Understanding transition performance during offshore IT outsourcing

Purpose – Within an IT outsourcing relationship, transition represents a critical and complex phase that starts immediately after contract signing. Transition involves handing over outsourced activities from client firm to service provider firm and accompanies a new way of operating. The purpose of this paper is to determine and detail factors influencing the performance of transition phase within global IT outsourcing relationships. Design/methodology/approach – In this paper, the authors present a framework for transition performance that includes four factors: transition planning, knowledge transfer, transition governance and retained organization. This framework is tested and enriched by utilizing a single, in-depth case study involving over 25 interviews with a global offshore IT outsourcing engagement. Findings – It was found that knowledge transfer and transition governance are more critical factors than transition planning and retained organization for transition performance. This was due mainly to two reasons: the critical challenges faced, within the scope of these factors, had higher potential to disrupt transition; and both these factors and their related issues required a significant joint and coordinated effort from client and service provider firms, thereby, making implementation challenging for transition. Originality/value – Practitioners have suggested that over two-thirds of failed outsourcing relationships are due to transition-related challenges. This paper represents one of the first in-depth studies that provides insights from a real-life global outsourcing engagement, which contributes to and complements existing literature on IT outsourcing by providing a greater understanding of transition. Furthermore, it provides practitioners with insights and best practices that can be used to guide transitions in real-life engagements.