India or IBM German furthermore because TCS will have a unit in Germany, also the TCS Germany. So, I am getting rebadged, I am changing my badge, so that is jargon. But here a lot of transition work happens because that is how the HR thing people moving over here you absorbing those people into your setup.
Some people go back to the old jobs, some will remain to support application, future new consulting company will take over the support work, planning need to be done for all of this, all of these things need to be planned out.
(Refer Slide Time: 12:57)
So, transition activities are 3 broad categories. We already discussed knowledge transfer which involves client’s business process knowledge. So, you have to know what the business processes are; business process apart from the IT part, the software part, then the application-specific; for each application; there will be application-specific knowledge and the logics for configuration development, etc.
So, you not you have to need to know the algorithm, etc., why it was developed in this way, why the program was written the code was written, what features were considered etcetera. Then HR transition we talked about earlier location transition transfers. So, HR means the people may have to move from physically one city to another city.
Role transition, new roles in the company there will be new roles. Compensation, yes company to company that place gets vary. So, in a new company they have compensation may have to be adjusted to bring it to that level. And then employment conditions of the rules and regulations which are applicable. So, from the previous company and new company; so, that is HR transition.
So, they have to be communicated, they have to be explained it is a changed management again changed management activity. And when you are handling people changing people again it is not always easy job because they will have a lot of questions, they have lot of doubts, that have lot of fears and you have to all as a HR person you have to satisfy, that the satisfy their questions.
Documentation, blueprints, the business logics, design documents, development specifications, configuration documents, application information documents and test scripts. So, these are the various types of documents which are generally to be in the knowledge transition to the document transition during a transition process of a IT systems. These are all relevant for an IT system. So, keep that in mind we are talking about transitioning an IT system.
(Refer Slide Time: 14:44)
So, typical support activities or transitioning, outsourcing. System administration. So, what are the jobs they do when you know once you are transforming means what are the activities which you have to cover, so and for the each of these activities you will have to acquire the knowledge. One is of course, system administration because you are maintaining systems.
So, daily database administration, this is just some examples few example, not an exhaustive list of activities. System performance monitoring, managing job schedules, managing technical infrastructure, some of the activities.
So, you need to be transitioning when you do transitioning you have to acquire knowledge for, so that you can do this job after the transition change management develop and implement, change control procedures, applying regular patches, notes, etc.
Patches means software little bit upgrades what the vendor will send time to time. You have to upgrade the software, so those patches come in and you have to do that as a system administrator. Testing while implementing changes for any change there has to be a test of course, because any change should not distract disturb the existing programs. And transporting changes from one environment to another.
So, you have lot of different environments in a complex, you have to system like you have a test environment, your QA environment, your development environment, and then finally,
there is a production environment where the actual thing happens. So, the development environment is where you do the change, first the change what you do the code, etc.
Then you move it to the quality environment. Environment in which basically a server, quality server dedicated for quality; there you do all the quality checking. Once it is through now you can transport those change request change to from a quality server system to a production to the final production system, because once it is in production system means its final, people will actually start using it.
So, before doing that you need to ensure that it is proper everything is taken care of, no bugs, the quality everything is fine, it is not going to disturb any other program, etcetera because its integrated software. So, anything any change you do in one area will actually impact everything else. So, you have to ensure that there is no negative difficult and negative impact. So, these are some of the major job elements; a for a system administrator.
(Refer Slide Time: 16:59)
From a end user application support because you have to give the support to the users actual users, not the IT or the end users. Provide ongoing support it continue whatever support they were getting. Manage and resolve problems and issues that is through your service level agreements. Any problem they come they will raise a problem ticket and you will have to take a look at the ticket and then solve it depending on the priorities, severity, etc.
And then root cause analysis problems. So, whenever there are multiple tickets in a particular area then you do something called root cause analysis. So, you try to find out what it is must be some cause which is not being identified. So, that is where the problem is recurring, it is coming again and again.
So, if you need a permanent solution then you have to go do a root-cause analysis and resolve that problem, and it might find out that they probably have to change the program itself. There is a lot of changes required in the code and some bug has appeared in the program.
