How to Manage IT Outsourcing for Best Results

Outsourcing is often compared to a marriage. Each is a relationship in which both sides can benefit substantially. Yet both relationships have inevitable friction and conflicts. The key to success in both affiliations is for the parties to keep in mind the interests and desires of the other, and to try to please each other, and to resolve conflicts in a civilized way. The one difference is that marriages are intended to continue “until death do us part,” whereas all outsourcing contracts have defined termination dates, which of course can be extended.

This article discusses the plans and actions computer operations managers, and others, must take to make an outsourcing relationship work smoothly and with maximum benefits for the client, as well as for the service vendor. There are always difficulties in these relationships — conflicts, obstacles, misunderstandings, and changed circumstances. These types of difficulties must be anticipated and approaches created for coping with them successfully. With careful planning and management, outsourcing can be a source of savings and other competitive advantages; some sloppily planned and managed outsourcing have been disasters.

TREND TO OUTSOURCING

Eastman Kodak was an early pioneer in the outsourcing movement. In 1989, Kodak contracted with Integrated Systems Solutions Corporation (ISSC), IBM’s services branch, to do the computer work that Kodak had been performing at four of its facilities. Then in 1994, Xerox signed a 10- year outsourcing contract for $4.1 billion with Electronic Data Systems Corp. (EDS) to do a major portion of its computer work. AMTRAK expects to save $100 million over a 10-year period from its outsourcing arrangement.

Those are three examples of the well-publicized movement to outsourcing as a business strategy. It has been estimated that 80 percent of information systems work will be done by contractors by the year 2000.

WHAT TO AND NOT TO OUTSOURCE

Outsourcing has proven effective in accomplishing several goals: to reduce costs, to generate cash, to focus management’s attention on the organization’s prime purposes, to take advantage of an outsider’s expertise, and to help expand globally. Functions inappropriate for outsourcing are systems work necessary to monitor the outsourcing vendor, a system that is part of a competitive advantage, and outsourcing that could expose key proprietary and confidential information.

TIPS FOR WORKING WITH THE CONTRACTOR

There are certain steps that can be taken at the beginning to establish a basis for working together constructively and cooperatively. Clear responsibilities for liaison are essential, regular meetings are helpful, and avoiding misunderstandings is important, yet having a mechanism for dispute resolution is essential.

Spirit of Partnership

Outsourcing arrangements work best when there is a basic feeling of trust and cooperation between the client and vendor. Truly, both should be working to accomplish common goals wherein each benefits in its own way. Both sides should gain substantially from the relationship. However, if conflicts dominate the relationship, lawyers probably get involved to protect what they see as their individual side’s rights, and the original goal of mutual gain and benefit is not achieved.

Liaison Staff

One person should be appointed as chief liaison representative for the client in dealing with the outsourcing vendor on a continuous basis. Liaison individuals should have the authority to act for their employers and should be the normal route of communications between client and vendor, particularly for complaints. Therefore, the liaison person must be knowledgeable about the technology involved, be a diplomat, yet be able to be firm in monitoring and demanding proper performance from the vendor. The liaison officer must also be of unquestioned loyalty to the clients’ interests (many systems technicians may see their best future career opportunities with an outsourcing services firm), yet see that the vendor’s legitimate interests are respected.

The outsourcing contractor should be asked to set up a liaison counterpart, and both client and vendor should clearly define their liaison representatives’ responsibilities and modi operandi.

The liaison function may vary in size and scope depending on the circumstances. McDonnell Douglas has a group of 15 to 25 employees managing its relationship with Integrated Systems Solutions Corporation (ISSC), IBM’s services branch, with which it has a $3 billion outsourcing contract. Hughes Electronics has a staff of 50 to oversee the work of its outsourcer, Computer Systems Corporation (CSC), in its $1.5 billion outsourcing contract covering 7 years, and is pleased with the way the relationship is working out.

Meetings

The spirit of working together can be strengthened by frequent meetings between representatives of the client and vendor on topics of interest to either party or to both. Having such meetings on an ad hoc basis, or perhaps regularly, under the guidance of the liaison representatives can get problems under control before they get out of hand, and foster an understanding of people on both sides about the interests and activities of the other parties, thereby encouraging a friendly and cooperative relationship and a feeling of participation, which are important factors leading to the success of the relationship.

