Change management in offshoring processes

Abstract

[EN] Operators in mature western markets are facing operational challenges (Syntel, 2013). Customers demand more and improved services at lower prices with shorter time to market. Flexibility, speed-to-market and cost containment are more important than ever before. The primary challenge and main focus in the high-tech and telecom industry are the availability and efficient administration of resources. (PriceWaterhouseCoopers, 2010) While the telecoms industry was relatively unscathed by the global financial crisis compared to other sectors, it has not been immune to its impacts. Looking ahead, the current economic uncertainty is likely to increase shareholder and market scrutiny. (Ernst & Young, 2013) In the search for satisfying shareholders and customer demands, offshoring non-core operations to low-wage countries stands as a very attractive alternative that is getting more and more popular. Having access to a younger and more prepared pool of talent and benefiting from a more flexible labour regulation are also decision drivers for moving operations abroad (Intrice, 2013). Also, when doing it through a captive Shared Service Centre, companies can share best-practices among the different operating companies from the same group, creating synergies and therefore increasing effectiveness and efficiency, while at the same time keeping managerial control and not risking confidentiality (NeoIT, 2004). However, moving operations abroad comprises several challenges that need to be managed. Apart from deciding the right location, agreeing on SLA levels, splitting tasks and responsibilities, analysing a complete and realistic business case and signing a convenient contract; the client organisation faces internal challenges among its current employees that need to be managed. Job loss fear, emotional contagion, working within different cultures, aligning with different stakeholders, keeping staff motivated and retaining the needed talent, creating readiness for change are issues to be properly managed if the company is to keep the daily business up and running till the end of the project and effectively transfer knowledge. Without keeping daily business under normal performance during the migration process, until the new organisation is able to work totally independently and at the required performance level, the company would not be able to satisfy customers during that period of time, and that could have devastating consequences. Moreover, if the client organisation is not able to effectively transfer knowledge to the new staff, chances are the new organisation will not run as needed. Therefore, if the company does not manage its internal issues, it will fail in offshoring. While Project Management works through the hardware of the organisation (structure, processes, role definitions), Change Management works through the software of it (skills, emotions, acceptance, culture), that means, the people side of the change (Creasey, 2013). There are several Change Models describing the steps to follow in order to effectively lead people through the transition path to a major change, but offshoring represents special challenges and constraints that require special solutions. While a lot has been written about Change Management, and about Offshoring, separately; almost nothing has been studied about the people-side of offshoring transitions. With our research, we aim to contribute in filling this gap. On the search for that purpose, first of all, we studied the concept and implications of centralization and offshoring, and we analysed different theories regarding Change Management. Secondly, we developed a real case study from the multinational telecommunications giant Vodafone. Through in-company observation and informal interviews we analysed the biggest challenges and outcomes from the followed approach to change in one of its offshoring projects. We could say an offshoring process is similar to a melting iceberg. Due to environmental changes, the structure of the organization (the iceberg) changes too (melts) and unfortunately, a piece of it is separated (offshored). Like every change, offshoring also has consequences. Thanks to both, theoretical studies and reality observation, we aim to discover the common serial of feelings that offshoring-affected staff tends to experience, then we will settle the basic principles for managing offshoring transitions, and finally, we will develop a model of steps to be followed in every offshoring project to effectively manage change and therefore, maintain daily business while transferring knowledge to the new employees placed abroad.