So, then you actually go into the program and change the program, code itself; so, that the problem can be solved permanently. Knowledge management. deliver continuous end user training, evaluate learning effectiveness, document lessons learned etcetera is a that is part of knowledge management we have to keep giving. So, whenever you do a change, the changed knowledge has to be communicated to the end user because they need to know what has changed and how their way of working will change.
So, you have to train them. So, we are changed this, so now your form will look like this instead of you are filling up these 3 fields, they have to there will be an additional two fields which are to fill up etcetera. So, that needs a training. So, that training has to be given. So, that is part of knowledge management; continuous improvement; plan for continuous improvement, value realization, measuring business benefit.
The continuous improvement is something its anything where, so you doing changing running a business, it is always we are now looking things should become better, faster, less problem, no problem, improved productivity efficiency. So, that is a part of the continuous improvement.
So, there will be a lot of developments and changes happening to ensure that your product the IT product we are using the people are using the performance quality etcetera, the ease of use etcetera things keep improving from with time. So, that is the whole idea of continuous improvement. So, there will be changes for that.
Value realization; so, that is one another thing you might have to deliver is that the company will ask what is the business benefit I am getting; so finally, you have to every year on year or quarter on quarter, you have to solve, find out some metrics which are measured; you have
to tell them; so like this year it was this; so next year the value was this, so you have, you know done some so much improvement, etc. And we are measuring business benefits also.
(Refer Slide Time: 19:38)
Transition activities manage a successful transfer of knowledge to global delivery support staff that is what we were talking. Now, how this is done, the steps, the phases, the methodology etcetera. So, the various type of activities which I was discussing earlier also, service request type, ongoing maintenance, emergency fix, corrective maintenance, database services, application enhancement and data services.
These are various types of activities which one does either manage in an IT system, managing an IT system, typical IT system terminology which you should be aware of. So, the ones in orange, these are all maintenance part here, and these two here application enhancement and data services is development. So, development is when you are writing a new code for example, or developing a new program software program, additional program.
So, that is that involves that is when its application enhancement. So, you need some more extra features in that application. So, you have to add some more code another program which will do something more than what is currently doing. Some new rule come in for example, from the government agency. So, that it has to cater to that rule.
So, GST there is a change, from 18 percent many of the items have been shifted to 12 percent. So, that is a change. So, for that you might have to write a small program in your software existing software.
So, that is known as application enhancement. Similarly, for data services. So, the data has to be no you have to take data from some other third party source and then put it into a system, so you have to write a interface program.
So, it has to talk to say you bought a new machine which has got a again a software itself all driven and producing data, generating data whatever and that data you need to also need to transport your ERP system because it is in your finance books. So, for that new software you have to write a interface program and link it, so that automatically things can move without any manual intervention. So, that is a part of data services. So, that is a developmental activity.
So, basically we say application development and maintenance. So, the two major components, one is development, other is a maintenance. And these are the typical maintenance services.
Now, transition starts the phase; it could be a 2 months, 3 months sort of timeframe what we are talking about this transition what happens, takes place. So, people go, actually travel to the customers end, but nowadays with remote KT and knowledge transfer and with tools and recording tools coming up.
So, the travels have reduced now people sit in the location in Bangalore or India or wherever and that client, they through such video conferencing recording tool etcetera they give the training. So, that most of the people do not have to travel because traveling is a cost when you have to send say 30, 40, 50 or 100 people to a foreign country or Europe or US, they will stay there for 3 weeks or 4 weeks in hotels.
So, that is a lot of cost, apart from plane fare, staying, food, lodging etcetera, etcetera. So, again everywhere we try to reduce costs, so it is in transitioning also we have developed technology tool. So, that the knowledge transfer can take place remotely like something we are doing here for example, today; I am giving a knowledge transfer remotely you are not in my class in front of me the classroom all the chairs are empty.
I do not see you any, I do not see anybody. I do not see a single student. So, that is a remote knowledge transfer. So, same similar thing is now applied in also transitioning process where the instructor can explain the whole thing remotely and this can get this gets recorded of course, and they can also replay its views to you know do a learning.
