MANAGING

OUTSOURCING
TRANSITIONS
• Transition Management
A collection of activities that accompany the signing of a BPO
contract enforcing or executing the comprehensive movement or
transition of processes from the customer to the service provider

• A Transition Manager
Responsible for migrating the function or process from the client
location or organization to the service provider or outsourcing
organization. He/she needs to be an effective communicator, as the
role requires extensive interaction with the clients.
Because of the nature of the role, a transition manager needs to have
a variety of skills and competencies:

• Need to have strong project management skills, as the

migration process are complex projects that require expert
management skills
• Needs to be comfortable to work with multicultural
environment, since most of the clients are from overseas
• Needs to have a thorough understanding of the existing
business and legal processes
 Generally, there are two common strategies followed in migrating
a function, these are:

• Lift and shift

• Re engineer and Migrate
Lift and shift
This is the most methodology used. When the process is mature, the lift and
shift’ approach is used for migrating.

Phases:
1. Move the current process to the service provider without changes/
improvements.
2. Stabilize
3. Re-engineer the process to achieve efficiency gain-produce same output,
less FTEs
• Modify the process
• Add end-user type or strategic automation
• Combine role with others
• Move process into a production line
• Negotiate elimination of unnecessary outputs
Items to consider
1. process change will not affect process control
points or output can be done by service provider
independently

-Onshore approval of process changes is a good

practice
- Onshore review if the change impacts
regulatory control points.
Items consider

2. Major effort: post go-live reengineering

- transition phase can be easy especially if” people

and process” are moved. This may take 3to4 months
only.
-onshore has the risk of losing political will to
reengineer after a while.
Advantages of an “as is” basis process migration:

• Training the new team is easier, as the process is well

understood and documented.
• Existing employees at the donor location are available
to support the process in case of disruptions or
instability.
• A fresh set of eyes (the new team) look at the process
from a fresh perspective. Often resulting in process
improvements and enhanced controls.
Re-engineer and migrate
Fundamentals rethinking radically redesigning
of the business process to achieve dramatic
improvements in critical measure o performance
such as cost, service and speed.
Items to consider:
• Useful when the process is either broken and requires fixing, or is due to
undergo significant change in the near future(systems change or process
change)
• In such cases, it may be important to utilize the expertise of the existing
team (which is built over several years) to drive the change, before it is
handed over to the new team.
• Company that outsource industry common processes to a market-
leading service provider will generally follow service provider processes.
• Company changes its processes as part of transaction to service
provider.
 TRANSITION SUCCESS AND
EFFECTIVENESS
Transition Pitfalls and Risk~ Critical
Success Factors~ Transition Effectiveness
Transition Pitfalls and Risk
• Most of the issues with sub-par or failed outsourcing
endeavors can be attributed to a few pitfalls.
1. Inadequate investments and sponsorship
2. Unclear scope of work
3. Training Shortcuts
4. Unclear roles and responsibilities
5. Not retaining the experts
These can be avoided if the transition manager constantly
refocuses attention on this things.
Transition Critical Success Factors
The success or failure of a transition project is
fundamentally measured in two aspects:
1. Technology Readiness - state of readiness of the
enabling hardware and software to support the
ongoing operations
2. Manpower Readiness - state of the readiness of
the operating staff; hired, trained, and skilled for the
service processes
Transition Effectiveness

Transition Effectiveness can be measured through:

1. Financial benefits
2. Performance of the team
Transition Effectiveness

1. Financial benefits
It is important to quantify the real cost of the function before off-
shoring (baseline cost) and the cost of the offshore team on an ongoing
basis.
• cost related to moving the function to the new team should be tracked
separately as project cost.
• capturing these cost elements enables comparison of baseline costs with
current cost, and provides an accurate measurement of the saves.
Transition Effectiveness

1. Workforce cost
All workforce cost is always charged to you since this cost are driven by
the market rates for the positions you want to fill. Moreover, this costs will
vary depending on skill level— whether entry level, experience, or expert
prospects.
2. Service Fees
Every outsourcing company will have their respective service fees, which
generally includes a fix fee per employee per month to cover all their
operating expenses. These operating expenses will typically cover
equipment, utility, bills, taxes and more.
Transition Effectiveness

3. Government-mandated Employee Benefits

As prescribed by the Philippine labor laws, each
employee is entitled to several benefits like the following:
• 13th-month pay
• Night differential
• SSS (Social Security)
 Transition Effectiveness

