[box type=”shadow” ]The success of the outsourcing model much depends on the ability to plan and execute an effective transition. This could be two-fold – transition from the outsourcing seeker to the outsourcing provider or transition from one outsourcing provider to another. What does happen in most outsourcing transition cases in India? What are the issues that surface and could these be prevented? Clean India Journal explores[/box]
Transferring processes to an external service provider is complex, as it involves transitioning the entire maintenance operations and requires due diligence in matters pertaining to documentation, planning, defining of roles, communication flow, evaluation process, knowledge transfer and other processes.
‘Having a transition plan is important because changing from one service provider to another, or transitioning from internally provided services to an outsourced contract, can be overwhelming due to the number of details, the expense, and sometimes emotional process. Unfortunately, many transitions fail. That can leave the owner and facility manager in an undesirable relationship for years, while a service provider can discover it has committed to a contract that could damage it financially and possibly harm its professional reputation.
In either case of transition, “sustainable and productive partnership needs a mutually beneficial and respectable relationship between the outsourcing seeker (client) and the outsourcing provider (facility service provider-FSP)”, says Jolly Kochery, Chief Executive Officer, Blue Bells Facility Services Pvt. Ltd.
Transition from the client to the FSP
In India, the very foundation of outsourcing has been based on a faulty model of L1 (lowest bidder). While the basic expectations from the FSP are put on paper, the cost of engaging them depends on the bargaining power of both the client and the FSP. Many fall out in the process and the contract is awarded to the lowest bidder, who in the pursuit to bag the deal, compromises on quality, delivery, standards and malpractices to meet ends.
The client requirements and the FSP selected to fulfil these requirements do not match. “Right from the salary and other costs are cut to the bone and the FSP merely becomes a manpower supplier. This is the bane of this industry in India. The good and ethical players do not get fair playing field. The L1 cannot invest in training; they pay nothing more than unskilled minimum wages. However, the client expects them to provide quality services. Is this really outsourcing? The best results are obtained when one moves from Input based contract to Output based contract,” says Jolly.
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Right from the salary and other costs are cut to the bone and the FSP merely becomes a manpower supplier. This is the bane of this industry in India
– Jolly Kochery
Hence, in the long run, due to faulty transition, the contract fails. “Failure occurs because both parties do not do the necessary due diligence and just hope for the best. In the end, there is finger pointing when in reality it was perhaps just a combination of several things, including lack of coordination between procurement and the business unit, weak program scope or lack of due diligence in understanding full client expectations.
At the time of signing the contract, “it is imperative that the client declare expectations regarding service levels. Additionally, this is the time when both management metrics and key performance indicators (KPIs) should be determined to allow the bidders to fully understand how their performance will be measured. In the actual transition stage, the KPIs will help in developing an effective operational plan. Some examples of typical KPIs include: operating budget to actual performance variance, preventive maintenance (PM) compliance, response time compliance, and preventive-to-corrective maintenance ratio. Often a balanced scorecard of management metrics and KPIs linked to the organization’s strategy leads to successful long-term performance”.