This e-book will help you understand the purpose, processes & pain areas of IT Outsourcing to external partner & will surely help you avoid the mistakes to bring real benefits for your organization.

1. IT OUTSOURCING JOURNEY
(Real Business Case – Fortune 500 Company)

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Table of Contents
1. OVERVIEW...............................................................................................................................3
2. PURPOSE..................................................................................................................................3
3. DEFINITION..............................................................................................................................3
4. OBJECTIVE OF OUTSOURCING ................................................................................................3
5. SCOPE OF OUTSOURCING.......................................................................................................4
6. CRITICAL SUCCESS FACTORS ...................................................................................................4
7. OUTSOURCING LIFE CYCLE......................................................................................................5
6.1. Strategic Assessment......................................................................................................................... 5
6.2. Need Analysis .................................................................................................................................... 8
6.3. Vendor Assessment........................................................................................................................... 9
6.4. Negotiation and Contract Management ......................................................................................... 11
6.5. Project Initiation and Due Diligence................................................................................................ 14
6.6. Transition Phase.............................................................................................................................. 14
6.7. BAU Phase ....................................................................................................................................... 15
8. CHALLENGES..........................................................................................................................17
9. WHAT COULD HAVE BEEN BETTER? .....................................................................................17
10. TERMINATION.......................................................................................................................19

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1. OVERVIEW
As a business practice, outsourcing is flourishing in almost every conceivable domain.
Organizations today outsource software development, innovation and research and
development efforts and even functional areas such as marketing, human resource
administration and finance and accounting. Outsourcing of knowledge-intensive work is
increasing at an astonishing rate. Moreover, outsourcing R&D even occurs when organizations
realize that this is their core competency, ie the key differentiator between them and their
competitors. The rationale is quite simple – an organization had better seek out and form
alliances with companies that have mature processes in place, even in the areas of its core
competencies, if it is to take advantage of the added value of mature practices.
This document outlines the outsourcing journey of IT Organization and provides key insights into
the various challenges that the organization undertook to align IT with business goals.
2. PURPOSE
The objective of this document is to provide a hands-on and applied approach to exploring the
intricacies of commencing, managing, renewing and/or terminating outsourcing engagements.
This document provides a complete picture of Organization’s Outsourcing Journey and outlines
the key challenges that arose during this engagement. It can serve as knowledge repository of
the outsourcing engagement and provide guidance to the organization for future endeavors.
The Outsourcing manual applies to all the employees, contractors, consultants, third party
vendors, business partners, and all those who require/have access to company’s information
processing systems and facilities.
3. DEFINITION
• Sourcing: Sourcing is the act of transferring work from one entity to another.
• Outsourcing: Outsourcing is the act of transferring the work to an external party.
• Client: A client is the person or organization that would like to outsource a given
project. Normally, this entity is thinking about utilizing outsourcing as a strategic tool.
Clients can range in scope and size. A client can be an entire organization or a unit
within an organization. If the project being outsourced is the entire IT department of the
organization, we can say that the organization is the client.
• Vendor: The vendor is the service provider who will take over and conduct the
outsourced work.
• Project: This is the actual work that is being outsourced.
• Organization: Applies to any company / business looking to outsource their core IT
Operations.
4. OBJECTIVE OF OUTSOURCING