Avoiding Misunderstandings

The best way to avoid misunderstandings is to have a contract clearly describing the work to be done and the standards of performance expected, and covering all the contingencies that are considered as possible to occur. But even with a well drawn up contract, there will be events that have not been anticipated, or one party may construe a part of the contract to mean something different from the other party’s interpretation.

Resolving Conflicts

There are three general approaches to conflict resolution other than legal action, which it is recommended be avoided at all costs. They are:

- A conflict resolution committee

- Referring the matter to higher executive levels

- Arbitration or mediation

The conflict resolution committee should probably be co-chaired by the two liaison representatives, with specialists added based on the nature of the issue, such as whether it is an accounting or technical matter.

If the committee cannot bring the matter to a compromise or other solution, it can be referred up the executive ladder — say to the vice president level, then to the CEOs — to resolve. This process sometimes can settle the matter quickly. However, it often takes valuable executives’ time away from their main functions, time they would take in researching and negotiating the issue.

Taking the conflict to arbitration or mediation is far superior to court action. Using the established processes of the American Arbitration Association can resolve issues faster, cheaper, and easier than suing, engenders less hostility, and can even be done without attorneys.

MANAGING THE TRANSITION TO OUTSOURCING

Making Detailed Plans

The key to a successful transition is a carefully and thoroughly drawn up plan listing all the events that must take place and their timing, including equipment transfers, data and software transfers, people transfers, and who (client and vendor people) is going to do what. Hopefully, much of the transition process has been spelled out in the contract; but even so, there are further details and dates to be made more specific, such as people’s names instead of job names, and actual dates instead of time periods.

The transition is a time for the people on both sides to become acquainted with each other. Full discussion and conversations are encouraged during this period to try to establish working relationships that will help in the continuing operation of the contract. The liaison representatives of the client and the vendor should take the lead in coordinating the design of the transition plans, as they will take a major role in their implementation.

Running Systems in Parallel

Running the old system concurrently and in parallel with the new outsourced approach is the best way to confirm the validity of the new way of processing a system. Sometimes, it may be unduly expensive to run the whole system in parallel, and it may be possible to accomplish the purpose of parallel processing by doing it in part, say putting through 1000 of a total of 10,000 orders, which may be sufficient to verify the correctness of the outsourced process. Of course, some outsourced work is for systems that are new and have never been done before, in which case no parallel operation is possible.

Monitoring and Evaluating Contractor’s Work

To achieve the client’s desired results requires, first of all, to clearly define what known facts will be considered satisfactory, then to get feedback on how the actual performance compares to established standards, and finally to motivate the vendor to conform to or exceed the defined expected results.

Establishing Standards and Managing Expectations

All outsourcing contracts should not only define what work will be done by the outsourcing vendor, but what results are expected and how they will be measured. In order processing, for example, the contract might define the turnaround time from input to output, the maximum percent of errors that would be acceptable, and the cost to the client if the vendor has some control of that. For an outsourced help desk function, the standard might specify the maximum response time, the percent that needs referral to a second technician, and feedback from the users as to their satisfaction with the results.

While these performance standards should be in the contract, as the work gets underway, there may arise additional factors to be considered and adjustments and clarifications that need to be made to keep the standards practical and current. The refinements should be negotiated between the liaison representatives and others concerned, with the agreed new terms put in writing to confirm the agreement and to inform all concerned about them. Since the contracts often run for several years, the changing needs of the client, such as new products and new markets, and changing vendor conditions, such as new hardware or software or location, frequently create the need for revisions to the expectation results.

Performance Reports

It is essential to arrange for some report to be made regularly on each feature of the performance standards so that the outsourcing vendor’s results requirements will be measured. Regular and prompt reports should be made by the vendor of items for which a performance standard has been established, measurable or not. Some of the reports will be by-products of other data processing functions, most will come from the vendor, but some may originate from the client, such as reports from users about their help desk performance. The liaison representative is a logical person to be responsible for coordinating, compiling, and disseminating the performance results.

Some aspects of contract requirements cannot readily be checked by reports. For example, keeping proprietary information confidential is a matter that can be verified only by keeping full communication with the right people, discreetly looking for possible breaches and diplomatically looking into anything noticed that raises suspicions.

