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MIS Quarterly Executive Vol. 8 No. 3 / Sep 2009 123 2009 University of Minnesota

Overcoming Knowledge-Transfer Barriers in Infrastructure Management Outsourcing

OvercOming KnOwledge-Transfer

Barriersin infrasTrucTure managemenT

OuTsOurcing: lessOnsfrOma case sTudy1

Stephen HawkUniversity of

Wisconsin-Parkside

(U.S.)

Weijun Zheng

University of

Wisconsin-Parkside

(U.S.)

Robert W. Zmud

University of

Oklahoma (U.S.)

MISQUarterlyExecutive

Executive Summary

This article describes how a global rm (JohnsonDiversey, Inc. - JDI) and an offshore

Indian IT service provider (Wipro Technologies) successfully overcame the knowledge-

transfer barriers associated with infrastructure management (IM) outsourcing. Case study

evidence is used to describe how these two rms worked together to transfer responsibility

for managing JDIs entire infrastructure to Wipro using a global delivery model. The

article describes the specic knowledge-transfer challenges encountered and the solutions

used to overcome them during a three-phase migration plan. It concludes with important

lessons learned about pre-contract and post-contract activities that other organizations

can apply to increase the likelihood that IM offshore outsourcing will be successful.2

GROWING POTENTIAL FOR OFFSHOREOUTSOURCING OF INFRASTRUCTURE

MANAGEMENT

The globalization of IT services, as evidenced by the sustained growth of offshore IT

service providers, continues to thrive. Using new but rapidly maturing infrastructure

technologies, IT executives can exploit the lower costs associated with offshore

services while still enhancing their technological capabilities.

The experiences and knowledge gained since the early 1990s have led to the

emergence of relatively mature business models and practices for outsourcing

application development, both onshore and offshore. However, a similar set of proven

business models and practices for outsourcing infrastructure management (IM)has yet to be broadly disseminated. Figure 1 highlights some of the differences that

distinguish the outsourcing of application development from IM. Recently, however,

some Indian providers that had previously gained little traction beyond the remote

monitoring of servers and networks have been extending their markets into broader

IM outsourcing engagements that used to be the territory of domestic IM service

providers. NASSCOM, in conjunction with McKinsey & Company, estimated that

three-quarters of all IM activities could be outsourced offshore, creating a $26 billion

to $28 billion revenue opportunity by 2013, half of which might be captured by Indian

companies.3

This article focuses on the knowledge-transfer challenges associated with IM

outsourcing. We begin by providing an overview of knowledge-transfer conceptsrelevant to IM outsourcing in general and then describing the importance of

knowledge transfer for the evolving global delivery model for IM outsourcing.

1 Carol Brown is the accepting Senior Editor for this article.

2 This research was supported by a grant from the Sloan Foundation. We also acknowledge the helpful

feedback provided by Phil Zweig on an earlier draft of this paper.

3 Extending Indias Leadership of the Global IT and BPO Industries, a report by NASSCOM and McKinsey

& Company, available at www.Nasscom.org, 2005. Chinas offshore IT services industry has also been growing

rapidly, although most of the services provided there are not in infrastructure management. See Carmel, E., Gao,

G., and Zhang, N. The Maturing Chinese Offshore IT Services Industry: It Takes 10 Years to Sharpen a Sword,

MIS Quarterly Executive (7:4), 2008.

MISQE is

Sponsored by


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124 MIS Quarterly Executive Vol. 8 No. 3 / Sep 2009 2009 University of Minnesota

Hawk et al. / Overcoming Knowledge-Transfer Barriers in Infrastructure Management Outsourcing

We then describe the IM outsourcing experiences

of JohnsonDiversey, Inc. (JDI) and its offshore

partner, Wipro Technologies (Wipro). Our research

objective was to provide insights into the knowledge-

transfer barriers associated with IM outsourcing by

showing how JDI transferred IM knowledge from

its employees to Wipros employees. (Appendix A

describes the methodology followed in gathering the

case data.) Finally, we summarize the lessons learned

from the JDI-Wipro case to identify actions that client

rms can take to increase the likelihood of effective

knowledge transfer to IM service providers.4

KNOWLEDGE TRANSFER AND IM

OUTSOURCING

In outsourcing, knowledge transfer typically refers to

transferring knowledge from the clients employees to

the providers employees. A distinction is commonly

made between explicit and tacit knowledge5 and

the differences in their ease of transfer. Explicit

knowledge has been captured and encoded in writing

or in symbols, both of which facilitate subsequent

transfer. Examples are product specications or

4 Partially based on Beulen, E., Fenema, P. V. and Currie, W. From

Application Outsourcing to Infrastructure Management: Extending

the Offshore Outsourcing Service Portfolio, European Management

Journal(23:2), 2005.

5 See, for example, Sterol, M. and Frey, B. S. Motivation,

Knowledge Transfer, and Organizational Forms, Organization Science

(11:5), 2000, pp. 538-550; and Slaughter, S. A. and Kirsch, L. J. The

Effectiveness of Knowledge Transfer Portfolios in Software Process

Improvement: A Field Study, Information Systems Research (17:3),

2006, pp. 301-320.

formalized procedures that have been captured in the

form of text, tables, and diagrams. Tacit knowledge

is much more amorphous, as it is embedded within

an individuals mind and is hard to express, if at all,

in written or symbolic form without considerable

information loss. Tacit knowledge may concern how

to do something (e.g., how to diagnose a network

fault) or provide the contextual underpinnings for

carrying out a task.

In addition, recent research has suggested a third

type of knowledge: implicit knowledge, which lies

between explicit and tacit knowledge.6 Implicit

knowledge is not currently declarative like explicit

knowledge but, unlike tacit knowledge, could be

made explicit. For example, instructions on how to

perform a task may not describe every detail and

contingency that might arise in performing the task

but are nevertheless understood by those who are

experienced in carrying out similar tasks. If needed,

written instructions could be expanded to document

this implicit knowledge.

Knowledge transfer for IM outsourcing requires both

in-depth, specialized knowledge of each technologytower as well as extensive systematic knowledge

of the clients infrastructure. The provider needs

an understanding of the historical evolution of the

rms infrastructure and the geographical, physical,

and logical relationships between infrastructure

6 Leonardi, P. M. and Bailey, D. E. Transformational Technologies

and the Creation of New Work Practices: Making Implicit Knowledge

Explicit in Task-based Offshoring, MIS Quarterly (32:2), 2008, pp.

411-436.

Figure 1: Application Development Versus Infrastructure Management Outsourcing4

Characteristic Application Development Infrastructure Management

IT activities Designing, acquiring, building, enhancing,

and maintaining information systems

applications.

Designing, acquiring, building, enhancing,

maintaining, and administrating the

technology towers* that form a rms IT

infrastructure.

Type of service Project-based; typically no more than

12-month contracts for new development.

Continuous services; typically, at least

36-month contracts.

Performance

metrics

Quality of project deliverables, time

schedule, and cost performance.

Costs and service levels continuously

measured.

Need for onsite

presence

Dependent on taske.g., requirements

gathering, installation, or maintenance.

Onsite for tasks that require hands

and eyes for problem diagnosis and

resolution.

Need for security Limited to development environment. Broadly concerned with controlling access

to physical devices, data, and operating

environments.

*Technology towers typically include data center operations, server administration, network and telecommunication services, desktop support, and

help desk services.