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The primary objective of outsourcing of Organization’s operations was directly related to
organizational strategic goal to focus on core competencies with strong IT Framework to
support multiple lines of business.
The key objectives of the outsourcing engagement are:
• Infrastructure Management: Incorporate best practices, layout hygiene factors and
institutionalize systems - comes as a basic & first offering.
• Process efficiency: Set up a transparent, standardised, process centric IT Enterprise
• Cost optimisation: Deliver business aligned SLAs with lower cost.
• Innovations & Transformations: Help build a responsive, future oriented architecture
and provide competitive edge to business through technology.
• Scalability & Cost variability: Build a flexible cost infrastructure that could be scaled
either ways when reacting to business dynamics, swiftly
• Competitive Edge: Sharpen our offerings/ability to respond faster
5. SCOPE OF OUTSOURCING
The outsourcing partner will take end to end ownership of IT Infrastructure and Application
Management.
The scope of this engagement for the entire Shared IT Services includes:
• Helpdesk & End User Services
• Datacenter Management
• Network & Connectivity Management
• Enterprise & LOB Applications Maintenance
• Information Security Operations Management
Aspects to be retained within Organization:
• Business Process Management (Line of Business – IT Team)
• Business Applications Strategy / Road Map controlled by the respective businesses
• Governance, IT Strategy and Architecture Review Board (CAPEX Decisions)
• New Application Development
6. CRITICAL SUCCESS FACTORS
Following are the key critical success factors of successful outsourcing engagement. Business
should derive 6 key benefits as an outcome of IT Outsourcing.
• Infrastructure Management: Higher uptime of infrastructure; avoidance of unplanned
outages.
• Process efficiency: Real time health and operational efficiency view to the lines of
business through sophisticated dashboards
• Cost optimization: Cost transparency; futuristically driving towards cost per transaction
• Innovations & Transformations: Best of breed skills and resources; opportunity to dip
into the Partner’s vast experience and research for business impact
• Scalability + Agility: Pool of switchable resources to swiftly react to business cycles
leading to flexibility of IT Costs & business costs.

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• Competitive Edge: Enhance customer base / increase share of wallet by leveraging new
channels for delivery and service; Use alternate sourcing to lower the basic cost of the
product/ service thereby making it accessible to new customer segments
7. OUTSOURCING LIFE CYCLE
Outsourcing can be viewed as form of service-based 'product' flowing through the life-cycle
stages moderated by the continuous iterative nature of the development process as the form of
the service is shaped during contracting and the early stages of delivery. Although there may be
peaks and troughs in terms of life-time value of outsourcing contracts that are important from
financial perspective, a more important consideration at Organization are the different stages
that outsourcing process goes through and how this impacts the people affected by the
potential transition and the service delivery:
6.1. Strategic Assessment
The key goals of this phase are:
• To develop a clear vision of outsourcing i.e. setting tangible goals and objectives.
• To determine how outsourcing fits into the overall business strategy.
• To select and engage executive sponsors for the outsourcing endeavor.
• To identify the key functions and processes suitable for outsourcing.
• To determine whether the engagement should be onshore, near shore or offshore.
Key Deliverables: Strategic assessment is the focal activity in the first stage of the outsourcing
process. The client undertakes a series of activities in this stage:
• Determines the current challenges of the organization.
• Develops a mission and vision to make outsourcing work.
• Identifies risks and mitigations.
• Analyzes the core competencies of the organization.
• Identifies strategies and tactics to maximize outsourcing value.
• Organizes an executive team.
The Strategic Assessment phase encompasses the following processes:
Business Value Assessment: The business-value assessment involves three stages:

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• Core Competencies: Organization’s core competency lies in business oeprations with IT
as centralized support function to drive business & achieve market leadership.
Organizational Strategy demands focus on core competencies with support functions
being driven by SMEs available in market that has proven records of running operations
successfully for similar businesses.
• Executive Sponsor Team: An executive team was established to oversee the outsourcing
project. The Executive Sponsor of the engagement was the Group COO. The team
composed of CIO, Central IT Team, IT Heads, Strategy Team & representatives from
Finance, Legal & HR. with comprehensive knowledge base of the IT operations to align
the tactical goals to meet the overall business goals.
• Organization Strategy:
o YOY Growth Projections
o Environment revealed inclination towards Outsourcing of Support Functions in
order to meet its targeted 40% compounding growth year on year. Most of the
Business had aggressive growth plan.To realize the growth aspirations of various
businesses the operations needed to be ramped up as well.
o Cost flexibility: The client organization needed to move from a fixed cost model to
variable cost model which is in line with the Business Growth Cycle.
o Business flexibility and Diversification: The business model of Organization was
evolving and the business was confident of diversifying.
Operational Assessment:
• Mapping Organizational Process
o Organization drew out the complete inventory of people, process and
technology. List of all processes were compiled as per the tower along with their
activities.
o The job responsibilities of all the team members responsible for such activities
were also drafted.
o List of processes with their SLAs was also compiled.