Motivating Vendor to Conform

If the vendor’s payments are tied to the performance results, that provision can be a principal motivating factor for the contractor to accomplish the outcome the client wants. Of course, having the vendor sharing the rewards and risks is a worthy plan where the circumstances make such an arrangement practical. It can make the vendor feel more like a partner than a contractor, and that spirit is desirable. Or, the contract may specify financial penalties when the vendor does not meet specified performance standards, generally a desirable type of provision.

The time to make terms for sharing the rewards and risks is when the contract is being negotiated; however, such an arrangement can be negotiated as an amendment to the original contract if both sides can see that it is to their benefit.

Whether or not the contract provides for the vendor’s payments to be tied in to its performance criteria, it is essential for the performance report results to be communicated regularly and systematically to the client’s management. The contractor should be thanked for meeting or exceeding set standards, and must be reminded of situations where the results criteria have not been met. If the performance is less than satisfactory a few times and the vendor is not brought to account, the contractor will not be motivated to hit the target. Thus, it is important to let the vendor know that the client is aware of the deficiencies and expects them to take corrective measures. Careful records of the deficiency and copies of the reminder notices are important to keep, so that if the situation becomes a larger issue, the historical facts are documented for reference in discussions and negotiations about corrective action.

The client has one advantage in its pressures to the contractor to meet performance requirements. Outside service firms, for business reasons, are anxious to please their clients so that contract renewal can be achieved. Therefore, a request for improved performance should normally be met with respectful responses or negotiations to resolve the matter. If a contractor is seriously and repeatedly deficient in its compliance, the ultimate threat is to terminate the contract, which is the last resort and an undesirable conclusion for both parties; terminations under hostile circumstances can hurt the client as well as the vendor, since they inevitably cause disruption and the difficulties of moving the work back in-house or to another vendor under unpleasant circumstances.

HOW TO HANDLE EMPLOYEES WHEN DOWNSIZING

One of the most difficult parts of outsourcing and other types of downsizing is to manage the human relations aspects so that morale and loyalty are preserved and that the best employees are retained. Unfortunately, transferring employees out or letting them go inevitably strains the feelings of the other employees, and this section shows some of the tactics that can minimize the negative results of downsizing and even, sometimes, leave the new organization stronger than it was before.

Downsizing Methods

Downsizing is a major part of, indeed one purpose of, nearly all outsourcing programs. Cost reduction is an objective of most outsourcing, and that reduction is primarily in terms of fewer employees.

But there are a variety of ways that downsizing can be accomplished without outsourcing. One currently popular approach is reengineering, which consists of methodically examining the operating processes of an organization by analyzing the types and numbers of employees needed for each function as well as developing better approaches for performing these processes. Another downsizing method is to make “across the board” cuts, say 10 percent of each department; this approach, which is used to hastily meet a budget crisis, is generally not recommended as it usually makes cuts in the wrong places.

In the data processing arena, many companies have been able to reduce staff by converting mainframe systems to client/servers, by adopting CASE methods for programming, and other methods for accomplishing the work goals with fewer employees.

Inevitable Anxiety and Resentment

Anxiety is an inevitable result of uncertainty. When a situation arises that will involve letting employees go, or requested to be considered for employment by an outsourcing services firm, it results in anxiety for those affected. These employees’ source of livelihood is put in limbo until the situation is resolved, even though the sources of their income may be improved under the new arrangement. Unfortunately, the uncertainty and resentment caused by downsizing usually also results in the lowering of morale of the employees who remain.

There are several general principles reviewed below for taking steps to minimize the disruption from downsizing, to maximize the morale and loyalty of the remaining employees, and to help to retain the employees the client wants.

Explain Process at Earliest Opportunity

The timing of the announcement of a downsizing plan to the employees concerned is a difficult decision, and usually not a perfect one. The plan should be explained before the rumors become prevalent. It can obviously be disconcerting for an employee to learn first of a downsizing plan from the newspapers.

While the plan must be discussed in advance with key employees who need to be consulted in preparing the structure of the downsizing effort, the planning phase should be as short as possible because, once the plan is known by top people confidentially, leaks and rumors almost inevitably follow.

Boeing’s announcement in 1993 that it would reduce its workforce by nearly 20 percent over 1 ½ years was received without any special alarm by its employees. The reason for the calm acceptance was that Boeing had made a point of revealing over the previous period that sales in the aerospace industry had been at a low level and that drastic corrective action was in order.