2. Performance of the Team

• primarily done by developing performance metrics
• usually subject to a testing phase to determine
reasonability of the service measures— also known as the
“baselining” period.
 DOCUMENT READINESS

Proper documentation helps us have a smooth and

effectiveness transition. We should look the bigger in
mind, like asking ourselves, "What should be
documented?".
The following are guides for proper documentation:

a. Inputs
- It is important to know where the inputs are coming
from, how they are given and who uses the inputs, including
when inputs are to be delivered and what to do when
challenges arise to maintain its quality are to be carefully
considered also. Source systems and dependencies are
inputs to be documented.
 b. Processes
- These are documented using the industry standard format and
in complete detail. Hands-off to other parties, internal and external
are documented including timing and format. Internship/flash
reports, if required, are also documented as deliverables. Delivery
time, day-of-month, period targets are documented. With enough
details and information based on the company's standards,
processes will be clear to everyone who needs it. Even on
processes, updates and tasks endorsed with its deadlines should
help the company have smooth and consistent process.
c. Outputs
a checklist or list of guidelines could be helpful to ensure
that outputs are made on time and comply with the
company& standards before it is endorsed to next final
steps. Intern/flash and final outputs are completely
documented. Formats, control steps and quality assurance
checklist are completely defined. Delivery time/ day-of-
period are reviewed to ensure they are achievable/
consistent with input timelines.
 d. Communication
People inside the company know who to communicate
with and how is very important. Communication channels
for output to be explicitly defined. Clarity here minimizes
misunderstanding during early production period,
especially if the outputs is an input to another process.
e. Supervision
It is also important to document how we manage
people who plays an important role in our business.
Onshore supervision points and what will be
reviewed/checklist should be defined. Supervisory review
paves the way for transition into center of excellence mode
where supervisory control rests offshore.
 Job shadowing
It involves spending time following a professional as
they work. By observing the professional for anywhere
from a few hours to several weeks, you can get a better
understanding of their particular career. Job shadowing
is a type of on-the-job training that allows an interested
employee to follow and closely observe another
employee performing the role.
Benefits of Job Shadowing
Job shadowing can be useful in a number of ways, including
helping you decide whether or not you enjoy and feel passionate
about a job. You also find out if your skills match the career field of
interest and whether your skills from school and other jobs might
translate to this job.
▪ Gain insight into the roles and responsibilities of other members of
staff and other departments.
▪ Reflect and learn from the experiences of colleagues.
▪ See how other staff and teams work.
▪ See the bigger picture and understand more about how the
University functions.
▪ “Test out” possible career options.
TYPES OF JOB SHADOWING
Observation
The shadowee will spend an agreed period of time observing the day to
day work of the host. It should be a typical representation of what the host
does on a daily basis. This type of shadowing works best when a shadowee is
looking to gain a greater understanding of what a host’s job role actually
consists of. The host will provide opportunities for questions and a debrief to
ensure that both parties benefit from the shadowing.
Regular briefings
The shadowee shadows the host for specific activities over a period of time.
This type of shadowing provides short periods of focused activity.
Hands on
This is an extension of the observation model detailed above. The
shadowee starts to undertake some of the tasks they have observed. This
provides the shadowee with hands-on experience of the role whilst being
supervised by the host. This type of job shadowing is not always possible and
would need to be discussed on a case by case basis.

EXAMPLES WHERE JOB SHADOWING HAPPENS:

• Observing meetings and interactions with client
• Fulfill office tasks or support projects
• Conduct professional and administrative information interviews
• Monitor a particular career functions and duties
Readiness Assessment Purpose
Readiness Assessment is served as a model of determinant or impact on
the success of outsourcing. It verifies if process to be outsourced is
adequately documented correctly-sized in generic resources and if resource
sizing already includes the right level of quality assurance and supervisory
control. The process to be outsourced should be adequately document
because poorly documented current process will result in:
a. In-house processes operate undocumented steps
b. Service providers adding uncertainty of process premium in their proposals
c. High probability of misunderstanding during initial phase of production;
and
d. Long work shadowing period and high cost as service provider tries to
document required process.
ADEQUATE DOCUMENTATION
Adequate documentation is needed for Input, Process, Output,
Communication, and Supervision.
Adequate Documentation: INPUT
Adequate documentation for inputs consists of five (5) considerations.
First is the proper description of inputs that includes the documentation of
the list/description of the input. It is critical that the documentation be made
to match the actual application or back-up or contingency plan in case of
input system failures.