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• Understanding the Nature of the Processes: The processes were segmented into four
categories Type 1, Type 2, Type 3, Type 4 based on their maturity and strategic
importance. Type 3 and 4 are more suited for outsourcing and those processes are
matured or auxiliary.
Type 2 Type 3
Type 1 Type 4
The outcome of the analysis was NOT to outsource following processes:
o Business Processes
o IT Interfaces
o Governance Processes
o IT Strategy
• Benchmarking Processes: Consulting partner of Organization during outsourcing
engagement did complete bench marking of the processes to be outsourced.
• Managing Critical Elements around processes: Organizational processes are driven by
number of critical elements which includes the employees who execute the processes,
suppliers or other business partners who provide inputs or are intermediaries in the
process, regulations that govern how a process should be conducted or executed, etc.
Hence all of these elements also need to be accounted for in the operational
assessment.
The guiding principle for managing critical elements was to novate all the contracts. If
there were cases where the contract could not be novated then Organization would
take responsibility of managing the contract with the concerned vendor would only
manage the SLA. Vender Management Office was formed to dedicatedly work for
managing contracts.
Risk Assessment & Mitigation Strategy
The various risks that might challenge the outsourcing engagement were identified and
appropriate risk mitigation strategies were drafted to mitigate those risks.
Process Maturity
Strategic Value
Core Auxiliary

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Financial Assessment
Commercial Model with 10 Year view was called by following FOUR vendors.The models were
brainstormed on multiple factors before the final contract can be awarded.
6.2. Need Analysis
Need originated from the study submitted by Consulting Group with a view of achieving 40%
CAGR.
Outsourcing will eventually ramp up IT operations which would thus support the business in
reaching their desired targets. Thus Organization was very sure that Outsourcing is inevitable for
its future growth. Hence there was no room for doubts regarding viability of the outsourcing
project.
It was decided to outsource only the IT operations i.e. Infrastructure. Application Development
which are maintained by other vendors and Organization In-House Technologies were not
included in scope. However processes such as Application maintenance were included in scope.
Outsourcing was favored for the following reasons:
• Improvising on the setup of existing process.
• Reducing dependencies.
• Improvising on the quality of service.
• Reducing Cost(shifting from fixed cost model to variable cost model)
The processes were benchmarked as per recommendations from consulting partner.
Benchmarking of processes ensured measurement of Process productivity through SLAs.
Consulting Partner did Competitor Benchmarking (comparing an organization’s processes
relative to its competitors) to arrive at necessary recommendations.
SOW and
RFP

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Consulting Partner helped Organization in producing the key deliverables of the Need Analysis
Phase:
• RFP:
o Sourcing requirements and scope
o Process and the quality issues
o Client corporate profile
• SOW:
o Scope of the project.
o Details of work assignment
o SLAs
o Roles and responsibility
6.3. Vendor Assessment
The key processes involved in this stage are:
All the above stages were undertaken to assess the whole set of vendors and finally arrive at top
3 vendors depending upon scores earned by them during this phase. The in house team along
with the consulting team from consulting partner worked together to do in depth vendor
analysis. The team on board undertook the following tasks:
• Background Preparation :
o This step basically involved putting in place a vendor evaluation team. The team
needed to be cross functional with expertise in core as well as auxiliary
functions of the business such as Finance, IT, Legal, HR, Operations.
o The team had to undergo a training or orientation program to clearly
understand the vendor selection process (vendor scoring system).
o Broad guidelines for vendor evaluation were set
▪ Methodology, Criteria, Response Templates and Process of evaluation
were standardized.
▪ Vendor bids would be evaluated based on 2 criteria: Technical bid
evaluation-60% and Commercial bid evaluation-40%. Total score for
Technical and Commercial proposals would be 100 .For commercial bid,
cash flow would discounted at 12% to arrive at Net Present Value and
the lowest bid would get the maximum score.
▪ Based on the above guidelines vendor evaluation matrix was compiled:
Selecting
the vendor