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2009 University of Minnesota MIS Quarterly Executive Vol. 8 No. 3 / Sep 2009 125


components. IM therefore requires expertise both

within and across the technology towers. Generally,

within tower knowledge tends to be more explicit in

character than across tower knowledge, as training

and detailed instructions can usually be provided for

the former but not the latter.

Much of the knowledge required for effective IM may

exist in the minds of client employees who acquiredtheir own knowledge through years of learning-by-

doing experience. This will make it very difcult for

the outsourcing providers employees to gain insights

into the interconnected components that form the

overall infrastructure and then effectively operate

and manage it. As a result, the amount of knowledge

that has to be transferred can be much greater than

expected. Client employees may have to prepare and

communicate much more extensive explanations

of why things happen than originally anticipated,

leading to delays in getting the providers employees

up-to-speed and greater up-front costs.

Transferring knowledge from client employees to the

providers employees can be accomplished through

a variety of means, such as training, observation,

written procedures, oral presentations, replicating

routines, and staging opportunities for client and

provider employees to interact. Such knowledge-

transfer mechanisms can be grouped into two

fundamental categories: 1) transferring directions

and 2) transferring routines.7 The former involves

encoding knowledge into explicit rules and procedures

that are then explicitly communicated. The latter

refers to the use of mechanisms that accomplishknowledge transfer without explicit communication

e.g., observing experts in their work, imitating the best

practices of others, and jointly accomplishing a task.

Given the inevitable information loss that

accompanies making rules and procedures explicit,

routine knowledge-transfer mechanisms have the

advantage of economizing on communication

and a greater capacity to vary responses to a broad

range of circumstances. 8 relative to direction

knowledge-transfer mechanisms. Further, transferring

knowledge often entails a series of events thatcomprise a portfolio of knowledge-transfer

mechanisms, with the composition of any specic

portfolio tied to the nature (i.e., explicit vs. implicit vs.

tacit) of the knowledge being transferred.9

7 Slaughter, S. A. and Kirsch, L. J., op. cit., 2006.

8 Grant, R. M. Prospering in Dynamically-competitive

Environments: Organizational Capability as Knowledge Integration,

Organization Science (7:4), 1996, p. 379.

9 Slaughter, S. J. and Kirsch, L. J., op. cit., 2006; Leonardi, P. M., and

Bailey, D. E., op. cit., 2008.

EFFECTIVE KNOWLEDGE

TRANSFER IS CRUCIAL FOR

THE IM OUTSOURCING GLOBAL

DELIVERY MODEL

While IM outsourcing is one of the oldest forms of

IT outsourcing, until recently, the vast majority of

such arrangements have involved domestic serviceprovidersdespite the potential for large arbitrage

and time zone advantages10 associated with offshore

outsourcing. There are two reasons for a rms

hesitancy to engage with an offshore provider for IM

outsourcing:

1. The need for an onsite presence.

2. The need for effective transfer of knowledge

about the intricacies of a rms infrastructure

and its management from the clients

onsite employees to the providers offshore

employees.

A providers knowledge-transfer capabilities and

ability to integrate the knowledge of a globally

distributed service delivery team affects the speed and

degree to which onsite stafng costs can be reduced.

The knowledge-transfer barrier has intensied

with the IM outsourcing business models that

have emerged since 2004. With the traditional

IM outsourcing business model, the provider

initially handled most work activities using onsite

personnel and then, gradually, increased the use of

remote services. In executing this business model,the provider often hired many of the clients IM

employees.11 Eventually, as the provider grew to better

understand the clients infrastructure, and as cost

savings and service improvements accrued, up to 80%

of the IM work was eventually done off-site (onshore

or offshore) if the vendor and client chose to do so.

10 By 2003, the vast majority of comprehensive IM engagements

were taken on by domestic providers that would often provide some

services from remote delivery centers, usually located in the same

region or continent as the customer. See Moore, S. and Rankine, C.Offshore Outsourcing Options for IT Infrastructure Support: What

You Need to Know, in Giga Research Report, 2003. For descriptions

of advantages of IM offshoring, see Saia, R. Outsourcing IT

Infrastructure: The Productivity Payoff, in Aberdeen Group Report,

2007; and Carmel, E. and Tjia, P. Offshoring Information Technology:

Sourcing and Outsourcing to a Global Workforce, Cambridge

University Press, 2005.

11 This model is described in Moore, S. and Rankine, C., op.

cit., 2003. For examples of domestic providers hiring of clients

IM employees, see Overby, S. Outsourcing: The Pros and Cons

of Offshore Remote Infrastructure Management, www.cio.com/

article/198450/Outsourcing_The_Pros_and_Cons_of_Offshore_

Remote_Infrastructure_Management, March 18, 2008.


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Today, the IM outsourcing business model emerging

with both domestic and offshore providers is a global

delivery model.12 With this model, the use of offshore

resources is maximized as soon as possible.13 Not only

does the global delivery model reduce the need to

absorb the clients employees but, where successful, it

dramatically enhances the value proposition for both

the client and the provider.

However, for the global delivery model to work to

its maximum potential, the provider and client must

swiftly overcome the knowledge-transfer barrier. The

provider has to rapidly learn and apply the knowledge

that the client rm has accumulated over several

years. The global delivery model is used by Indian

providers, and major domestic IM providers are now

using it to supplement the traditional IM outsourcing

model, typically offering their customers the option

of using either domestic or offshore facilities, or a

combination of both. As of 2007, Forrester Research

had identied 19 providers using the global delivery

model for IM outsourcing, all of which were either

domestic providers from North America or the

European Union, or IT providers from India.14

The dangers of insufcient knowledge transfer prior

to taking over IM responsibilities using a global

delivery model by both domestic and offshore

providers are twofold. First, without sufcient

knowledge, productivity and service levels will

suffer considerably. Second, the client will lose

much of its organizational memory of how to

manage its infrastructure if, as is common in offshore

arrangements, client employees are let go. Not onlydoes the global delivery model place much more

stringent demands on the knowledge-transfer process

than the traditional domestic model, but failures in

arrangements using the global model can have serious

consequences for both the client and the provider.

In the case described below, an offshore provider

(Wipro) worked with a domestic client (JDI) to

successfully cope with the challenges of transferring

knowledge from the clients employees to the provider

employees.

12 The global delivery model involves the use of onsite employees

and multiple offshore delivery centers across the globe. A service

provider using this model need not own all the offshore delivery

centers, but can use the resources of partners located around the globe.

13 Beulen, E., Fenema, P. V. and Currie, W., op. cit., 2005, p. 11.

14 Roerig, P. The Forrester Wave: Global IT Infrastructure, Q2,

2007, Forrester Research, Inc., June 2007.

DESCRIPTION OF THE CLIENT

AND OFFSHORE IM PROVIDER

In our case study, the two major players were Wipro

Technologies and JohnsonDiversey, Inc. (JDI).

Wipro Technologies

Wipro Technologies began in 1980 as a computermanufacturer and an IT services rm within Wipro

Limited, and initially concentrated on selling

computers and providing application development

and IM services to the domestic Indian market. Wipro

has been the leading provider of IM services to Indian

customers since the early 1980s and is now one of

the leading Indian providers of offshore IM services.

Headquartered in Bangalore, Wipro is currently

the third largest IT services company in India. As

of Dec. 31, 2008, it had over 99,000 employees and

53 delivery centers across the globe. Wipro derives

approximately 8% of its global revenue from IM-related services and, early on, obtained ISO 2000 and

BS15000 certication for IT services management to

be positioned for IM growth.

