Entry and Exit Strategies in Sourcing Engagement

Christine V Bullen, Richard LeFave and Gad J. Selig

Chapter 14 in Global Sourcing of Services:Strategies, Issues and Challenges, 2017, pp 521-558 from World Scientific Publishing Co. Pte. Ltd.

Abstract: This chapter describes the process known as transition (entry) where sourcing assets and/or knowledge are migrated from the client to the provider. The key topics are (a) description of the transition process; (b) effective execution of transition; (c) controls needed during the transition period; and (d) do’s and don’ts related to transition. Sourcing assets can be: people, processes, hardware, software, or licenses. Where no physical assets change hands, such as in a staff augmentation engagement, the primary work of the transition period may be transferring knowledge and providing education and training. The Strategic Sourcing Life cycle identifies transition process that includes the execution of a phased plan, broken down by asset category to be transitioned to the provider. In addition to the transfer of assets (ranging from knowledge to technology to human resources to other physical assets), in many cases, this may be the first time the client organization will have a significant, project-related interaction with the provider. The transition process provides an opportunity to witness the effectiveness of the provider and the working relationship between the client and provider teams. This is a critical opportunity for both the client sourcing team and the provider to execute effectively and to ensure the process is clearly communicated, that any staff to be transferred as part of the engagement is properly integrated into the provider’s organization and that transferred processes are well documented. As far as sourcing engagement exit is concerned, its planning starts early on in the sourcing life cycle. A plan for exit is more than ending a contract but rather evaluating positioning options that benefit the company. The sourcing contract needs to define these options in legal terms in the context of company’s functional management needs to prepare operational plans to implement the options identified. There can be one or several reasons for exiting and for each reason, the contract should provide for as to when they are triggered and how they are executed. The key topics covered regarding exit strategy in this chapter are: (a) what makes up a sourcing engagement exit; (b) when to plan for the exit of the sourcing engagement; (c) the costs associated with an exit; (d) benchmarking as a tool to support an exit strategy; (e) alternatives for an exit strategy; (f) termination and transition costs; and (g) exit planning lessons learned.

Keywords: Outsourcing; ITO; BPO; KPO; Labor Arbitrage; Surrogate Motherhood; Insourcing; Offshoring; Onshoring; Cloud Sourcing; Crowd Sourcing; SaaS; Tele-Radiology; Joint Venture; Medical Tourism (search for similar items in EconPapers)
JEL-codes: J20 (search for similar items in EconPapers)
Date: 2017
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