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Vendor Evaluation Matrix
Weightage IT Strategic Outsourcing Criteria
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Vendor credentials and site visits combined for the scoring:
• Capital Markets Organization with minimum turnover of INR 1000 Crs.
• Scope coverage for Infrastructure Support, Application Support, People Migration
• Size of the organization
• Number of business units.
• Tenor of the contract
• Range or size of the deal
30
Implementation Approach, Methodology & Project Management:
• Senior management commitment.
• Plan for transitioning to the vendor organization – plan, deployment, vendor
management, people rebadging
• Quality Assurance – ITIL Processes Feedback mechanisms, security awareness.
• Process / Operations Excellence initiatives - including Change Management process,
procurement, management of services, asset management.
• Tools deployment and related benefits
• Risk protection on termination/exit
20
Human resources deployment
• People quality.
• Model of deployment – number of people deployed for onsite / offsite for various
activities and processes
• Managed Services – subcontracted or managed by the vendor for service delivery
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Functional and Technical fitment
• Functional capabilities of the new applications proposed.
• Technical fitment to the architecture.
• Technical scalability of the application.
• Product roadmap-EOL or EOS or minimum investments or commitment from the OEM.
• Integration with the existing suite of products.
• Improvements to existing technical set-up.
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Value adds proposed by the Vendor
• Technology innovation from the vendor for the financial services sector.
• Cost optimization
• IT Strategy review / IT enabled business transformation
• Technical Architecture roadmap – mitigation for technology discontinuity
/obsolescence
• Business Process improvements
• Technical fitment to the architecture.
▪ Evaluation Response Templates also were prepared as per the
evaluation criteria
o SOWs and RFPs were shared for the vendor to respond.
• Managing the Vendors: A manageable list of vendors was selected by applying high level
criteria s so as to reduce the pool of potential vendors.
• Evaluating Vendor Proposal: The next step in vendor assessment process involves
evaluating vendors based on a predefined checklist. Vendors were evaluated based on
the following step:
o Step 1: Technical Bid Evaluation
▪ Verification of Offers
▪ Compliance of Documents
▪ Clarification of bids
▪ Technical Presentation
▪ Technical Scoring and Ranking
o Step 2: Commercial Bid Evaluation
▪ Verification of Offers
▪ NPV Calculation

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o Step 3: Final Vendor Scoring
o Step 4: Evaluation Report Success factors were created by the executive sponsor
team for successful outsourcing engagement.
The success factors reported were:
• Alignment with Business Objectives & Agility
• Vendor Agnostic Technology Solutions
• Cultural Fitment for Organization
• Vendor Executive Sponsorship
• Visibility into Operational processes
• Technology & Timing Decision Flexibility
• Ability to carry out Transformational initiatives
• Ability work on ‘spirit rather than the letter’
• Transparency into costing models & solutioning.
• In depth vendor assessment: A comparative analysis of all the top vendors were done to
ascertain the best fit outsourcing partner for Organization.
Post such comparative analysis the executive sponsor team along with the top management
decided to issue letter of intent and start negotiating process with finalized vendor because of
the following reasons:
• Strong Application Management Practice
• Commercials
• Top Management leverage
• Flexibility in approach to operating model & contract
• Global Customers and Best Practices
6.4. Negotiation and Contract Management
The key phases in this stage are :
A good outsourcing contract is the result of a detailed due diligence, organization assessment
and vendor identification, evaluation and selection by the client organization prior to formalizing
a contract. It reflects mutual benefits and shared risks for both the client and vendor
organization and is understood by all parties involved. It defines for both the client and vendor
organizations the current, future and termination elements of the outsourcing relationship. It
will be the document that both organizations will refer to for help in managing the outsourcing
relationship throughout the life of the contract.
Hence this phase is very important in laying down the contract and its terms and conditions.
• Negotiating with the vendors: Having a proper negotiation team in place is very
important for this step. The team in question should be completely aware of the needs
of client and the capabilities of the vendor. The team was responsible for :
Producing the
contract