• It is also important to document the accuracy of the quality of inputs

including the base/accuracy statistics to be used to justify cost of measures
to improve accuracy.
Adequate Documentation: PROCESS
It is important to know whether the processes are properly documented,
if the hand-offs to other parties (internal and external) are shown in the
documentation, the interim or “flash” reports are documented, and if the
delivery time/day-of-month/period targets are documented that is used is
consistent.

• It is also important to know how many levels are documented.

Documentation must go beyond high-level process and must document
actual outputs sufficiently to allow qualified performer (with years of
experience in the process and has sufficient academic training) to replicate
output.
Adequate Documentation: OUTPUT

Adequate documentation for output consists of 5 considerations namely;

1. Properly described output

2. Method of transmission
3. Language of output
4. Timing of the output
5. Dependencies
Adequate documentation for output, are outputs completely
documented
- Formats defined. In key management reports, down to the colors
of certain data
- If output is an input to another process, best that structured
template is followed
- Periodic changes in outputs (and in contents /format within
output) are normal— BUT the change
requests should be documented, cost- justified, and properly
approved
• Adequate Documentation: COMMUNICATION How are the outputs to be
communicated Transmission channel has to be clearly stated—e.g., email, file
upload into MS Sharepoint As input to another process—in workflow or direct
entry to another system.
1. The effectively of a communications trainer is
reflected on the agents that get sent out to operations.
2. Learning materials and modules must be distributed to the agents for reference
and practice customers.
3. Reorient agents with product specific knowledge. Agents often times forget
certain procedures which
makes them hesitant to speak clearly.
4. English skills can be improved if it is practiced every day.
5. Motivate and encourage agents by rewarding and recognizing the top
performers.
Adequate Documentation: SUPERVISION
Considerations for Supervision:
Onshore - refers to giving work to an organization in the same country you
reside.
Offshore - Offshoring means getting work completed in a different country.
Staffing - It involves the process of filling the vacant position of the right
personnel at the right job, at right time.
Equipment- Tangible property (other than land or buildings) that is used in
the operations of a business. Examples of equipment include devices,
machines, tools, and vehicles.
Motivation – Internal and External Factors that stimulate desire and energy in
people to be continually interested and committed to do a job, role or
subject, or to make an effort to attain goal.
HANDS – OFF
• An appropriate contract is critical for the success of business process
outsourcing ( BPO ). We investigated how coordination and negotiation
costs impact choices of contract type. We characterized three types of
contracts in terms of vendor incentives for costs savings and flexibility to
change besides payment schedule.

• There is a trade off between levels of incentive to reduce costs and

flexibility to change . Thus firms need to choose the appropriate type of
contract by weighing one type of concern against another based on the
characteristics of transactions.
 Using data from US companies, we found that the
concerns of managing interdependence are better mitigated
with high incentive contracts with detailed service
description such as Fixed Price contracts while the concerns
of opportunistic behavior in ex post adaptation should
increase the preference to contract with more flexibility for
changes such as Time and Materials contracts.
SCALE
 SCALE
scaling up is a phase of company growth
and a scaleup business is one that seeks
continual growth, achievement, and
increased revenues without a substantial
increase in resources. 
Sufficiency on scale depends on the following:
• Service Provider
• Requirement of the Job
• Client
Sufficiency on scale depends on the service
provider for risk management
• What are the SPs capabilities?
• SP`s records and background
• Are they worth to invest with?
Right scale depends on the job requirements-capabilities
 Empowered
 Capability
 Readiness
 Adaptivity
• Consistency
Right scale depends on the client percentage of outsourced roles, etc.
 Decision
 
1. The need for service
2. Who is more capable?
3. Contract

 Tips to Optimize Scale

 
1. Maximizing Deals and Meeting Goals
2. End to end roles
3. Product profit and loss
4. Training
The Benefits Of Scaling Your Business
Businesses can reap many benefits from scaling up such as increased growth and
revenues. Here are seven benefits of scaling. 

