ZIFFPAGE TITLEOutsourcing Obstacles

By Mel Duvall  |  Posted 2005-01-13 Email Print this article Print

Technology and business executives who fail to manage the psychology of their projects do so at their own peril. Elisabeth Nash knew she'd have to coax good people onto a project to overhaul the processes and systems at the mortuary giant. Yet, they might

Outsourcing Obstacles
But other Service Corp. employees would be asked to sign off from the company entirely. How Nash would handle the substitution of outside talent for inside staff had the potential for creating huge morale problems, inside her team and in the organization as a whole.

The HMIS software not only had to be refashioned for Service Corp.'s size and complexity, but for the scope of its operations. No other funeral company does business in as many states, all of which have different laws regulating death care. Steve Uthoff, Service Corp.'s chief information officer, hired Infosys Technologies, a software services firm in Bangalore, India.

Infosys' job was to translate the original package from the Microsoft Windows operating system to a more flexible, expandable Web architecture built with Microsoft's .Net programming tools. Infosys, according to John Del Mixon, Service Corp.'s managing director of information technology, could do the work for 30% to 40% less than it would cost Service Corp. to do it in-house.

The new software would replace Service Corp.'s existing applications, which ran on IBM AS/400 servers and the Unix operating system. That meant Service Corp. would no longer need the people who had been supporting those systems. Thirty of 40 developers were laid off.

The issue was emotional. Nash received an e-mail from one woman within the Service Corp. ranks angered by how she had read about companies sending U.S. jobs overseas. "Now we're one of those companies," she complained.

Anxiety levels went up among those who stayed put, as well. People who survived the cuts wondered if they, too, would eventually be laid off. "It was very stressful," Mixon remembers.

Nash and Mixon knew they had to explain the plan. In town-hall meetings and individual phone and office conversations, they told people that using Infosys was just a single tactic in a larger plan to rearrange the business model of Service Corp.'s technology group.

The change was not the switch that people thought was happening, Nash and Mixon explained. This wasn't higher-paid American workers being jilted, one-for-one, for lower-paid people from another country.

Rather, they said, people were laid off because Service Corp. was dropping homegrown software and no longer needed the people who maintained it.

But the layoffs and the hiring of Infosys happened at the same time. The coincidence affected the entire company's state of mind. And that made the ultimate success of the project precarious—because the processes and systems that Infosys and Nash's team would produce would have to be used universally, or Service Corp.'s day-to-day business would break down.

To make matters more complicated, about 20 Indian programmers from Infosys were assigned to work at Service Corp. headquarters in Houston. In this case, the idea was to get key talent close to the customer, learn its business better and have face-to-face contact, all to speed up delivery.

But bringing foreign hands to home turf to do work that could have gone to longtime staff can be as incendiary as if they were scabs helping to bust a union.

Perhaps to not cause jitters, Kush Kochgaway, the Infosys account manager for Service Corp., declined to comment on any friction produced by this combination of offshore and onshore outsourcing.

But he acknowledged that he and his co-workers must often deal with a cool reception from people who think the U.S. is losing technology jobs to cheaper offshore labor.

"It's difficult, definitely," he says of starting new engagements. "What we try to do is make sure we don't get into those discussions" of politics and economics. The idea is to "maintain a low profile, initially."

Nash tried several moves to ease the situation, for both the project team and the company at large—explaining the economics of the decisions, and breaking ice between Service Corp. and Infosys people with offsite recreational activities, like Houston Astros baseball games and karaoke nights. At certain junctures, she pushed Infosys out of sight of field users by temporarily taking them off the help desk.

No one tactic was a silver bullet. But each eased tension, she believes. Anger developed only in small pockets of the company, and emerged mainly at the very beginning of the project, she says.

Some of that early resentment arose when staffers found that Infosys programmers didn't know the basics of Western funerals. They had to understand, for example: What is a hearse, and when does it come into play? When is embalming necessary? Or, what is the difference between an "at-need" and "pre-need" contract?

To nip the backlash, CIO Uthoff made it his job to teach Infosys about the funeral industry. Then, the work Nash had done in recruiting field experts to the Delta Project team paid enormous dividends.

Wolfsen, for example, shared her first-hand knowledge. She explained to the Infosys programmers that during a "first call" from a client entering a funeral home, a mortician takes certain steps: collecting the deceased's name, date of death, next of kin, location of remains and whether there has been official authorization for removal—all items that had to be coded into fields or drop-down menus on initial funeral contract screens.

Wolfsen also took them through the sequence of activities and nomenclature of caskets, services and other aspects of Western funerals. Getting things right would curb criticism from skeptics, Nash notes—a notch up on the credibility scale that later helped make reluctant field personnel more confident in the new system.

Even so, communication between Service Corp.'s technology team and the Infosys staff sometimes broke down, often from passivity. An Infosys programmer might send an e-mail to a Service Corp. worker asking questions about technical requirements, and the e-mail would go unanswered.

Mixon and Nash had set up regular Tuesday morning conference calls between Delta Project leaders, Kochgaway and Infosys in India. The two managers would place phone calls or drop in on the offenders. "We were in front of these one or two people asking about this," Nash recalls. "It was polite, but clear: We expect cooperation."

But that initial lack of communication went both ways.

Nancy Polasek, a former project manager at Service Corp., says she was irritated with Infosys coders early on because she felt her programming suggestions "were not taken seriously."

She says code they'd written wouldn't include test logs showing how well it communicated with existing software. She had to ask for the logs several times. After a few weeks of similar talks with pertinent Infosys programmers, code did start coming in with error logs appended, she says.

"At first, you don't know what to expect," Polasek says of working with an offshore contractor. "The more you see their work, though, you react to the high quality of it," she adds. "It was a very good experience."

Polasek quit last March. She had grown unhappy with Service Corp., in part because moving most application work to Infosys meant limited advancement for her. "It was clear the big challenging stuff would go overseas," she says. Polasek is now a principal at Decide Consulting in Houston, a technology consulting firm she co-founded with a friend.

There were other, subtle things Nash did to bring the Service Corp. and Infosys staffs closer together. She hung the flags of the U.S., India and Canada (for Wallin) in Delta Project's main meeting room. She invited all Infosys staff on all team outings to baseball games and bowling dates.

The Delta Project team eventually came to regard Infosys people as colleagues, Mixon and Nash say. But what was most effective in reaching that state—though it took time—was seeing Infosys' work. "After a while, when people saw how professional they were, that [discontent] went away," Mixon says.

But resentment would resurface a year later. Infosys said it could staff a help desk in India for Service Corp. with the same number of people—21—but run it for 20% less than what Service Corp. was spending.

Mixon says the company did save that much, and got good quality. But not everyone was sold on the switch. John Casillo, a former director of technology operations who oversaw the help desk and other infrastructure areas, says he thought Infosys "oversold" its support capabilities. Casillo says the quality of support dropped. He quit last July because of it, and is now director of information technology at Goodman Manufacturing, a Houston company that makes air ducts.

To deal with the new stress, Nash and Mixon steadfastly defended the economic logic of the decision. "But there's only so much you can do sometimes," Nash says. "This is the way we've evolved, and they have to understand."

While the overall move called for rigidity, Nash found a way to remain flexible. When a module for handling orders for cremation went online in August, Nash temporarily reconfigured the help desk so that all calls were answered by Service Corp.'s own staff.

Contributing Editor
Mel Duvall is a veteran business and technology journalist, having written for a variety of daily newspapers and magazines for 17 years. Most recently he was the Business Commerce Editor for Interactive Week, and previously served as a senior business writer for The Financial Post.


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