July 11, 2014

Outsourcing Today – More About Partnership, Less About ICT

Maarit Laaksonen

Head of HR Transition and Transformation, Tieto

In today’s ever-changing world, outsourcing IT services has become a solution for an increasing number of companies. The constant flow of new technology trends – such as mobile, social, M2M, big data, and cloud – is changing the way industries function.

These new technologies are the driving force behind business transformation, which has led to an environment where only agile players can stay in the game. Therefore, many businesses turn to specialized companies for help, and not just to outsource their ICT function. They also want guidance about business transformation.

Compared with outsourcing projects ten or twenty years ago, the main driver behind today’s outsourcing projects is more than just cost savings. Today, companies are looking to achieve a competitive edge with help from outsourcing.

Companies are looking for transformation partners

With many new and aggressive players entering the field, there is more competition within the ICT industry. Still, most clients today are also more capable as buyers, since they've already gone through several outsourcing projects. This means that the clients remember possible pitfalls and are looking for more than just an inexpensive deliverer; they want a partner to support them through their technology-driven business transformation.

One of the most important factors of an outsourced project is seamless cooperation with the client. Reciprocal trust and commitment to the project are needed for a successful project. This way, all parties will have the same goals and expectations for the project.

In recent years, Tieto has made big investments in transformation management in order to be a reliable and effective partner for our clients in their outsourcing projects. The positive feedback we receive from our clients shows our extensive experience in the field as well as our collaborative approach to all of our outsourcing projects. We believe in planning and working together with all parties to make the transition go as smoothly as possible.

Transition is the critical step in any outsourcing project

Outsourcing typically consists of four phases of service delivery: planning, transition, transformation, and the steady state. The transition phase lays the foundation for the whole project and thus determines the success or failure of the outsourcing project. Successful transitions are characterized by the way in which all critical factors are addressed and managed. If any of these factors are overlooked, the whole outsourcing project is at risk to fail.

One of the biggest pitfalls of any transitioning project is the lack of proper planning. When the planning of an outsourcing project is done in a hurry, things will go wrong.

The ‘quick and dirty’ approach does not work with major projects like these. There needs to be enough time to draw up a realistic project outline, schedule, and budget. If the schedule fails because of lack of proper planning, it means more extra costs to the client.

It’s the people who make or break the transition

There are other crucial success factors in an outsourcing project. You need an experienced and competent team who has worked with similar cases before. They need to implement the best practices, processes, and methods previously acquired while working with past projects. In addition to experience and expertise, another major success factor is transition management. This is knowing how to manage the client’s expectations when their whole way of working is undergoing a transformation.

People are often very prone to resisting change, especially such a big one as business transformation. Therefore, careful planning and open communications are needed to manage these expectations. It is the people who make or break the transition.

We need to make sure that these clients have accepted the change we've implemented, and are committed to working with us, because their skills and expertise are especially critical during the transition and transformation phases. They play a big role in ensuring the business's continuity.

At Tieto, we are truly proud of the way we handle employee transitions. When some of our client’s employees are transitioning to us, we listen to the individuals, take their wishes into account, and don’t leave anyone's questions or concerns go unaddressed.

Therefore, the importance of open, timely and honest communications can't be emphasized enough. In transition projects (especially ones where there are people transitioning from one company to another) the communications need to be directed to individuals.

We need to take the time to communicate with our clients as individuals – while also listening to them instead of delivering a monologue.

Maarit Laaksonen works as Head of HR Transition and Transformation at Tieto’s Large Deal unit. You can find her on LinkedIn.

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