• Sustainable Growth
• Increased Job Generation
• Improved Operational Efficiency  
• Tap Into Greater Innovation
• Enjoy Competitive Advantage
• Enjoy A Secured Future
• Increased Adaptability 
Summary:
It is important that the business/ a company
undergo scaling process to be able to set
standards, oversee the future of your business,
meet your goals and to build a good and long
lasting relationship with your business partners.
 Identifying Task Candidates For Outsourcing Scale

In every organization, one of the primary target

business owners implement is the task of finding the
right employees to hire. Same goes when you
outsource, you need to find effective people that you
believe can carry out the tasks you want for them
handle. There are 3 basic steps you need to follow to
successfully find great talents that would help you and
your business grow.
Step 1: Identify needs
As a business owner seeking for talents, you must first identify and define what your business needs are.
• Measure how much work and what are the processes you need assistance with. Set up
• standards for the level of expertise that you require.
• Break down the extent of support you need from your outsourced talents and figure out which
• part of your business processes you will give access to your talents.

These factors will help you narrow down the list of candidates you have pooled by their level of expertise and
the skill sets you are looking for.

Step 2. Choose an outsourcing/offshoring model

• Basically, there are four general models for outsourcing. These are:
• freelance
• offshoring
• agencies or BPO’s
• virtual assistants
• Businesses that require cargo wise data entry services most likely
choose offshoring back office data entry solutions. The only
downside of this model is that this requires more investment during
the first stage of tasks transfer and high compliance requirement
with the regulations of the countries where your offshore partner is
based.
• Other businesses also opt for BPO’s (Business Process Outsourcing
Agencies), which is not practical for small businesses because of its
high cost and coverage
• Freelance and Virtual Assistants on the other hand are the most
favorable options for small scale or start-up businesses. With this
model, business owners can hand pick talents through submission
of talent’s portfolios or web chat conversations to gauge
personalities and skills.
Step 3. Formulate your Interview/Hiring Process
• This step is the very core of talent-scouting. This part determines
mostly the outcome and end-result of your journey to find talents
for your business. But what always wins in an interview is the
ability of an

Applicant to motivate oneself. Hire people who are motivated.

Motivated employees have the following qualities:
• a positive attitude
• goal-oriented
• Has initiatives
• Has a track record of personal achievements and success.
The challenge now is how you will find them from your applicants’ database. The
following tips will guide you when screening employees and handpicking
motivated ones:
• You can ask how they were in their previous work, how their previous employer
treated them and the reason why they left. Most motivated individuals skip
mentioning negative remarks about their previous employers. They are your
talents with a positive perspective in life.
• Determine whether the applicant has a set of goals in life. You may ask what his
goals are for the next 2-3 years.
• You can also ask about the applicant’s greatest achievements and what made him
achieve them.
• Do not miss to consider and examine both the personality and attitude of your
prospects however, do not set aside the importance of the job-related skills you
require. Weight them. Someone who has these qualities is a good team member
and the right talent for your business.
Managing outsourcing transition

Transition management is a key aspect of the process of

outsourcing. Transition management should be priced and
form a part of the agreement between the outsourcer and
the purchaser and appear as a schedule to the agreement as
new services. This section deals with the planning and
implementation of those new services.
Because of the nature of the role, a Transition Manager needs to
have a variety of skills and competencies:

1. Needs to have strong project management skills, as the migration

process are complex projects that require expert management skills;
2. Needs to be comfortable in working in a cross-cultural
environment, as most often, the client teams are based overseas;
3. Needs to have a thorough understanding of the; existing business
and legal processes, and, current as well as emerging technologies
as these play a critical role in the off-shoring of a business function.
Two common strategies followed in migrating a function, these are: Lift and Shift
and Re-engineer and Migrate
LIFT AND SHIFT This is the most common methodology used. When the process is
mature, the ’Lift and shift; approach is used for migrating.
PHASES OF LIFT AND SHIFT
• 1.Move the current process to the service provider without changes/
improvements
• 2. Stabilize
• 3. Re-engineer the process to achieve efficiency gain – produce same output, less
FTEs
a. Modify the process
b. Add end-user type or strategic automation
c. Combine role with others
d. Move process into a production line
e. Negotiate elimination of unnecessary outputs
ITEMS TO CONSIDER IN LIFT AND SHIFT STRATEGY
1. Process change that will not affect process control points or output can be done by service
provider independently
2. Major effort: post go-live reengineering
a. Transition phase can be easy especially if “people and processes” are moved; may take 3 to
4 months only

ADVANTAGES OF LIFT AND SHIFT STRATEGY

Advantages of an “as is” basis process migration:
1. Training the new team is easier, as the process is well understood and documented
2. A fresh set of eyes (the new team) look at the process from a fresh perspective, often resulting
in process improvements and enhanced controls.

