More and more companies are aware of them and are implementing them: Outsourcing IT abroad, especially to India, is now common practice. Nevertheless, the challenges and problems that can arise should not be underestimated. Professor Dr. Peter Steinhoff explains what these are and how you can avoid them in your company from the outset. He bases his observations and helpful tips on a comprehensive study that outlines the process of IT outsourcing and concrete solutions in the context of centralized outsourcing via subsidiaries.

How the centralized outsourcing of IT abroad goes smoothly

Hello Professor Dr. Steinhoff! In your experience, what is the typical basic motivation of companies when they decide to outsource their IT centrally abroad - for example to India?

In 2018, we conducted a survey and study with a medium-sized company that had decided to centralize its first and second level IT support and outsource it to India by 2020. The company has founded a subsidiary in India for this purpose. It is interesting to note that the outsourcing did not go to an external company, but was carried out in-house.

However, the majority of strategic issues will remain with the parent company. The German subsidiary was already converted in terms of helpdesk support in 2016 and has since acted as a pilot for the introduction. Our study was conducted with the German subsidiary.

The aim of relocating and centralizing first and second level IT support in India is to make processes more efficient. Furthermore, the costs of providing local support are to be reduced and a high quality of service guaranteed. These objectives can certainly be seen as the main goals that companies are pursuing with this project.

What should the basic procedure be to ensure that this project runs as smoothly as possible? Are there certain "mandatory" measures and tools that facilitate and optimize implementation?

An important finding of our investigation was that the acceptance of outsourcing and, by extension, that of our Indian colleagues is very low. One of the main reasons for this is that many employees did not feel sufficiently informed about the centralization and outsourcing of first and second level IT support.

This showed that such a comprehensive transformation must be closely accompanied by transformation management. It is not only relevant to communicate the WHAT and WHY, but it is even more important to accompany the employees on the path of change.

When it comes to collaboration across national borders, there are some classic challengeswhether with external partners or with employees of a subsidiary. Based on experience, what typical complications arise from this step, particularly from the perspective of the workforce?

The study confirmed that one of the biggest challenges 'still' remains the difference in language as a key issue between German and Indian service providers. It is, so to speak, a key variable for satisfaction and acceptance and therefore a central factor in the perception of the quality of the service received.

Interestingly, many of the employees stated that they speak English. Nevertheless, the English language prevents many of the employees from contacting the helpdesk when IT problems arise. As employees get older, this willingness decreases even further.

The language barrier is therefore often not only a communication problem, but also makes employees in Germany reluctant to contact the outsourced IT support team in the first place. How do employees deal with this problem?

Among employees under 30, just nine percent stated that the English language is perceived as an obstacle when contacting IT support. In contrast, 40 percent of employees over the age of 50 stated that they avoid contacting IT support because of the English language. These employees then generally try to get support elsewhere. They quickly ask a colleague on site for help or search the internet for a remedy. This disrupts workflows and results in avoidable additional costs.

What is the specific situation regarding the acceptance of employees in Germany compared to employees abroad in India? How well is the outsourcing of IT support with the help of a subsidiary accepted overall?

As the study showed, language also has a decisive influence on satisfaction with the service. The greater the language barrier, the less satisfied employees are with the support and problem-solving expertise of the IT helpdesk. They even have the feeling that the importance and urgency of their concerns receive less attention.

As the language barrier increases, the acceptance of Indian colleagues and the Indian subsidiary also decreases. In some cases, this is even very clear in the survey. For example, 20 percent of German employees questioned the raison d'être of the Indian company. Acceptance of outsourcing decreases in particular with increasing age and greater language barriers. The raison d'être of Indian colleagues is particularly questioned by 70 percent of employees who feel that the language barrier prevents them from contacting the helpdesk.

In your opinion, what are the most important advantages that IT outsourcing to India or other countries brings for companies - and do these offset the complications that arise?

The outsourcing of IT services has been a central topic in companies for years and has become indispensable. While the first phase of outsourcing mainly focused on reducing IT costs, today the focus is on issues such as the shortage of skilled workers and the resulting significant staff shortages in the IT sector. This skills shortage is even accelerated by the changing role of IT, which has evolved and must evolve from a cost factor to a driver of digitalization.

Of course, there are complications with outsourcing, especially when it comes to collaboration across company and country borders. Such outsourcing is a transformation within the company itself that should not be underestimated and must be prepared accordingly. This requires the right sourcing concept, which must also take the intercultural component into account.

Are there any "golden rules" for this measure that, from the company's point of view, must be taken into account when outsourcing IT to ensure that this step goes smoothly?

In a nutshell, I believe there are exactly two golden rules that should always be observed when outsourcing IT:

1. Outsourcing does not necessarily turn a bad process into a good process.
2. Don't outsource thinking! That was also the motto of our congress last year in Neumarkt in der Oberpfalz. The TCI blog has reported on this.

Thank you very much, Professor Dr. Steinhoff, for the interesting I would like to thank you for your comments on the topic of IT outsourcing abroad and especially to India, which is particularly popular in this area. Your observations as part of the study and helpful tips on centralized outsourcing offer valuable assistance to many companies - thank you very much!

The interview with Professor Dr. Peter Steinhoff was conducted by the TCI editorial team.

Editor's note: Recently, a technical article by Professor Dr. Steinhoff was published in Computerwoche, which discussed the outsourcing of IT to India in particular. From the perspective of SMEs illuminated.

(Cover image: © Impact Photography | stock.adobe.com)