Until recently, Wipros primary business model for

supporting end-to-end IM services contracts was to

locate its employees onsite at the customers premises.

But since about 2004, it has aggressively adopted

a global delivery model strategy for delivering

IM services. Now, most IM services are provided

from three dedicated remote IM facilities (Global

Command Centers) in Bangalore, Chennai, and Pune

using a robust global IM services delivery platform.

JohnsonDiversey, Inc.

JDI has its origins in SC Johnson & Son, Inc. Founded

in Racine, Wisconsin in 1886, SC Johnson began by

selling wood ooring but soon sold paste wax to its

wood ooring customers and has since expanded into

numerous product lines. Today, it provides leading

brands in areas such as home cleaning, home storage,

and personal care products. Initially, JDI was a

service products division within SC Johnson, selling

commercial cleaning products. It separated from SCJohnson in 1999 to become Johnson Wax Professional

and, in 2002, acquired DiverseyLever from Unilever

Corporation to become JohnsonDiversey, Inc. With

this acquisition, JDI became the second largest rm

worldwide in the commercial cleaning products

business. The rms current revenues are about $3

billion, and its 13,000 employees operate out of 300

locations in 68 countries.


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Prior to being acquired, DiverseyLever had a

decentralized IT organization with a proliferation

of applications. Johnson Wax Professional had a

more centralized and standardized approach to IT

management. Soon after the acquisition, JDI began

consolidating the DiverseyLever IT organization into

the Johnson Wax Professional (now, JDI) architecture.

However, JDI faced a serious nancial problem in2005a combination of the debt incurred to fund the

acquisition and the doubling of crude oil prices. Under

heavy pressure to reduce costs, the IT organization

was charged with reducing its budget from 4.3% of

revenue to an industry average 2.5%, with 60% of

the savings expected to come from IM and the other

40% from application development. This translated to

a targeted annual reduction goal of $29 million from

savings in the IM area.

After exploring its options, the consolidated JDI

IT organization chose outsourcing as the strategy

for meeting cost reduction goals in both IM andapplication development. In both areas, only

architecture planning, project management, and

user liaison functions would remain within the IT

organization. While cost reduction was a primary

driver for this decision, other important goals

included improving service levels, where possible,

and reorienting the IT organization to focusing on

identifying business opportunities and resolving

business problems. Although JDI had engaged in

IM outsourcing via onsite contractors and had a

limited offshore outsourcing arrangement (for remote

network and server monitoring), this (almost) total IMoutsourcing initiative was a major departure for the

rm.

At the beginning of the Wipro engagement, JDI

operated two major data centers (Sturtevant,

Wisconsin and London, England) supporting

enterprise (ERP) applications for 54 countries. The

remaining 14 countries are in Africa and the Middle

East, and run small local ERP systems. In addition

to hosting ERP applications, JDIs infrastructure

supports IT operations in 31 manufacturing facilities,

105 warehouses, and approximately 160 sales ofces.

PREPARING TO OUTSOURCE IM

ACTIVITIES TO WIPRO

While carrying out a provider selection process

and negotiating a set of service-level agreements

(SLAs) with the selected providerWiproJDI

continued to rationalize its IT infrastructure assets

and IM processes. This initiative had begun after the

DiverseyLever acquisition and continued into the

transitioning of IM responsibilities to Wipro.

Rationalizing Infrastructure Assets and

IM Processes

JDI had begun to rationalize its infrastructure assets

and IM processes prior to the crisis that led to theoutsourcing agreement with Wipro. Although these

efforts were undertaken to reduce infrastructure

complexity and cost, they paid extra dividends

once the IM transition to Wipro was underway. JDI

categorized, documented, and rationalized all of

its IT assets and IM processese.g., infrastructure

technologies and IM policies and procedures were

standardized with the objective of reducing them

to a relatively small set of standard components and

practices.

A key step was to segment infrastructure assets into

six classes of sites, with each class differentiated

according to hardware conguration, support

requirements, and performance metrics (see Figure 2).

The two main data centers, which required the highest

level of reliability, were congured with the highest

component redundancy and were provided with the

highest level of onsite support. At the other end of the

spectrum, class E sites (sales ofces with ve or fewer

users) were provided with an Internet-based virtual

private network (VPN), no onsite support, and no

guaranteed reliability or performance metrics.

This rationalization effort proved much more difcultthan expected.15 DiverseyLever used SAP as its core

ERP system, while Johnson Wax Professional used

JD Edwards. JDI estimated that, just in Europe,

there were 900 miscellaneous applications that

were undocumented at the enterprise level and that

depended on local support. Moreover, some of these

applications were hosted or developed by third parties

that no longer existed.

While this initiative to rationalize infrastructure

assets and IM processes was far from complete when

JDI began to seek IT service providers to take on itsIM activities, both JDI and Wipro were able to reap

the benets of the progress that had been made. The

component and process standardization that had

15 An overview of the challenges of post-merger information system

integration is provided in McKiernan, P. and Merali, Y. Integrating

information systems after a merger, Long Range Planning (28: 4),

1995, pp. 4-5. Lessons learned from a successful integration are

provided in Brown, C., Clancy, G., and Scholer, R. A Post-Merger IT

Integration Success Story: Sallie Mae,MIS Quarterly Executive (2:1),

2003, pp. 15-27.


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already been carried out had reduced the complexity

of the IM task, correspondingly reducing the amount

of knowledge that had to be transferred to Wipro.

The rationalization of IM processes had also resulted

in much IM knowledge being explicitly codied,

making it easier to transfer this knowledge. Dening

IM processes, together with the segmentation of

sites shown in Figure 2, also proved invaluable in

easing JDIs task of dening service levels for an IM

outsourcing contract based on sound business realities.

A major rationalization step that was planned beforethe Wipro engagement, but not carried out until after

the transition to Wipro, was to close the main data

center in London and consolidate all its work into a

single data center in Sturtevant.

Provider Selection

Following responses to the initial request for proposal

(RFP), eight providers were asked to submit full

proposals. Although JDI didnt exclude the possibility

of sourcing IM and application development to

different providers, the eight nalists had all submitted

proposals for both IM and application development.

Among the preliminary proposals that werent

considered further were a few from providers for

just IM or application development. These providers

wanted to work with other providers to offer the

full range of services sought by JDI. The main

reason these providers werent invited to submit full

proposals is that they didnt provide the same degree

of cost reduction as the eight nalists.

After evaluating the responses, Wipros proposal and

one from a leading U.S. service provider were selected

for further consideration, and JDI began detailed

discussions with them. Both rms then developed nal

proposals for a ve-year outsourcing engagement.

As part of the evaluation process, JDI investigated

the knowledge-transfer processes of both providers,

which provided details of their methodologies,

Figure 2. Six Classes of IT Operations at JDI Sites

Site

Class

Description Confguration* Support Reliability

Goal

Data

Center

Main Data Center Two MPLS WANs

Dual WAN and LAN equipment and circuits

Diverse power to equipment with, battery or

generator backup

24x7x365

On-site

employees

99.95%

A Large Manufacturing

Facility

Two WAN circuits, at least one an MPLS

Separate routers for the WAN circuits

Diverse power to equipment, with battery or

generator backup

24x7x365

On-site

employees

99.9%

B Small Manufacturing

Facility/

Multifunction Ofce

Two WAN circuits, at least one an MPLS

Single router for the WAN circuits

Battery backup

24x7x365

On-site

employees

99.6%

C Large Sales Ofce Single MPLS WAN

Single router

Battery backup

8x5 98.6%

D Medium Sales Ofce VPN for WAN connectivity

Single router

8x5 95%

E Small Sales Ofce Internet VPN client on PCs 8x5 Best effort

*Sites are connected to each other using MPLS (Multiprotocol Label Switching)a proprietary WAN provided by MCI that provides secure,

high-capacity VPN services globally with quality of service guaranteesor via an Internet-based VPN. Specic sites have MPLS or Internet VPN

connectivity, or both.


