MANAGEMENT IN ACTION – SOCIAL, ECONOMIC &

ETHICAL ISSUES

Disruption Due to Outsourcing

A Case Study on Juniper Networks

By –

SAIKAT SAHA
A001110718017

MBA – Class of 2020

AMITY BUSINESS SCHOOL, AMITY UNIVERSITY, NOIDA

CONTENTS

1. Abstract ................................................................................................. 3

2. Introduction ........................................................................................... 4

3. Literature Review .................................................................................. 5

4. Objectives .............................................................................................. 6

5. Problems Faced ..................................................................................... 7

6. Suggestions ............................................................................................ 8

7. Conclusion ............................................................................................. 9

8. References ............................................................................................. 10

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ABSTRACT

Juniper Networks, an American multinational corporation headquartered in California took a

major decision to outsource most of its IT related work to IBM. With this decision it was
announced that majority of its present employees were to be transitioned to IBM while
retaining only a small percentage within Juniper. The organisation started the outsourcing
process with the assumption that since the work location and projects would be unchanged
there would be low to minimal resistance and disruption to service.

However, the transition did not turn out as expected. The firm came across various challenges
due to decision – attrition, internal transfers, low employee morale were a few.

This study aims at providing suggestions on how Juniper could have approached the
outsourcing transition task efficiently working in parallel to IBM to ensure a smooth
transition.

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INTRODUCTION
In the mid-20th century when US firms looking for ways to cut costs and lower manufacturing
costs turned to Asian countries with lower labour costs transferred their manufacturing
facilities to take the advantage. This came to be known as outsourcing.

Outsourcing can be defined as a business practice through which jobs or services are farmed
out to a third-party organisation. Outsourcing, sometimes also referred to as ‘contracting out’
transfers tasks, operations, jobs to an external workforce through contracting with a third
party for a certain period of time.

ADVANTAGES
1. Swiftness & expertise.
2. Concentrating on core processes rather than supporting ones.
3. Risk-sharing.
4. Reduced operational & recruitment costs.

DISADVANTAGES
1. Risk of exposing confidential data.
2. Hidden costs.
3. Lack of customer focus.

Juniper Networks Inc. is an American multinational corporation founded by Pradeep Sindhu

in 1996 and headquartered in California. The company deals in networking products such as
routers, switches, management software, etc.

The vision of the company is stated as such, “We exist to solve the world’s most difficult
problems in networking technology. We bring simplicity to networking with products,
solutions, and services that connect the world.”

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LITERATURE REVIEW

Chang Seob Yeo and Vafa Saboori-Deilami (2017) conducted a study on “Strategic
challenges of outsourcing innovation in global market”. Their objective was to find out that
under which circumstances MNCs should outsource the innovation function. They concluded
that dissimilar characteristics between the home and host country affects the autonomy of the
innovation at the host country.

Zafar Iqbal and Aasim Munir Dad (2013) wrote a paper on “Outsourcing: A Review of
Trends, Winners & Losers and Future Directions”. They analysed the outsourcing trends in
the past decade and forecasted the future on the basis of it. They concluded that offshore
outsourcing will be on the rise in the future and India’s position as a place for IT outsourcing
can be challenged with new emerging players.

Barbara Mihm (2008) conducted a study on the topic “Outsourcing Customer Service:
Applying the Value Chain as A Method to Improve Service at Call Centres”. The author
analysed data from customer satisfaction surveys on computers regarding technical support
from Dell, Hewlett-Packard and Apple, which was gathered by Consumer Reports in March,
2006. Based on her findings, she recommended some guidelines for companies going for
outsourcing such as doing prior investigation, finding customers’ expectations, practice
information sharing in call centres etc.

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OBJECTIVES

1. To understand the problems faced by Juniper Networks in the outsourcing process.

2. To come up with suitable solutions to solve the problems discovered.

PROBLEMS
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Juniper Networks, an American multinational corporation headquartered in California took a
major decision to outsource most of its IT related work to IBM. With this decision it was
announced that majority of its present employees were to be transitioned to IBM while
retaining only a small percentage within Juniper. The organisation started the outsourcing
process with the assumption that since the work location and projects would be unchanged
there would be low to minimal resistance and disruption to service.

However, the transition did not turn out as expected. The firm came across various challenges
due to decision – attrition, internal transfers, low employee morale were a few.

1. Resistance by employees affected by the outsourcing.

2. Disruption in service.

SUGGESTIONS
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Following the Triad would have helped Juniper Networks in a successful transition in
outsourcing. The three main aspects of the triad are plan, communicate and measure.

1. PLANNING

A well-established plan is of foremost importance for any decision to be success. Planning

early and in detail would have helped Juniper foresee some of the problems that arose in the
transition.

2. COMMUNICATION

Communication is essential and of immense importance for decision that affect a major
number of employees of the organisation. The employees who will be affected by the
outsourcing decision has to informed of the changes they will undergo. Meetings to establish
a clear positive outlook for the transition is crucial.

3. MEASURING

Measuring the success of transition in outsourcing is as important as the transition itself.

Keep a check on the transition plan and following up and measuring any deviations to take
correcting measures.

The above steps consist of various sub-steps which can be summarized as follows –

a. Following a clear and robust transition process.

b. Communicating is important.
c. The social aspect matters.
d. Identify key people and concentrate efforts on them.
e. Increase in job scope.
f. Bridge the culture gap.
g. Overcome resistance.
h. A dedicated transition team is an ideal solution.

CONCLUSION

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Juniper Networks’ outsourcing decision with IBM has been one of its major projects in the
recent past. The decision created a great deal of upset and disruption in the organisation’s
environment. Following the suggestions mentioned earlier could streamline the transition
process and reduce the resistance from the employees.

REFERENCES
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1. Andersen, M. K., & Ankerstjerne, P. (2010). Successful Transition in Outsourcing. ISS White
Paper, 7-14.

2. Iqbal, Z., & Dad, A. M. (2013). Outsourcing: A Review of Trends, Winners & Losers.
International Journal of Business and Social Science.

3. Yeo, C., & Saboori-Deilami, V. (2017). Strategic challenges of outsourcing. Asia Pacific
Journal of Innovation and Entrepreneurship.

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