Explain Openly the Business Reasons for the Change

When the downsizing plan is announced, the important matters to emphasize and clarify are the business reasons for making the change and the fairness features of the plan for the employees.

There has been enough downsizing in recent years that it has become an accepted fact of life to most people. It has become recognized that in the evolving intensity of global competition, companies must often make major cost reduction efforts to beat or stay even with competitors. The real reasons for the decision to lessen staff can be to reduce a downward profit trend, to meet known cost levels of competitors, to generate cash for an important new venture, or some other of the many possible business considerations. These business reasons should be explained so that all concerned are made aware of the valid and logical necessity of the downsizing plan. It should be made clear how the downsizing program will make the organization stronger so that departing employees will understand the logic and reasonableness of the effort and remaining employees will feel more secure.

The fairness of the plan structure as explained should include the general terms of a financial package and career assistance for those that will leave, and the benefits of working for a computer service firm for those employees who may be made available for employment with the outsourcing vendor. The plan may give choices to some employees, making it somewhat voluntary, such as having them decide whether to accept a severance package or transfer to some alternative positions.

All of this open discussion of the business reasons and fairness will not eliminate some bitterness and lowering of morale. But done well, it should keep those disadvantages to a minimum.

Get Help from Human Resources and Legal Staff

When Philadelphia Newspapers, Inc. planned a downsizing effort in 1993, based on moving from its mainframe to client/servers, the unions threatened to walk out. The downsizing program had to be deferred until the labor dispute was resolved. That delay indicates the value of securing counsel and advice from legal and human relations specialists.

The human resources staff should participate closely in the planning of the downsizing steps. It is their job to be skilled in the handling of employee relations matters, especially those involving intense emotional feelings. Therefore, human resources’ advice and guidance should be sought in laying out the plan. However, the execution is a line responsibility; that is, it is the line manager’s proper role to make the announcements to the groups affected and, ultimately, to explain to each individual how the plan affects him or her.

The legal staff should also be consulted in designing the downsizing plan and the separation packages. Their advice is needed to make sure of compliance with the Employee Retirement Income Security Act (ERISA), the Consolidated Omnibus Budget Reconciliation Act (COBRA), union agreements, and other legal requirements.

Assess Individual Employee’s Loyalty

Decisions regarding which employees are to remain and which are to be let go should be based mostly on their skills in relation to the client’s needs. But the employee’s loyalty to the employer is also an important factor in that decision even though there is no objective way to measure that loyalty. At best, loyalty can be judged by intuition, but there can be signs such as cooperative behavior, expressions of bitterness, and general demeanor indicating acceptance of management’s decisions and plans.

When downsizing is a part of an outsourcing arrangement and some of the client’s employees are to be employed by the services vendor, employees who are more loyal to their computer specialty than to their current employer may prefer to join the computer service firm rather than stay in an organization in which computer operations are not the primary function.

But loyalty can be a double -edged sword. Some employees who may not be the best qualified may feign loyalty, sensing the severe competition for survival in a downsizing situation. Their attempts to please may be appreciated, but should be tempered with a balanced evaluation of the employee’s worth.

Encourage Valued Employees to Stay

Once it is known, from announcements or rumor, that a downsizing program is underway, some of the better employees may feel it is a good time to seek greener pastures. The employees whom the employer needs or wants to retain because of their skills and loyalty assessment, should be encouraged to stay. This may involve giving assurances as to future plans, possibly a pay increase because of added responsibilities, bonuses, or other financial incentives. These assurances are important particularly because of the general negative atmosphere that is generated by the downsizing, including lowered morale and anxiety due to the uncertainties involved.

Preach Loyalty Rationale Continuously

To those employees who will be retained, management should continuously be explaining the goals of the organization, why the prospects are good for reaching those goals, and how the individual employees fit into the plans and are wanted to help achieve those goals. These efforts are necessary to bolster the morale and offset the feelings of bitterness and resentment that are inevitable among some of the employees who are retained after seeing many of their associates leave, even though they may be given generous departure packages.

After downsizing, it is natural for remaining employees to feel insecure, anxious, depressed, and even resentful. Open communications can help. It is well to continue discussing the place of the downsizing in the organization’s overall goals, and to seek employee views and help in planning how the work can best be done under the post downsizing environment. Let employees vent their feelings without being recriminated for doing so. Such communication can foster a renewed feeling of trust and sense of value.