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processes, tools, and timelines for accomplishing

knowledge transfer. JDI also carried out due diligence

by talking with customers of both providers. While the

two proposals were comparable in terms of service

delivery and use of offshore delivery resources,

Wipros projections of greater cost savings for JDI

resulted in it being selected. (Wipro was also selected

as JDIs application development partner.16)

JDI would retain responsibility for IM planning and

oversight. Responsibilities for managing servers

and PCs, along with all networking connections

and devices, would be transferred to Wipro. While

Wipro would be responsible for desktop support and

operating a help desk, most of these activities would

be carried out by a subcontractor already possessing

the capability to provide onsite support in the 68

countries and the several languages used globally

within JDI. Wipro had neither the subcontractors

geographic reach nor its ability to support all the

needed languages.

While Wipro would meet the onsite presence needs

at JDIs major data centers with its own personnel,

responsibility for providing an onsite presence at

smaller data centers and sales ofces would lie with

the subcontractor providing desktop support and the

help desk. In all cases, these onsite personnel would

be expected to resolve problems via a smart hands

capability under the guidance of offshore Wipro

technicians. Smart hands refers to the use of onsite

employees who are knowledgeable enough to visually

inspect a device and replace a part in it by following

instructions but who typically lack the in-depthexpertise of the offshore technicians.

Developing Service-Level Agreements

JDI and Wipro developed SLAs with monthly,

quarterly, and annual service level targets, including

penalties to be paid by Wipro when targets were not

met. Wipro was given a 90-day grace period once

it took over responsibility for a specic IM area,

after which, it was accountable for the negotiated

performance metrics. The beginning dates for Wipro

to take over specic IM activities were heavilyinuenced by initial estimates of the amount of time

needed to transfer the required knowledge from JDI

employees to Wipros employees.

16 We had expected there could be interactions from having a

single provider taking on JDIs IM and application development at the

same time that could make it difcult to separate IM and application

development issues from each other. But, as explained in Appendix A,

this turned out not to be so.

In addition to these negotiated SLA targets, JDI

developed internal surveys to provide qualitative

metrics to complement the quantitative SLA

performance metrics. These surveys were used

monthly to assess its employees (primarily business

users) satisfaction with Wipros services. JDI used

the survey results twice a year to evaluate Wipros

performance, with Wipro being held accountable for

meeting agreed-on user satisfaction targets.

THREE-PHASE APPROACH TO

TRANSFERRING KNOWLEDGE

FROM JDI TO WIPRO

The knowledge-transfer process used by Wipro

to acquire the knowledge needed to manage JDIs

infrastructure comprised three phases: preparing for

knowledge transfer, transferring the knowledge, and

transferring IM responsibility and integrating the

knowledge across Wipro. These three phases closelymatch the three-phase approach recommended by

Chua and Pan17 for transferring knowledge in IT

offshoring:

1. Initiation and planning, where the knowledge

to be transferred is identied.

2. Ramp up, where most knowledge transfer

occurs.

3. Integration, where actions are taken to ensure

that sufcient knowledge has been absorbed by

the providers employees.

In this model, knowledge is rst transferred from

client employees to a select group of the providers

employees who are sent to client locations for

this purpose. This select group then passes on the

knowledge to the providers offshore employees.

Since the select group of onsite employees tend to

be more senior and have more onshore experiences,

they have better language skills, greater sensitivity

to cultural differences, and more knowledge of the

clients technology and markets. They are therefore in

a better position to assimilate the clients knowledge

than offshore employees. The select group ofonshore employees then does much of the work

of communicating the knowledge to their offshore

17 Chua, A. L. and Pan, S. L. Knowledge Transfer and

Organizational Learning in IS Offshore Sourcing, OMEGA (36), 2008,

pp. 267-281.


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colleagues.18 This two-step knowledge-transfer

process helps to minimize problems from language

and cultural differences that may arise in offshore

engagements.

IM responsibilities for JDI sites were transitioned to

Wipro over time, with all three knowledge-transfer

phases undertaken as each site was transitioned. The

rst site to be transitioned was the global data centerin Sturtevant in late 2006, followed by the second

major data center in London. These were followed by

the smaller sites with the last transfer of responsibility

to Wipro being completed in late 2007. Site transition

processes took from six weeks to six months for the

main data centers and class A and B sites, one to two

weeks for class C and D sites, and very short time

periods for class E sites.

Phase 1: Preparing for Knowledge

Transfer

During this phase, Wipro and JDI identied the

knowledge that needed to be transferred and planned

the transfer process. Early on, JDI encoded its IM

knowledge using the templates supplied with Wipros

knowledge-transfer methodology, which had been

developed over time by Wipro from experiences

gained from prior client engagements. The Phase

1 effort started with knowledge about JDIs two

major data centers and enterprise applications, and

then shifted to regional and local technology towers.

However, in identifying the knowledge elements that

needed to be transferred, issues of context constantly

arosee.g., Why is this server so important?and Why is this server located here? Both rms

soon recognized that a much broader, richer view

of context needed to be incorporated into the

knowledge-transfer process. JDI and Wipro jointly

developed enhancements to Wipros knowledge-

transfer methodology so that enriched context could

be incorporated, and then applied the enhanced

methodology.

Phase 2: Transferring the Knowledge

Actual knowledge transfer involved three steps:knowledge acquisition, client-led shadow, and vendor-

led shadow. At the conclusion of the vendor-led

18 For an example of two-step knowledge transfer, see Oshri, I.,

Kotlarsky, J., and Willcocks, L. Managing Dispersed Expertise in

IT Offshore Outsourcing: Lessons from Tata Consultancy Services,

MIS Quarterly Executive (6:2), 2007, pp. 53-65. Leonardi, P. M. and

Baily, D. E., op. cit., 2008, discuss the role of more experienced on-site

employees in translating between the language and knowledge of the

client, and the detailed instructions needed by offshore employees.

shadow step, Wipro personnel were considered ready

to assume responsibility for supporting a JDI site.

Knowledge Acquisition Step. This step lasted from

less than a week to a couple of months, depending on

the breadth of IM activity and number of people at a

site. Knowledge acquisition was achieved through

multiple learning approaches involving documenting

assets and processes as specied in Wiprosknowledge-transfer methodology as well as the use

of videos, system demonstrations, hands-on-access,

and interpersonal knowledge sharing. Generally, these

knowledge acquisition activities engaged onsite Wipro

employees, with the knowledge presented to them

being played back to JDI employees so they could

validate what had been learned. Once validated, the

onsite Wipro employees shared the knowledge with

their offshore teams.

Client-led Shadow Step. In this second step,

Wipro employees worked side-by-side (onsite or

remotely) with JDI employees performing specicIM tasks. The Wipro employees role was to observe

what the JDI employee did, with the JDI employee

responding to questions and making sure that the

Wipro employee understood what was being done.

