The Make-or-Break Transition Phase

Then the real work began.

As is the case with almost all offshore work, the most critical phase is the transition. "The first big issue was knowledge transfer. We were sitting on a large inventory of applications built by a variety of vendors," Wood says. He and the project leader from Wipro spent a month creating a transition plan. "The transition period requires bringing a few people who will eventually be working offshore onsite to go through the application, get an understanding of it and create the documentation that's required," Wood says. Offshore developers were paired with someone at Otis who knew the application or with someone from the vendor who created the application. "Creating transition documentation is critical to the vendor getting off to a good start as quickly as possible," says McCaffrey. Otis created an overarching transition plan that included writing standard technical documentation outlining such things as file-naming standards, and hardware and software environments; creating a high-level project plan; identifying the best onshore and offshore managers; and providing opportunities for knowledge transfer such as job shadowing.

The transition stage also requires close collaboration with the vendor's project leader who works onshore throughout the course of the relationship. The onsite project leader is basically a go-between, making sure the work done at Otis in terms of project requirements and specs translates into the right coding or maintenance work in India. Doucette says the project leader is the most important person in the Indian outsourcing proposition. "The mistake we made initially at Otis was trying to have our own employees communicate with the offshore workers in order to save as much money as possible," Doucette recalls. "We found we needed a strong business analyst from the offshore company working onshore as an intermediary."

Once few and far between, competent business analysts and project leaders are no longer in short supply in India, Doucette says. But that doesn't mean Doucette and his reports rest easy. "We are ruthless on the people who come in," he says, recalling the time at Otis when he sent the vendor's proposed project leader, who was a database administrator lacking business analysis and project management skills, back to Bangalore after just four hours.

Meanwhile, in Bangalore, Wipro was setting up the Otis shop so that employees had a development environment to plug into when they got back. The transition took four months - January to April 2002 - and Otis work was at a steady state by June.

In addition to being the most critical stage, the transition period is also the most costly because of high rates for offshore workers on-site and the set-up costs. Otis spent $US420,000 on the transition and didn't recoup that investment and start saving money for a year. Today, with 75 per cent of the 20-person offshore team working in India and 25 per cent working at Otis, Wood says the company is saving $US1.4 million a year on application development and maintenance, a nice complement to the annual $US7 million it has been saving by using its own captive development centre of 70 employees in Pune.