According to business IT specialist Oliver Krancher, many outsourcing projects fail because of poor knowledge transfer to the service provider. He explains how this can be avoided.

IT directors outsource software maintenance to offshore service providers in order to save money; often, however, they are buying into trouble and problems. Business IT specialist Oliver Krancherfrom the University of Berne calls it a “human affliction”: he believes that the reason outsourcing projects often produce the wrong results – particularly in the case of software maintenance projects – is down to the failed transfer of knowledge from the customer to the service provider. In other words, it is a problem with individual learning. It’s hardly surprising: “From a cognitive perspective, software maintenance is a very difficult task,” according to the 31-year-old. Krancher spent the last three years studying ways for companies to address the problem as part of his doctoral thesis, for which he received the €7,500 Business Technology Award from management consultants McKinsey. The judging panel stated that this work “offered fresh impetus for both academics and professionals.”

Poor knowledge transfer leads to spiraling costs

When Krancher was working for an IT service provider during his studies, he learnt at first hand how an offshoring project can get out of control. “There were a lot of problems with knowledge transfer, and the project overran by several months.” Costs skyrocketed. “We didn’t know what we could have done differently,” says Krancher. Reason enough, then, to research the topic. “After all, it’s an economically significant problem.” Supported by the Swiss National Science Foundation, Krancher followed projects at a Swiss bank in which software maintenance was outsourced to an offshore service provider. During the projects, he and his supervisors, Professors Jens Dibbern and Sandra Slaughter, drew on theories from learning research to determine how the necessary knowledge could best be transferred to the service provider’s employees