To ensure that a wide variety of issues and situations

were experienced, simulated scenarios were played

out along with day-to-day work activities. Once Wipro

employees had observed a sufcient variety of issues

and situations and appeared to understand how to

resolve these, the vendor-led shadow step began.

Vendor-led Shadow Step. The third and nal step intransferring knowledge involved Wipro employees in

leading IM activities, with JDI employees monitoring

what the Wipro employees did and assisting when

necessary. Normally, the JDI employee would step in

only when skill gaps were recognized. This step was

considered completed when Wipro employees were

able to handle IM activities well enough to meet SLA

targets.

In practice, the vendor-led and client-led shadow

steps often overlapped at a given site, with some

IM activities being in the client-led shadow step,while others had already progressed to the vendor-

led shadow step. Together, these steps lasted about

four to six weeks for most class A, B, C, and D sites,

although they took up to three or four months in a few

instances. The three steps were accomplished much

more quickly at class E sites.


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Phase 3: Transferring IM Responsibility

and Integrating the Knowledge Across

Wipro

The last phase involved transferring IM responsibility

to Wipro and integrating the knowledge gained about

an IM activity or a site across all relevant Wipro

personnel and departments. During this phase, Wipro

used the knowledge it had gained to integrate JDI

work routines with its work systems and both to

optimize its service efforts and to minimize onsite

employee requirements. It was thus able to move to

offshore provisioning of remote IM services to the

fullest extent possible, as quickly as possible.

Challenges Faced During Phase 3. Several

challenges arose during the process of transferring

work and integrating IM knowledge across Wipro.

The most signicant were:

Difculty in resolving complex problems.

Inadequate preparation for impending changes

of IT employees retained by JDI and business

users.

Delays encountered during the transition

process.

Difculty in Resolving Complex Problems.

Although there are technical solutions for resolving

infrastructure problems remotely,19 there are complex

problems that require the collaboration of experts. At

rst, Wipro had some difculty in resolving complex

IM problems that involved multiple towers. Wipro

handled such a problem by giving it to the tower

specialist who appeared best suited to solve it, and

would then pass the problem on to a different tower

specialist if the rst one was unable to resolve it.

Unfortunately, this sequential, tower-centric approach

too often resulted in signicant delays in resolving

problems. Wipro subsequently modied its approach

to resolving problems identied as complex: for these

problems, the process began with a virtual meeting. As

described by the former server tower lead:

[There were many] people on the callwhich

might be all the tower [specialists] involved.As soon as a specialist gures out it is not his

issue, he can leave. Its all done together, and

within 15 minutes, we can quickly get down to

the two people that will be able to solve the

problem.

19 Appendix B provides an illustration of how offshore

administration was used by Wipro and JDI.

While not all problems are complex, the frequency

with which such problems arise in IM makes this an

important issue. As the former JDI network tower lead

noted:

when it came to the more complex

problems, the guys that really understood how

things are put together and could analyze the

situation were all sitting here [in Sturtevant].

The reason why its good to have experts hereis they can talk to each other. ... If you dont

have that exchange of information between the

teams, it takes a lot longer to solve because

they just pass it around, and it takes a lot

longer to identify the problem.

The use of virtual teams by Wipro served a purpose

similar to the more informal approach JDI had used

for solving complex, cross-tower problems prior to

outsourcing IM. Once Wipro had adopted this type of

collaborative approach20 for problem resolution, JDI

observed signicant improvements in service quality.

Inadequate preparation of JDIs IT employees

retained by JDI and business users. The transfer of IM

responsibilities and knowledge-integration phase was

also a period of organizational transformation for JDI.

As Wipro assumed responsibility for IM activities at

a site, JDI employees were either transferred to new

roles with other JDI work groups or let go. Retained

IT employees went through a skills and knowledge

rediscovery process so that each employees

knowledge and skills could be best integrated into a

new JDI organization structure and to enable newlycreated value-adding IT roles.

Most of the retained JDI IM managers were tower

leads who used to spend time on routine IM

administration activities as well as on resolving the

more challenging break and x problems. These

managers are now in an IT architecture planning

group, and the former lead for desktop support serves

as the main JDI contact for resolving IM problems

that have escalated up the Wipro hierarchy without

adequate resolution.

20 This solution approximates the process used by Infosys to

overcome time zone differences in application development work.

Infosys has developed a process for holding regular real-time meetings

involving key personnel as an important tactic for overcoming time-

zone differences. Although the meetings between JDI and Wipro

werent regularly scheduled, they served much the same purposeto

get the relevant specialists together and decide what was needed to

resolve a problem. See Carmel, E. Building Your Information Systems

from the Other Side of the World: How Infosys Manages Time Zone

Differences,MIS Quarterly Executive (5:1), 2006, pp. 43-53.


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Retained IM employees were often found to be

insufciently prepared for their new IM roles in

several ways:

For the stress experienced as many coworkers

were let go.

For understanding how their prior IM

responsibilities would be handled once the

transition was complete.

For their new organizational role.

As a result, two IM managers designated to be

retained unexpectedly left JDI, and other retained IM

managers kind of checked outi.e., they were not

sure what their new role was to be and were not happy

with the on-going changes.

Some changes were also viewed negatively by

business userse.g., certain of the negotiated SLAs

actually reduced service levels because of priority/cost

tradeoffs. Also, the changes in how desktop supportwas handled required adjustments by many business

userse.g., rather than simply contacting an onsite

IM employee, a business user had to go through a

more formal procedure involving provider employees

to resolve a problem. As a result of these and similar

issues, some business users became dissatised,

particularly if they had had little input into the change,

and did not fully understand the new work procedures

or SLAs.

After responsibility for the rst few sites had been

transitioned to Wipro, JDI improved the way it

communicated changes to business users. It also

introduced a more proactive change-management

program for business users by forming outsourcing

support groups that included JDI IM managers along

with Wipro and subcontractor representatives.

Delays encountered during the transition process.

Unexpected delays also arose during the transition

process. Many of these delays can be explained

because Wipros bid for the JDI contract used very

general metrics (such as number of servers and PCs,

number of users, and number of application systems).

These metrics were used as the basis for estimatingtransition and support time frames and costs, and

to derive the fee structure. As it turned out, Wipro

and JDI had underestimated the complexity of JDIs

infrastructure and found themselves having to use

far more hands and eyes on the ground for a much

longer period than initially planned. However, JDI

had used the initial schedule to set and communicate

termination dates to IM employees who would not

be retained, and when the transition schedule proved

unrealistic, many of these employees had to be asked

to stay on longer than planned. While JDIs HR

group ran into occasional difculties, most of these

employees were kept on longer (most often through

extra payments). When this was not possible, less

knowledgeable, but available, employees had to be

used.

IMPACT OF THE TRANSITION

ON JDIS IM ORGANIZATION

STRUCTURE

Figure 3 contrasts the organizational structures for

JDIs IM units before and after IM responsibilities

were transitioned to Wipro. Before the transition,

105 employees in Global Infrastructure Services

supported the different technology towers globally

within the two major data centers. The Architecture

and Sourcing group consisted of a single individual. In

addition, there were 11 regional infrastructure groupsemploying a total of 100 employees who were located

worldwide to support local infrastructures. There was

also a program/project management group (not shown

in the gure) that provided leadership to both IM and

application development projects.

