Operational Issues in IT Outsourcing Engagements - Indian Service Providers View

8/6/2019 Operational Issues in IT Outsourcing Engagements - Indian Service Providers View

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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.



Operational Issues in IT Outsourcing Engagements Indian Service Providers View

An MBA 2010 Project Report submitted by Ravi Warrier

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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





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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.7. Issue 4 Clients lack of commitment or support ............................................................ 26


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





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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





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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





List of Figures

Figure 1 - Overview of the Research Process .......................................................... ................................ 12





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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





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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.





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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.





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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.





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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?





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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.,





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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).





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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





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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





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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/





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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/





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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.





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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.





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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.





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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





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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.





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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





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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.





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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





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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


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





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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.





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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).





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VI.A.5. Issue 3 Lack of mature processes or their understanding on the

clients end


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





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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.





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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.


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.





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VI.A.7. Issue 4 Clients lack of commitment or support


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





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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.





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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.





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VI.A.9. Issue 5 Ineffective Communications


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





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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.


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.





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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.





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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





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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.





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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.





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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.





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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.





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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.





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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.

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517.





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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.





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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.





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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.





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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





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b. Missed opportunity to earn money during the project period

c. Missed opportunity to learn from a team





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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.





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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





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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





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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.





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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?





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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





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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!





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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.





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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.





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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.



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

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