Offer Reasonable Severance Terms

It is essential for the public relations well-being of the organization to offer fair and generous settlements to employees who are asked or encouraged to leave. Such settlements may include provisions such as a cash amount based on the years of service, earlier pension starting dates, and career guidance and support.

The cash settlement is intended primarily to support the person until he or she is able to locate another position (though some have urged stock options instead of cash so that the ex-employee may share in increased profits from the downsizing). The earlier pension can be given by adding, say, 5 years to the employee’s actual age to enable him or her to achieve a retirement pension earlier than would be available otherwise. The outplacement assistance is usually provided by a consultant who guides the ex-employee in the techniques for seeking a new position and may also provide some of the resume preparation and phone and office services helpful to the job seeker.

All these separation assistance tools help the organization’s management to feel and say properly that it is doing what it reasonably can to help those who are put in a difficult position by the downsizing program, often due to no fault of their own.

Try to Give Choices Between Favorable Options. To whatever extent possible, it is wise to build into the severance arrangement choices for the employees so that the employees feel that there is a voluntary element in the plan and that they are not being forced unilaterally into their new status. For example, at a downsizing program at Sea-Land Service, many employees were offered a generous severance package, but given the choice of remaining with the company, which would try to, but not guarantee to, find them a lower-level position with the company if the package was rejected. With this choice, no employees left Sea-Land without the severance package.

SECURITY

The data in the hands of an outsourcing service may be the lifeblood of the client organization. It is, therefore, essential for the client’s management to make sure that there are adequate backup copies of the operating data that the vendor possesses. This can often be accomplished by securing from the vendor current copies of the data so that operations could be continued should a disaster — like a flood, earthquake, or fire — destroy the client’s data at the location of the outsourcing service. If the client relies on backup data that the vendor has arranged, such as with a firm like the Iron Mountain Depository or Comdisco, then the client must periodically audit those extra copies to verify that they are current, complete, and properly secured. However, even if the vendor does maintain an extra data security copy off-site, by keeping its own backup copy, the client is in a better position to terminate the vendor and resume its own work or use a new contractor. The backup data discussed here must include copies of the current software needed to run the other data.

The other major security concern is the exposure of proprietary information through the outsourcing vendor. Of course, the restrictions on the use of key business and technical data should be spelled out in the outsourcing contract. Whether they are or not, it behooves the client to check on the proper handling of information in the hands of the vendor, by observation, inquiry, and other means. If the contract does not spell out security requirements sufficiently, they should be discussed with and agreed to between the client and vendor, with the terms put in writing, in effect, as a supplement to the contract.

HOW TO TERMINATE A CONTRACT

The contract terms have much to do with how the contract is terminated, and there are may different reasons for ending a contract that affect how it should be done. A major factor in making a smooth transition to whatever the new arrangement will be is to prepare a careful plan and schedule of the items and events involved. Finally, both client and vendor may wish to renew the contract; but then there are always adjustments and improvements to make over the previous terms and features.

Terminating a contract before its scheduled end because of problems or changed circumstances cannot be done easily or quickly. It takes time to reestablish IS operations in-house or transfer the work to another contract service vendor. Therefore, if and when problems occur or conditions change, it is generally best to negotiate appropriate revised arrangements with the vendor rather than choose an early separation.

Reasons for Terminating

There are many reasons for terminating outsourcing contracts. One reason may be that the contract period is finished (though if the arrangement has worked well, a renewal would be the logical outcome). It may be that the client or the vendor has become dissatisfied for one reason or another and wants out. A good reason is that another vendor, possibly with some advanced tec hnology, has offered terms that could save more money and provide specialized benefits. Or possibly, the client’s needs have changed in terms of product or territory, or an acquisition or merger was made that has caused the vendor’s services to be unsuitable.

Planning and Scheduling Termination

The transition to setting up the outsourcing arrangement required listing the myriad of details that had to be taken care of; a careful plan listing the equipment, software, and personnel changes to be made; and scheduling the events in a logical fashion. The termination process requires a similar listing of the hardware, software, and people changes and a time schedule for the events to take place. The scheduling process may be aided by Gantt or PERT charts, which help to identify the actions needed, their sequence, and the steps to follow up to keep the schedule on track.