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o Prioritizing the requirements as critical, important, required and desired but not
required.
o Negotiating on the price of the contract and selecting the vendor with the most
appropriate bid.
o Documenting through Minutes of Meetings (MOM) of all the negotiations done
with each of the vendor.
Organization followed a TWO Layer Negotiation:
1. First Layer : by CIO & IT Heads along with third party consultant
2. Second Layer : by CEO & COO
• Documenting the Agreement: Post negotiation outsourcing contract was drafted with
the aim of it being clear, concise ,complete and well defined(with minimum
ambiguity).The outsourcing contract clearly defined the following
o the scope and nature of the engagement;
o roles and responsibilities of the client organization;
o roles and responsibilities of the vendor organization;
o metrics for evaluating the performance of the relationship;
o recourses in case things do not go as expected.
The final contract was signed between Organization & vendor covering all businesses of
Organization. The contract refers to the following Annexures & Schedules that states processes,
data facts & masters that contracts will honor as required:
• Annexures:
Document Name Purpose
Annexure A Line of business of Organization
Annexure B List of Branches
Annexure D IT User growth projected for 10 years
Annexure E Service window
Annexure F Various tools to be deployed with their details
Annexure G Sourcing activities(daily,weekly ,monthly)
Annexure I Organization Application master
Annexure J Budget
Annexure K Refresh cycle of common infrastructure
Annexure L List of transformation initiatives
Annexure M Preferred brands of various applications
Annexure N Resources required for for the next 10 years.
Annexure P People to be rebadged
Annexure Q List of existing assets
• Schedules:
Document Name Purpose
Schedule 1 All outsourcing contract related definitions
Schedule 2
Schedule 3 Scope of work
Schedule 4 All details of report with frequency

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Schedule 5 Governance model for the outsourcing plan
Schedule 6 Fees and Commercial model
Schedule 7 Business continuity and disaster recovery plan
Schedule 8 Transition plan
Schedule 9 Vendor location address provided for each city
Schedule 10 Change control procedures
Schedule 11 Key Vendor personnel to be deployed for the outsourcing
engagement.
Schedule 12 Terms of subcontracting
Schedule 13 Service Level Agreement
Schedule 14 Termination assistance if the contract is terminated between
vendor and client.
Schedule 15 Developing Security Plan for handling confidential information of
Client
Schedule 16 Approved bench markers
Schedule 17 Insurance terms
Schedule 18 Employee hiring principle of Vendor for outsourcing engagement
Schedule 19 Business service agreement
Schedule 20 Novated Contracts
• Final Agreement
Document Name Purpose
BSA Business service agreement
Data Center
Partnership
agreement
This agreement was created between organization & vendor
MSA Master service agreement
Employee hiring
agreement
Employee hiring agreement
• Determining Penalties: The goals of fixing penalties were to encourage vendors to
resolve problems and drive for continuous improvements and innovations that promote
the achievement of the outsourcing objectives. Common penalties are:
o Cash penalty: In the form of reduction in payments to the vendor owing to
failure to meet a contractual obligations (eg not adhering to SLAs).
o Project delay penalty
• Planning an exit strategy: A proper exit strategy was drafted in case of contingencies
Schedule 14 and 6 was compiled for this purpose. Schedule 14 explained the complete
set of deliverables for the existing vendor if the contract is terminated. Schedule 6 talks
about fees to be charged to vendor if the contract is terminated. Overall the exit
strategy encompassed the following:
o Impact of the business relationship.
o Payments outstanding for both client and vendor if any.
o Assets to be returned.
o Handling projects which are in WIP.