The new JDI IM organization structure is not only

leaner but also is much more adapted to JDIs business

needs. Since application development work was

transferred to Wipro between late 2006 and late 2007,

most application development employees were also let

go during the same time frame as this case. The maingroups that remain for supporting IM and application

development are the Architecture and Solution Design

group and the Program and Project Management

group.

After IM responsibilities had been transferred to

Wipro, the Architecture and Solution Design group

comprises just 10 employees, three of whom focus

on IM issues. A Vendor Management group of six

employees was formed to monitor and manage the

work of Wipro and other vendors. Finally, a Program

and Project Management group was established

to provide JDI leadership for IT projects. Of the

25 employees in this group, 18 lead application

development projects and seven lead infrastructure

initiatives. Thus the number of JDI employees

dedicated to IM work has been reduced from 206 to

10 (three in Solutions and Architecture and seven in

Program/Project Management). In addition, the six

employees in Vendor Management work on both IM

and AD engagements.


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Finally, JDI continued its efforts to consolidate and

standardize its infrastructure assets, which began

prior to the nancial crisis and continued during

and after the transition of IM to Wipro. This further

rationalization was crucial to JDIs achievement of IM

cost reductions as well as Wipros ability to provide

JDI with a stream of value-added benets.

After the transition to Wipro was complete, Wipro

initially staffed the JDI account with 150 of its

employees, with 25% onsite and 75% offshore. With

experience and further progress in rationalizing the

infrastructure, Wipro has been able to reduce its

stafng to the current level of 110 employees, with

20% onsite and 80% offshore.

JUDGING THE SUCCESS OF JDIS

IM OFFSHORE OUTSOURCING

STRATEGY

Although challenges arose along the way, JDI

considers its IM offshore outsourcing strategy a

success. The key indicators used to assess the success

of IM outsourcing in the short run were meeting

stipulated cost reduction goals while achieving

service level targets. Once JDI had fully transferred

responsibility for IM to Wipro and reduced internal

IT employee levels to targeted numbers, it was able

to achieve its cost-savings goals. JDIs internal goal

for the new IM strategy was annual cost savings

of $29 million in the IM area. Although this goal

was not achieved as quickly as planned because the

transfer of some IM activities to Wipro took longer

than expected, it was achieved in the rst year post-

transition and is now being exceeded. And, after

taking over responsibility for an area, Wipro metagreed-on service level and customer satisfaction

agreements for all areas at a 95% rate within one

year.21 According to JDIs contract oversight manager:

Wipro came very close to meeting

performance goals within three to six months

in every area, without exception.

Wipro has also continued to make signicant progress

in enhancing service levels and improving JDI IM

productivity, but, as an interviewee stated, cost

savings are not even half the story. Wipro is striving

to create other differentiators by showcasing hiddencosts in managing a technological infrastructure. For

example, previously, JDI did not account for losses in

productivity and revenues due to system downtime.

These losses are now tracked and reported. Also,

since Wipro is able to record and archive every JDI

21 While some service level problems did arise in one country after

the cutover to Wipro, errors in how the incident reporting system closed

tickets during May/June 2007 were discovered. This misreporting

resulted in overstating the reported SLA underperformance.

Figure 3: JDIs Pre- and Post-outsourcing IM Organization Structure


12/18



IM incident within its Global Command Center,

subsequent analyses have allowed Wipro to forecast

and prevent many problems before they occur. As

noted by a JDI employee:

From my view, the most signicant

improvement is the extensive server and job

monitoring that was put in place to identify

issues before they reach users. The Global

Command Center in India has established

parameters for server performance and critical

job monitoring that have proven extremely

benecial in reducing the number of incidents

logged by users, preventing downtime, and

identifying, then either xing or re-running,

jobs critical to the business, that otherwise

would have failed.

LESSONS LEARNED FOR OTHER

ORGANIZATIONS CONSIDERING

IM OFFSHORE OUTSOURCING

Many market forecasters project that IM offshore

outsourcing will grow rapidly as organizations

aggressively seek opportunities to reduce IM costs

and improve IM service levels, and predict that Indian

companies will quickly capture about half of the

offshore market. Other researchers have pointed out

that early U.S. preferences for outsourcing to India

were due to lower language barriers and a history of

closer ties to the Western world.22

Our study supports these predictions: JDI reported

that cultural and language barriers were only minor

22 For example, see McFarlan, F. W. and DeLacey, B. J. Outsourcing

IT: The Global Landscape in 2004, Harvard Business School Note 304-

104.

issues affecting service delivery but not a major

impediment to knowledge transfer. We also found

that Wipro, along with other leading Indian providers,

has well-established programs for familiarizing its

employees with the culture of their clients countryand improving language skills. The relative absence

of problems in the JDI-Wipro case stemming from

cultural and language issues suggests that these

programs have been successful.

As our case description shows, however, the

operational capabilities of vendors are not the only

determinants of IM outsourcing success that should be

assessed. A client company must anticipate and plan

to overcome the knowledge-transfer barriers so the

provider can acquire the required knowledge of its IM

practices and the associated business contexts.

Our examination of the IM offshore outsourcing

partnership between JDI and Wipro provides eight

lessons for organizations considering engaging an

offshore provider to handle some, or most, of their

IM activities. These lessons are summarized in Figure

4. Lessons 1 to 4 focus on pre-contract activities and

Lessons 5 to 8 focus on post-contract activities.

Pre-Contract Activities

Lesson 1: Place a High Priority on Knowledge-

Transfer Planning and Execution. Transferring aclients IM knowledge to the providers employees

is likely to be the criticaland most challenging

activity when the global delivery model is used for

IM outsourcing. Transferring in-depth, specialized

knowledge of each technology tower as well as

extensive systematic knowledge of the clients

infrastructure is complicated and requires extensive

work and careful coordination. Within an offshore

outsourcing context, IM knowledge transfer is likely

Figure 4: Lessons Learned

Pre-contract Activities

Lesson 1: Place a high priority on knowledge-transfer planning and execution.

Lesson 2: Begin rationalizing your infrastructure assets and IM processes as soon as possible.

Lesson 3: Assess the providers knowledge-transfer capabilities as part of the selection process.

Lesson 4: Help potential providers to understand the complexity of your infrastructure as part of the RFP

process.Post-contract Activities

Lesson 5: Apply a visible phased approach for managing knowledge transfer and IM transfer.

Lesson 6: Use synchronous (physical and virtual) meetings to understand complex problems.

Lesson 7: Ensure employees are retained until knowledge has been transferred.

Lesson 8: Prepare both to-be-retained IM employees and business users for the new IM environment.


13/18



to be even more difcult due to greater geographic

and time zone distance as well as greater cultural

diversity across the global delivery team members.23

Fortunately, JDI management foresaw the potential

knowledge-transfer challenges with Wipros global

delivery model and prioritized knowledge-transfer

planning and execution in its IM outsourcing project

management.

Lesson 2: Begin Rationalizing Your Infrastructure

Assets and IM Processes as Soon as Possible.

While the value of rationalizing (i.e., consolidating,

standardizing, and documenting) infrastructure assets

and IM processes is well-recognized,24 rationalization

is extremely advantageous in preparing for a smooth

knowledge-transfer process from the client to

outsourcing provider. Although JDIs initiative to

rationalize its IM infrastructure assets and IM process

had not been completed when the contract with

Wipro was signed, both JDI and Wipro were able to

leverage the work that had been done. Had JDI not

already made considerable progress in rationalizing

its infrastructure assets and IM processes prior to the

Wipro engagement, the entire transition would most

certainly have been more difcult, more expensive,

and taken longer. Subsequent IM rationalization

remained an important priority for both JDI and

Wipro.

