There is no IT Outsourcing without a Transition: An Introduction to ITO Transitions

  Governance   Outsourcing   Resource Management   Knowledge Shelf  

The information technology outsourcing (ITO) industry has been growing for decades and has become a key approach for many multi-national companies seeking to improve quality, reduce costs, or otherwise transform their businesses. In the context of an ITO contract life cycle, the transition represents a critical and complex phase that starts immediately after contract commencement or effective date. The transition often sets the tone for the outsourcing relationship because it provides the customer with the first operational  experience with the new service provider. While transition management practitioners have suggested that over two thirds of failed outsourcing relationships are due to transition-related challenges (Beulen, Tiwari, & van Heck, 2011), research has shown that over two thirds of executives reported problems during a transition (Deloitte Development LLC, 2012).

The lack of specific literature on this subject, however, has led to many misconceptions, including terminology that is being loosely used, which sometimes makes non-expert transition discussions confusing.

For simplicity purposes, this paper assumes a first-generation outsourcing, in which the customer has not moved yet to standardized global processes through an outsourcing provider. Second-generation outsourcings, in which services are moved from one outsourcing provider to the …

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