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6.5. Project Initiation and Due Diligence
Vendor was selected to take over the services from Organization & extend their expertise &
experience to bring value addition to the existing environment.
For final proposal, vendor was given one month to perform Due Diligence of the existing
operations within scope of the engagement. During this time, vendor deployed their experts in
various fields for One Month in Organization premises to study the existing processes & various
risks and improvement opportunities. This activity helped vendor to identify the gaps & plan
their strategy for running the operations post project kick off.
The outsourcing engagement between Organization and vendor was signed after various
sessions of negotiations & discussions at various levels. The project kick off date was agreed &
valid for 10Years.
Post signing of contract and before bringing vendor on board, Organization needed to be
prepared as well for such a strategic alliance. Hence key focus area for Organization was to
Create Awareness regarding the impending alliance. It was important and critical that all
stakeholders be educated on the terms and conditions of the contract. This would enable
everyone to be on the same page and work as a unit with a common undertaking to make the
outsourcing relationship a success. Following mode of engagements were planned with
concerned stakeholders during this phase:
• Internal Town Halls: to address the concerns & queries of employees w.r.t rebadging,
roles & responsibilities, gratuity, employment continuity etc.
• Joint Address by Organization Chairman & vendor CEO: to address concerns on long
term vision & highlight key advantages of the engagement on organization & employee
growth.
6.6. Transition Phase
Vendor deployed their team of experts (temporary & permanent staff) to perform following
activities as a part of transition plan agreed between Organization & vendor (Refer Schedule 8 –
Transition):
• Rebadging of Employees (HR Transition): The existing team of organization IT
Employees were identified during Due Diligence Phase to be rebadged to vendor for
running the operations. Organization ensured smooth rebadging of employees from
Organization to vendor with a focus on following areas:
o All rebadged employees received appraisal before due date.
o The rebadged employees resigned from Organization formally with complete
handover of Organization Assets and joined vendor with no gap in their
employment. To safeguard the employee, it was agreed to maintain the
continuity of gratuity benefits in vendor Payroll to benefit the employees
resigning from Organization having less than 5 years of service.
• Vendor Onboard Governance Framework: The entry/exit processes were setup for all
vendor resources along with all support functions. Key Highlights of this framework are:

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- All Vendor Employees (temporary / permanent) are governed by Entry / Exit
Process.
- All vendor resources are allocated a unique ID Card for ease of identification
during movement within the campus by security personnel.
- The roles & responsibilities of all Support Functions (Security, ID Team,
Admin, HR, Organization PMO) were clearly defined to avoid any issues
during induction / release of vendor resource from Organization Project.
- Separate Employee Code Series was introduced in the HR System for ease of
identification & seamless access of IT Systems required to do their day to day
activities.
- The complete framework is supervised by Organization Governance Team.
• Program Governance Framework: To ensure smooth transition of services to vendor,
Organization established a team of SMEs & PMOs to oversee the phases of the
outsourcing life cycle. Each member was supposed to bring a unique skill that is needed
for success of this outsourcing initiative. This team would track the transition plan of the
vendor and escalate any discrepancies/slippages to appropriate personnel for closing
the issues. This team would be responsible for the successful transition of the services
to the Vendor.
• Vendor Contract Negotiations: This activity was planned to ensure the handover of all
AMCs / ATS of all vendors to vendor to initiate / renew all expiring contracts through
vendor at better pricing than previously done by Organization directly. During this
phase, Vendor Management Team got hold of all old contracts & invoices to initiate
vendor interactions & negotiations.
• SLA Baseline: The key KPIs to measure the performance & availability of IT Systems &
Processes were identified & agreed between vendor Governance Team & Organization
Team. These were also the measure of vendor’s Performance. The Approach &
Methodology of data gathering & computing the defaults were also agreed during this
phase. All defaults were linked to Service Credits agreed in the engagement.
• ITSM Process Deployment: All existing processes were studied & documented as each
Tower’s SOP with basic ITIL Principles incorporated in all the processes to follow the
best practices.
• Software Compliance: During this phase, vendor Team gathered the information
regarding various Software’s Deployed in Organization Environment and bridge the gaps
between deployed & procured with removal of unauthorized or unapproved software
OR new procurement. The tool was used by vendor team to gather information via
Organization Network.
• Enterprise Tools: Vendor suggested to suite to cover monitoring & management of all
areas in Organization IT Environment. Following tools were deployed for respective
towers
The transition period was agreed as 3 Months from the date of inception. During this period, the
operations were run in parallel by both Organization & vendor Team and NO PENALTY was
applicable on any service default.
6.7. BAU Phase