Lesson 3: Assess the Providers Knowledge-

Transfer Capabilities as Part of the Selection

Process. A well-developed, disciplined methodology

to drive the knowledge-transfer process is necessary,

especially when the global delivery model is usedfor IM outsourcing. The required knowledge needs

to be transferred to the providers employees as

swiftly and comprehensively as possible for the

global delivery model to succeed to its maximum

potential. It is thus critical that as organizations

solicit bids for IM outsourcing engagements, they

gain a good understanding of the nature and viability

of the providers knowledge-transfer strategy,

methodologies, and supporting tools. In particular, we

strongly emphasize the need for reference checks with

23 See Lam, A. Embedded Firms, Embedded Knowledge: Problems

of Collaboration and Knowledge Transfer in Global Cooperative

Ventures, Organization Studies (18:6), 1997, pp. 973-996. Lam notes

that the dominant form of knowledge held in organizations, its degree

of tacitness, and the way in which it is structured can vary considerably

between rms in different societal settings. The ways in which such

knowledge is used and transmitted have contributed to project failures

and weakened the technological relationship between the partner rms

over time.

24 Ross, J. W., Weill, P., and Robinson, D. Enterprise Architecture

as Strategy: Creating a Foundation for Business Execution, Harvard

Business School Press, Boston, MA, 2006.

prior clients to drill down on the nature and success of

the providers knowledge-transfer processes.

Wipro had developed a comprehensive knowledge-

transfer methodology that was supported by a range

of knowledge-management tools and practicese.g.,

numerous well-dened knowledge-documentation

templates for scripting purposes. A providers

experience in IM outsourcing, particularly withinfrastructures of a similar scope and conguration as

the clients, is also important for effective knowledge

transfer.25 Although Wipro had considerable

experience of outsourcing engagements involving

each of JDIs technology towers, it needed to engage

in signicant learning to support JDIs complex,

globally distributed infrastructure.

To support the evaluation of capabilities in this area,

client rms should develop scorecards that cover

the major issues involved in knowledge transfer. For

example, the scorecards can be used to assess whether

the provider has:

A phased knowledge-transfer process.

A broad variety of data-encoding templates

usable with explicit, implicit, and tacit

knowledge.

A broad variety of knowledge-transfer

techniques.

Methods for transferring knowledge from

its knowledge-transfer teams to its remote/

offshore centers, systems, and staffs.

Extensive prior IM outsourcing experiences,

especially in similar engagements.

Lesson 4: Help Potential Providers to Understand

the Complexity of Your Infrastructure as Part

of the RFP Process. Providers responding to the

initial RFP need to acquire sufcient knowledge

of a prospective clients infrastructure so they

can adequately assess its complexity. In the JDI-

Wipro case, there were some delays in transitioning

IM responsibilities from JDI to Wipro because

the complexity of JDIs infrastructure had been

underestimated. This not only adversely affected theearly protability of the engagement for Wipro, but

also delayed the ow of benets to JDI. It is thus

critical that an organization soliciting bids from IM

25 See Dibbern, J., Winkler, J., and Heinzl. A. Explaining Variations

in Client Extra Costs Between Software Projects Offshored to India,

MIS Quarterly (32), 2008. This article discusses how a providers

absorptive capacity to assimilate the clients knowledge quickly

is enhanced by having prior experiences that are similar to that of the

clients situation.


14/18



service providers, if it has not already done so, invest

in a concerted effort to document and describe the

complexity of its IT architecture, accuracy, and age of

infrastructure assets and maturity of its IM practices.

This knowledge should be made available to potential

providers at the beginning of the RFP process. By

making accurate and complete information available

to providers, organizations will likely receive more

realistic and thorough proposals. And, perhaps evenmore important, better proposals should increase the

likelihood of a subsequent smoothly functioning and

successful outsourcing engagement with the selected

provider.

Post-contract Activities

Lesson 5: Apply a Visible Phased Approach

for Managing Knowledge Transfer and IM

Transfer. JDI used a very visible phased approach

for transferring IM knowledge to Wipro. Each phase

at each site followed a well-dened plan with clear

goals. This visibility increased the ability of JDI

and Wipro to monitor and control the knowledge-

transfer process, to assure consistency in the

conduct of knowledge transfer, and to adjust the

entire work schedule in a timely, as-needed manner.

The progression of learning enabled by Wipros

knowledge-transfer methodology also proved effective

in developing the knowledge of Wipros employees on

how to manage JDIs infrastructure. It also equipped

them with actual experiences in IM operations and

management prior to assuming full responsibility for

these activities.

In addition to the phased knowledge-transfer process

that occurred at each site, there was a phased transfer

of IM responsibilities to Wipro: only a few sites were

transitioned at any point in time. The priority given to

transitioning a site was determined by the complexity

of the sites infrastructure, with more complex

sites given higher priority and transitioned earlier.

This provided an early window into the viability of

Wipros knowledge-transfer methodology. JDI strove

to improve the transfer of sites transitioned later by

learning from the earlier experiences. Beginning with

the most complex rst was particularly important atJDI due to core ERP applications being centralized

in the data centers. Understanding the interactions

between local sites and the main data centers was

therefore important in supporting the needs of other

sites.

Besides the priority given to complex sites, the use

of a phased approach to transitioning sites proved

benecial. JDIs experience shows that even with due

diligence in investigating the providers knowledge-

transfer capabilities, adjustments in the knowledge-

transfer methodology are likely to be requiredand

the ability to make revisions during the transition

depends on using a phased approach. As JDI and

Wipro gained experience with the knowledge-

transfer process at the early sites, they made needed

adjustments to these processes (e.g., incorporating

rich contextual knowledge, as mentioned earlier).They also recognized how and when the methodology

should be adapted to best t the requirements of a

particular site. As later sites were transitioned, the

enhanced knowledge transfer-processes were applied

along with the IM and business context knowledge

that had been gained from the earlier transitions.

Lesson 6: Use Synchronous (Physical and Virtual)

Meetings to Understand Complex Problems. It is

critical for globally distributed IM support teams to

share and integrate the knowledge of team members

when resolving complex, cross-tower problems.

Usually, teams of specialists share and integrate their

knowledge through commonly understood roles

and interactions established through training and

constant repetition.26 Prior to the IM outsourcing

engagement with Wipro, JDIs IM personnel worked

in close physical proximity to others who were

responsible for distinct technology towers, enabling

them to easily interact with one another. JDIs IM

employees therefore gained some expertise outside

their own technical specialization and were plugged

into what was happening within the other towers.

When a complex problem arose, these employees

tended to know who knew what and were usually

able to quickly bring together the relevant specialists

to integrate their knowledge to resolve the problem.

Since complex infrastructure problems typically

require this kind of knowledge sharing, virtual

meetings need to replace physical ones as part of

a providers capabilities for resolving complex

problems.