So, that if they forget something is something they can always go back. So, transition planning of course, anything any program its like a project, it is a project transition project, it is a mini project you can say 3 weeks or 2 months, 6 weeks, 8 weeks. So, you do a your planning for that any project you do a project planning.
And then it starts with something called a guided perform. So, after once a knowledge transfer is over you start solving because there has to be hands on right. So, just not theoretical you have to practically do. So, the first step where you solve tickets is called guided perform means, that is the first stage of knowledge transfer, work shadowing classroom education, performs 25 percent of our tasks means you are actually not solving the ticket.
It is being solved by the instructor. You are just observing. So, it is called guided perform or maybe he will ask you to do 1 or 2 things, but most 80 90 percent of thing he will be doing he or she will be doing, you will be observing. So, that is that goes on for a few couple of weeks. So, you are observing how tickets are getting solved. So, that is called guided perform.
Next comes next phase is a assisted perform, that is the second stage of knowledge transfer. You perform 75 percent of the work. So, its assisted means he will do something, but you will do most of the thing. In the first one guided you hardly did anything 25 percent little bit of the work. He did 75 percent, now it is reverse. So, you will be doing 75 percent of the work of the ticket solving and 25 percent balance he will doing. So, that is called assisted perform.
And the last one is parallel perform. Parallel perform means you are doing it 100 percent, he is observing you because he has to observe you are now actually solving a problem. See if you do a mistake I mean then the whole system there will be users will have a problem. So, you are actually solving a problem. So, he is your coach, your tutor, your mentor, he is looking at you and you are solving the problem. So, that is called parallel perform.
So, it starts with guided, assisted, parallel. So, your contribution to the ticket solving changes from 25 percent, 75 percent, 100 percent these are just rough numbers I mean it just cannot be a kind of measured like that, but it just gives you an indication of the extent of work you are doing at each of these stages or phases.
So, transfer of service responsibility comes in after only after parallel perform. So, they will certify you yes, you are capable you are passed etcetera, then goes the final is a steady state where you take over completely. So, nowadays after that in steady state it is your headache, your business, your coach mentor tutor is no longer there.
Now, what happens in such cases is you have to be aware of the people who are training giving you the training they are the people who are going to lose their job because they were sustaining it and now once it is offshored outsourced to you I mean they are going to go.
So, after 3 weeks or 4 weeks they will leave. So, after the after that if you have any questions etcetera, etcetera they are not there. So, that is one thing you have to keep in mind when you are doing this transition planning. So, every all doubts questions etcetera knowledge related should have to be clarified within this fixed time of 4 weeks or so, 6 weeks whatever you are given.
If you miss out something after that, those experts are no longer there because they have lost their job, they have gone somewhere else and after, they leave the company, they will not bother if you contact them, does not matter why they should respond. So, that is why this transition planning is extremely critical.
And when you are doing the transitioning process I mean from your side when you are receiving the knowledge it is very important because if you do not miss out something do not get the knowledge in future you cannot blame anyone because they will say: why did not you ask? So, you have to also prepare very well, from right from the beginning as to ensure that you are not missing out any relevant questions, because if you miss out then the chances gone.
(Refer Slide Time: 27:26)
Incremental progress towards the goal. So, again it is just graphical view which shows makes you understand application knowledge on the y axis here and the continued and effective support maintenance applications the time axis here. And, then we say plan pre plan, then ASP is Application Specific Planning on the right box.
I have given all the acronyms explanation. But these acronyms are very common terminology. So, it is called ASP means application specific planning. So, first is the general plan overall plan pre plan, then for each application you have to plan separately.
Then transition KT-GP, KT means Knowledge Transfer Guided Perform. The knowledge transfer you are doing knowledge assisted perform, then parallel perform and then finally, steady state and this RKT means you are using Remote Knowledge Transfer.
So, that is your target application skill level. So, that is a minimum level you need to reach the application knowledge here this level, after that only you are allowed to do parallel perform, ok. So, this the previous slide is a very similar.
(Refer Slide Time: 28:27)
Now, the tran