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At this time, the team of experts deployed by vendor is well versed with the processes &
functioning of IT Systems as a result of:
• Due Diligence: Understand how operations are handled on the ground.
• Transition Phase: Work closely on actual scenario’s with the Organization Team to get
hands on experience on the various challenges & best strategies deployed from time to
time to get the best user experience.
With the transition of core operations to vendor Team, the SMEs at Organization shifted their
focus from transactional / supervisory role to strategic role. As a result the governance team
was setup that includes Subject Matter Experts & PMOs to ensure the following:
- Contractual Governance:: Each SME was responsible to ensure the following in their
respective Towers:
• Adherence to Scope of Work
• Business Interface to align IT with Business.
• Business Reviews on Performance of IT Systems.
• Minimum Business Disruption
• High Customer Satisfaction
• Process Re-Engineering
• Cost Savings
- SLA Governance:: Regular Review Mechanism was established to review the Availability
& Performance KPIs agreed at Transition Phase with focus on constantly meeting target
levels. The Downtime Tracker was implemented to capture the real time outages for
better understanding of risks & implementation of mitigation strategies to avoid
repetition of similar incidents. Each SME was responsible to ensure the following:
• Target Service Levels
• Minimum Outages / Incidents
• Continuous Service Improvements
• Higher Availability of IT Systems
• Strong Performance Levels
- Program Governance: IT Governance Team was setup to ensure the following:
• Implementations of Cross Functional Deliverables like Software Compliance,
Tool Implementation, 3/6/9 Months Initiatives etc.
• Regular Program Level Reviews at multiple levels.
• Regular Connect between vendor with Organization Businesses on the
performance & understand issues / areas of improvements.
• Management of Vendor Resources
• Relationship Management
- Financial Governance: IT Governance Team was responsible of managing vendor
financial transactions in line with the Commercials agreed as a part of ITSO Engagement
& ensure accuracy in the following:
• Monthly Bills / Invoices of Fixed Components
• Margin Cost in Contracts
• New Business Commercials
• Timely Invoices & Payments

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8. CHALLENGES
During the Engagement, following were the challenges experiences by Organization IT Team &
the mitigation strategies implemented to have minimum impact on the services:
1. Tool Implementation: The Tool was further outsourced to another partner by vendor.
The final implemented solution could not satisfy the requirements stated in the
contracts with following issues:
- False Alerts for Downtime
- Incomplete Implementation of Modules (Complete Features not visible)
- Incomplete Coverage (Applications not covered till date)
- Data Accuracy Issues
- Unavailability of Dedicated Tower Lead / Subject Matter Expert
2. High Supervision: Organization IT Team experienced the need of high supervision in
each tower on BAU Activities and complete handover was never complete. This was due
to low trust level on vendor Resources & their seriousness towards their role.
3. Service Improvements: Vendor was supposed to deliver Target SLAs but it was accepted
by Organization to provide an extension as they failed to deliver and requested
extension to reach Target SLAs and work on reduced SLAs for 4 Months. Vendor
struggled to bring in desired SLA Improvements in end user SLAs & overall experience.
4. Resource Management: Vendor was struggling in following areas of resource
management in first 2 Years:
- Reduction in Manpower with more innovative ways of working & tools.
- High TAT for Backfill of Vacant Positions which is minimum 3-6 Months.
- Quality of Resources
5. Financial Management: Overall TAT of Orders from Organization - Vendor – OEM has
been very high resulting in delay & customer discomfort. Also, very less value add was
seen in terms of negotiations & vendor management.
6. Contracts & CRs Management: At the start of the engagement, there were huge delays
in novation of many contracts which improved gradually.
7. Software Compliance: A major deliverable listed in the contract where vendor struggled
to gather data for assets due to incorrect approach and lack of required tools. Till Date,
the data has not been correctly mapped in the system and actual status of compliance
in Software Assets has been a challenge on the Data Center Assets.
8. Stability of Vendor Personnel / Important Positions: In the first 2 Years all the
important positions saw change of vendor personnel with every new individual bringing
new vision and were focused on bridging the gaps left by earlier individual.
9. WHAT COULD HAVE BEEN BETTER?
The contract was documented considering the following risks & ensured suitable provisions at
the time of unfortunate situations:

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o Complete Transparency on day to day activities performed by vendor.
o Final Decision Making resides with Organization Tower Leads on any change
introduced in the system.
o Flexibility with Organization on Refresh of Infrastructure or Transformational
Activities.
With such well-defined contract, some gaps were observed in the overall construct of the
contract which could have been handled better. Few Areas where a better job could have been
done are as follows:
- Clearly Defined Scope of Important Deliverables like Tools: The contract states few
lines on the tools scope which is broad level requirement. The detailed requirement was
not stated anywhere which could have worked as Traceability Matrix after the
implementation. The need was felt by Organization during the engagement.
- Performance SLA Credits Calculation Methodology: The SLA Document stated the
various SLAs expected on the performance of IT Systems but missed including the
Methodology of calculating the SLA Defaults which became the cause of concern during
the engagement & Organization had to compromise with the softer approach at later
date.
- Broad Scope of Supported Applications: The drafted documents especially list of
applications saw gaps in enlisting all the applications which are critical and should be
monitored for all SLAs. Instead a broad level application is available where many are not
even critical ones.
- SLA Data Availability: All KPIs given to vendor for SLA Monitoring were not backed up by
historical data monitored by Organization. The challenges in monitoring the same KPIs
would have been exposed earlier if they were monitored by Organization before by
their teams. This would have helped in drafting the realistic KPIs during contracting.
- Asset Management Scoping: The expectations stated in the contracts could have been
more detailed to define the clear expectations and the approach needed to manage
assets. The statements in the contract are open ended & doesn’t state the specific
requirements from this deliverable.
- Outsourcing Compliance: It was important to analyze much deeper on whether
outsourcing compliance was a good idea? The compliance brings out the gaps which will
eventually bring more work for vendor eventually and hence outsourcing the same
function was justified.
- Clear Project Management Deliverables: The contract doesn’t state the specific
deliverables required for managing new projects & the metrics / approach required for
the success of the project. The area was left open in good faith that vendor being a
leader in IT will bring best practices in Project Management in their approach.
- Better Scope of Work: During the engagement, lots of areas were discovered within
SOW that were required to be detailed out with multiple discussions as specific
deliverables were missing in these areas. We could have done a better job in scoping the
deliverables.
- Relying of SLA vs. T&M Model: A Better job could have been done with more analysis
on scenarios that involved meeting SLAs while bringing fewer resources on the ground
which will affect the experience by end user while the SLAs will meet the target.
- ARC/RRC Model Feasibility & Approach: The scope & feasibility of ARC/RRC
Achievability was left on vendor & Contract with limited analysis done on actual
scenarios and feasibility of the same on the overall payouts to the vendor.

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- Proof of Concepts of Technology: The better approach would have been to have POC
Conducted during Due Diligence Period of all Technology / Tools that would have
exposed the gaps & how effectively they would fit in Organization Environment. The
model of accepting the big products during contracting in good faith and with
assumption that they will suffice for all requirements was a big lesson learned by
Organization.
- Quality of Resources & Processes: The better approach would have been to include the
expectations from resources allocated on Organization Project in terms of Minimum
Qualifications, Work Experience, Authority in vendor Organization etc. & the minimum
quality levels expected from the team on the ground. The metrics for quality assestment
could have stated for processes & resources.
- Changes in Governance Structure: The contract doesn’t state any clause for changes
that can be brought to Governance Hierarchy / Level of Personnel expected in the
various committees in terms of authority, reporting level within vendor etc. for decision
making & issue resolution.
- Staggered SOW: It might be a good idea to have staggered SOW with clear deliverables
defined in phases rather than relying of vendor to deliver everything during Transition
Phase where the team struggled a lot and major challenges were seen. This could have
given teams at both sides to implement & measure the outcome & quality of
deliverables in much better manner.
10. TERMINATION
The agreement also allows multiple scenarios for termination of this engagement and can be
exercised by either party i.e. vendor or Organization in the event of failure or delay to deliver,
impose introduced by regulatory policies, change in control, force majeure OR convenience.

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About the Author
Mr. Lokesh Grover has over 14 years of experience in the area of Project Management &
Program Management Office (PMO) and have worked with big names in the Industry like
IBM, Barclays, etc. & was the key team member in the outsourcing process of the company
to well-known technology partner. He runs his own consulting firm now in UAE & can be
contacted as below for feedbacks/ suggestions on this e-book or other consulting
assignments:
Email : lgrover@ensourcedigital.com
Website: www.ensourcedigital.com