RE-ENGINEER AND MIGRATE

Fundamental rethinking and radically redesigning of the business process so as achieve
dramatic improvements in critical measures of performance such as cost, service, and, speed.
ITEMS TO CONSIDER IN RE-ENGINEER AND MIGRATE STRATEGY

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

Operations Management (OM) is the administration of business

activities to accomplish goals, achieve higher productivity, and
maximize profitability. Operations management is the brach of the
management that administers the complete production timeline of
a service or product from the input stage to the finish stage,
including planning, organizing, coordinating, and controlling all the
resources needed to produce a company’s goods and services.
Performance Management
Performance Management is the systematic process by which an
organization involves its employees, as individuals and members of a group, in
improving organizational effectiveness in the accomplishment of mission and
goals. Employee performance management includes:
• Planning work and setting expectations,
• Continually monitoring performance,
• Developing the capacity to perform,
• Periodically rating performance in a summary fashion, and
• Rewarding good performance.
Limitations of service level
agreement(SLA)
Professional Development

Professional development refers to skills and knowledge attained for both personal development and
career advancement.

Value- lifelong learning, a sense of moral obligation, to maintain and improve

professional competence, enhance career progression, keep abreast of new technology
and practice, or to comply with professional regulatory organizations.
Approach to Personal Development:

 Case Study Method

 Consultation
 Coaching
 Communities of Practice
 Lesson Study
 Mentoring
 Reflective Supervision
 Technical Assistance
Quality Monitoring and Analyzing
Quality Specification:

 Total Quality Management (TQM)

 Total Quality Circles (TQC)
 ISO 9001
 Six Sigma
Total Quality Management (TQM)- is a management system or approach to long-term
success through customer satisfaction. In a TQM effort, all members of an organization
participate in improving processes, products, services, and the culture in which they
work through the use of; strategy, data, and effective communications to integrate the
quality discipline into the culture and activities and activities of the organization.
Total Quality Circles (TQC)- means having organized Kaizen activities, involving
everyone in a company – managers and workers – in a totally systematic and integrated
effort toward improving performance at every level.
ISO 9001- is a very flexible quality standard that is readily applicable to many industries,
as well as to all sectors of IT-BPM industry, hence its popularity in the Philippines even
with small-scale business.

Six Sigma- is a set of qualitative and quantitative (statistical) techniques to

systematically improve processes by eliminating defects and process variation.
Six Sigma asserts that:
 Process variation is an obstacle to reliably delivering high quality products and
services, as defined by the customer
 Continual focus on reducing process variation is the foundation for business
improvement and success
 All business processes (manufacturing, service, administrative, etc.) can be
measured, analyzed, controlled, and improved
 Effective problem solving can only be achieved by data driven decision making,
and
 Achieving and maintaining quality improvement requires an organizational
commitment that comes from senior management
Productivity Monitoring and Control

Employee Productivity is amount of outputs (usually regulated by requirements

and quality) which can be produced by employee per period of time, utilizing the given
resources. The more stable and elaborated the process of production (the less X-factors
or varying inputs it involves), the smoother level of productivity is expected from
employees operating it.

Continuous Improvement Initiatives

5S Process-or more simply “5S”, is a structured program to systematically

achieve total organization, cleanliness, and standardization in the workplace. 5S was
invented in Japan, and represents five (5) Japanese words: Seiri, Seiton, Seiketsu,
and Shitsuke.
Benefits:

 Improve safety
 Decrease don time
 Raise employee morale
 Identify problems more quickly
 Develop control through visibility
BUSINESS PROCESS MAPPING AND NOTATION
Business process mapping/modeling and notation (BPMN) is a
flowchart method that models the steps of a planned business
process from end to end. A key to Business Process
Management, it visually depicts a detailed sequence of
business activities and information flows needed to complete a
process. The primary goal of BPMN is to support business
process management for both business and technical users. It
provides a notation that’s intuitive to business users but is also
able to represent complex process semantics.
Flow objects
Example of BPMN
Reasons why businesses would map their processes

1. Brings everyone on the page in understanding the process

2. Eliminate bottlenecks, errors, and redundancies in procedures
3. Optimize business processes by eliminating inefficiencies and repetitors
4. Builds cross-functional understanding between areas
5. Promote internal collaboration between teams
6. Decreases waste by identifying extras and gaps in the process
7. Ensure standardization of processes for internal audits and compliance with policies and
regulations.
THANK YOU!