The written or charted schedule also helps in coordinating the steps with the service contractor who, of course, must agree with the plan and cooperate to make it successful. There should be some guidelines about the termination steps in the contract, but they are never enough to be a working schedule at the time of the transition. Hopefully, the contract will set an elapsed period for the termination process that is ample enough to make it a smooth transition. If not specified in the contract, the pricing of the services in the termination period must be negotiated as one of the early steps.

RENEWING A CONTRACT

Long before the contract termination date, the computer services manager and others should be evaluating whether some other vendor might do the work better, whether the client has come to believe that it can do the outsourced work more advantageously in-house, or whether the contract should be renewed. If the decision is to renew, then the client should analyze in what ways the arrangement could be improved and whether a more advantageous price could be obtained, and begin to negotiate a revised contract — hopefully to the benefit of both the service firm and the client. The new contract should also reflect the many circumstances that undoubtedly have changed since the original contract was written, such as new technology used by the vendor and new products, customer groups, or geographical territories for the client.

SOURCES OF GUIDANCE AND SUPPORT

The operation and managing of an outsourcing or other downsizing program are matters in which it is helpful to talk with others who have been or are managing similar plans for their organizations. Informal meetings with peers in other such organizations about common problems can be a source of ideas and a feeling of support. There is considerable literature on these subjects; one thorough and pertinent source is Winning the Outsourcing Game: Making the Best Deals and Making Them Work by Janet Butler (Auerbach Publications, 2000).

Many organizations do buy, for a fee, the advice of experts who have experience in managing outsourcing and downsizing programs. These sources include the Outsourcing Institute and a variety of consulting firms.

The Outsourcing Institute

The Outsourcing Institute Inc. (www.outsourcing.com) is a for-profit membership group to which both outsourcing users and vendors belong. Membership is free.

Consultants

Consultants, especially consulting arms of large public accounting firms, have been engaged to advise and counsel on whether and what to contract out, vendors to select, and how to negotiate and manage outsourced work. Firms like Anderson and PricewaterhouseCoopers provide such advisory assistance, though their fees range from $250 per hour to much higher.

The leading consulting associations can also refer inquiries to members, who can provide outsourcing vendor advisory serv ices. These include:

- Institute of Management Consultants (IMC): www.imcusa.com

- The Association of Management Consulting Firms (ACME): www.amcf.org

- Independent Computer Consultants Association (ICCA): www.ica.org

Consultants’ capabilities can also be researched through the Internet via Management Consultant Network International, Inc. (MCNI), reached via

www.mcninet.com.

CASE EXAMPLE: SEA-LAND SERVICE

As reported in the November 1993 issue of Personnel Journal, Sea-Land Service, a major cargo-shipping company based in New Jersey, in 1989 determined that its modest profits were due to excess staffing that had developed over the years. To overcome its inefficiency, the company decided, after careful planning, to redefine all jobs by analyzing what functions and how many people were really necessary for operating the business. By comparing the skills and abilities of its employees with its analytically determined staff guidelines, from CEO on down, the company was able to reduce its employee number by 800, or 15 percent. The restructuring of its organization eliminated five levels in its organizational hierarchy. These downsizing changes enabled the company to reduce operating expenses by $300 million and increase revenues 30 percent to $3.3 billion and increase profits by 35 percent to $151 million. All this improvement took place during a period of intense competition in this global industry.

The plan was designed to be as fair as possible by giving employees reasonable choices, with those choices being voluntary. Employees whose new positions would be two or more levels lower, or who lived over 50 miles from work, were offered severance packages and outplacement services. Those who turned down the severance arrangement would be helped in relocating within the company, though doing so made them forfeit the severance benefits. In the end, no one was laid off without benefits.

RECOMMENDED COURSE OF ACTION

The following points are highlights of the actions a computer operations manager should take to oversee and manage the work of outsourcing service vendors:

- Establish a relationship of cooperative partnership with the outsourcing vendor.

- When obstacles and conflicts occur, resolve them rather than fight about them.

- Even though there is trust and respect between client and vendor, monitor performance and demand results that were contracted.

- Select and rely on a strong liaison representation to coordinate relations with the contracting services vendor.

- Make careful and detailed plans for the steps to transfer the work to the outsourcing vendor and, at termination, to transfer the work to another vendor or in-house.

- Make parallel runs, if possible, with each change.

- Explain the downsizing reasons to employees — clearly, openly, and promptly — and reinforce those explanations regularly.

- Keep current copies of computer data and software in-house.