Lesson 7: Ensure Employees are Retained

Until Knowledge has been Transferred. As IM

responsibilities transition to an offshore provider, the

clients IM employees are typically let go. A lessonfrom the JDI-Wipro experience is to ensure that

these employees are not lost before the knowledge-

transfer tasks have been completed. Although it is

not always possible to know the complexity and time

26 Grant, R. M., op. cit., 1996.Grant, R. M., op. cit., 1996.


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requirements of a given knowledge-transfer task,27

employees termination dates should be based on

estimates of transition dates jointly developed by

the provider and the client. Termination dates should

also be supported by well-thought-out plans for

the completion of knowledge transfer. Since some

employees with needed knowledge may leave earlier

than anticipated, alternate knowledge sources should

also be identied early enough in the site-transitionplanning so that unanticipated departures do not result

in extended delays in knowledge transfer.

Lesson 8: Prepare Both To-Be-Retained IM

Employees and Business Users for the New IM

Environment. Most of JDIs change-management

efforts focused on IM employees who would be let

go, with far less attention given to the to-be-retained

IM employees or to business users. Retained IM

employees need to be included in change-management

efforts through such means as timely communication

about their new roles, preparation and training for

their new positions, and counseling to help the

survivors cope with the stress of downsizing.

Business users also need to be prepared for changes

in how the IT infrastructure will be supported.

Wipro overcame some of the initial problems by

providing information forums for business users.

These groups also proved invaluable for obtaining on-

going feedback from business users on how the work

being done by Wipro (or the subcontractor) could be

improved.

CONCLUSION

We expect that many organizations, driven by ever-

increasing pressures to simultaneously reduce IT

costs and enhance IT service levels, will consider

moving to IM outsourcing arrangements similar to

the JDI-Wipro engagement described in this article.

Our analysis of this case has identied key actions for

client organizations and key capabilities of IM service

providers that help to ensure IM offshore outsourcing

engagements provide added value for both the client

and the provider.

27 A similar problem was encountered by Reuters when it sourced

nancial services from its captive delivery center in India. Reuters

concluded that subject-area experts needed to stay on until the

performance of the captive center had stabilized. Terminating/

transferring these experts prior to stabilization resulted in higher-

than-expected costs and delays in completing knowledge transfer. For

more information, see: Lacity, M. and Fox, T. Creating Global Shared

Services: Lessons from Reuters,MIS Quarterly Executive (7:1), 2008,

pp. 17-32.

APPENDIX A: RESEARCH

METHODOLOGY

We conducted structured interviews with executives,

IT architects, and project managers from both JDI and

Wipro involved with the IM outsourcing engagement.

Interviewee titles and interview counts are given in

the table below. To enhance contextual understanding

of these interviews, we obtained and examined otherdata sources (company brochures, website material,

contract and service-level agreements, network design

diagrams, etc.). Members of the research team also

visited JDIs IT operations facilities in Sturtevant,

Wisconsin and Wipros Global Command Center in

Chennai, India. All researchers contributed equally to

this study.

Given that our focus for this paper is knowledge-

transfer issues for IM, during the interview process,

we asked about the impact of a client rm engaging

in outsourcing both IM and application developmentto a single provder. At JDI, the groups that supported

application development and IM prior to the Wipro

engagement operated relatively independently of

each other. These groups were replaced by similarly

distinct sub-units within Wipro after the transition. No

particular challenges were reported by JDI managers,

but Wipro managers did indicate two potential

benets from having a single provider take on both

IM and application development. First, using a single

provider eliminates disputes that can arise between

providers. Second, there are opportunities for a single

provider to introduce improvements that result fromcomplementary changes in both areas. The only caveat

we would add to these responses is that it may have

been too early in the outsourcing engagements to have

encountered any instances where nger-pointing was

avoided or where synergistic improvements were

introduced.

APPENDIX B: OVERVIEW OF

REMOTE ADMINISTRATION AT JDI

Remote administration of JDIs infrastructure is

accomplished by setting up alert tools on servers and

other devices to monitor, query, collect, and forward

data on status, events, and performance to one of

Wipros Global Command Centers. Once problems are

diagnosed, Wipro personnel at these centers remotely

initiate actions to resolve the problem. Theoretically,

any problem that does not require physical access to

equipment can be resolved remotely.


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The gure below depicts in more detail how remote

administration is handled. Components at JDI

locations are monitored by a tool called NAGIOS

(an open source host and network monitoring

program) that sends collected data to one of Wipros

offshore delivery centers, where it is processed by

Remedy (a help desk tool from BMC software),

which manages the resolution of detected problems.

Remedy generates a ticket that is given to an offshore

administrator responsible for the technology tower

associated with a detected problem. Once a problem

is diagnosed, the administrator remotely accesses

the identied device to resolve the detected problem.

While Wipro has the capability to remotely detect

and diagnose problems via the VPN and MPLS

Client and Vendor Interviews

Interviewee Title No. of

Interviewees

No. of

Interviews

With JDI

Employees

CIO 1 2

Former tower leads (now architects) 3 6

Contract oversight manager 1 2

Lead manager for vendor selection and transitionplanning 1 2

Director of architecture 1 2

Assistant director of North America operations 1 2

Non-IT managers (Business users) 4 4

Total 12 20

With Wipro

Personnel

Manager of Global Command Center 1 1

Manager of Chennai delivery center 1 1

Senior and mid-level managers in the delivery centers in

India

4 5

Senior relationship manager (formerly the onsitedelivery manager at JDI)

1 1

Total 7 8

Remote IM Administration


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links, coordination is typically required with telecom

providers to resolve WAN connectivity problems.

Almost all networked devices, such as routers

and PCs, can be remotely administered using the

connection provided by their network interface

cards. Servers are additionally congured with RILO

(Remote Insight Lights-Out) cards to enhance remote-

administration capabilities. For example, if a serversoperating system malfunctions, RILO can be used to

remotely turn the server off and back on. Just about

the only thing that cannot be done remotely with

RILO-equipped servers is to open them up to replace

components.

ABOUT THE AUTHORS

Stephen Hawk

Stephen Hawk ([email protected]) is Professor of

MIS in the School of Business and Technology

at the University of Wisconsin-Parkside. Hisrecent interests focus on offshore outsourcing, IT

workforce development, and the Russian software

outsourcing industry. He has published in MIS

Quarterly Executive, Decision Sciences, Information

Systems Frontiers, Electronic Commerce Research,

Journal of Business Ethics, Journal of Information

Technology Education, and Information Technology

for Development. His Ph.D. is from the University of

Wisconsin-Madison.

Weijun Zheng

Weijun Zheng ([email protected]) is AssistantProfessor of MIS in the School of Business and

Technology at the University of Wisconsin-Parkside.

His recent research interests include the strategy,

design, and impacts of electronic markets on industry

value chains, offshore outsourcing management,

and online reputation systems. He has published in

MIS Quarterly, Information System and e-Business

Management, and Communications of International

Information Management Association. He holds a

Ph.D. from the University of Oklahoma and a Ph.D.

from Shanghai Jiaotong University.

Robert W. Zmud

Zmud ([email protected]) is Professor, Michael

F. Price Chair in MIS, and George Lynn Cross

Research Professor in the Division of MIS, Michael

F. Price College of Business at the University of

Oklahoma. His research interests focus on the

organizational impacts of information technology

and the management, implementation, and diffusion

of information technology. He is currently a senior

editor with Information Systems Research and MIS

Quarterly Executive, and on the editorial boards of

Academy of Management Review and Information &

Organization. Previously, he was Research Director

for SIMs Advanced Practices Council. He is a fellow

of both AIS and DSI and is a recipient of AISs LEO

Award. He holds a Ph.D. from the University of

Arizona and an M.S. from MIT.


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