Offshoring and differences in business & work culture

[karineschomer]

When companies outsource to vendors in different parts of the world, they encounter national differences in business & work culture. For example, U.S. companies with offshore outsourcing operations in India run into predictable differences in management, teamwork and communication styles.

What experiences have you had with navigating these differences? What are some of the main issues you have encountered? What solutions to bridging the cross-cultural gaps have you found most effective?

Karine Schomer, President and India Practice Leader
Change Management Consulting & Training, LLC
www.indiapractice.com

P.S. I've got a short article on "Cross-Cultural Risk Factors in Offshore Outsourcing" I can forward to anyone who is interested.


   

[psarathy]

Karine, would love to read the article. Being an Indian and managing an Indian vendor has been quite an experience. While I have leveraged it to cut through some of the cultural issues - saying "yes" I can do it  really means - we will try to go to the end of the world to try solving your problem but we will not admit we do not know the solution.

Communication I find is critical and having a professional attitude is very important. The challenge is that the standards that one is used to in the US are not the same as perceived in India. I found that in the smaller vendors, such as the one I am managing there is a significant gap between expectations in just about everything - the cultural barrier prevents this from surfacing early in the encounters.

Asian culture in general is hierarchial and almost subservient. Hence in a vendor client relationship - speaking up, admitting lack of knowledge or admitting difficulties is not likely to happen. It is only through communication that these need to be recognized and corrected

[sly182]

Karine, I am also looking forward for your article. Could you please send it to me (I ll drop you my mail in PM).

I am very interested in cultural phenomena of offshore development (in fact it is my ongoing PhD thesis). Especially I am focusing on Russian - Japanese relations, but suppose we have the very same problems and misunderstanding as you.

I would try to contribute to the development of this topic according to material I've already poses.

So, not saying that is all but to be continued.

Once more, looking forward for you article.

[karineschomer]

The article "Cross-Cultural Risk Factors in Offshore Outsourcing" can be found at http://www.cmct.net/cultural_risk_factors.html.

Another article,  "Challenges Indian Offshore Teams Face in Working with Americans" can be found at http://www.cmct.net/article_offshore_challenges.html

Let me know your reactions to the observations made in these articles.

Karine Schomer, CMCT President and India Practice Leader (schomer@cmct.net)

[sly182]

Thank you for the articles, there are right on the mark! Besides those I have found many interesting others at the CMCT site. By the way, the correct link to the first article is http://www.cmct.net/article_risk_factors.html

According to my experience, not so many Japanese offshore deals consider cultural awareness diversion in three risk factors you described in the article (they are focusing on the mixture of what is called Japanese-corporate-national-culture). I suppose diversion into three separate factors is practical approach as it is a “check-list” for the well-planned offshore collaboration.

Once I engaged in a project when Japanese part have chosen the way of constant education of Russian engineers on-site and use some of them as buffer for abroad communications. Thus, all cycle would be locked on a group key managers – no transfer of Japanese managers and specialists was considered. That led into long transaction period (over 5 years!).

Are you working with Japanese customers or planning to execute India-Japan projects? As the India and Japanese cultures, although being Asian, still differs.

You mentioned surveys and reports on the topic in your articles, could you point out the most significant of them?

I would like to notice survey by Unilog (RETHINKING THE OUTSOURCING OF INFORMATION SYSTEMS - THE NEW SUCCESS FACTORS http://www.logicacmg.com/reg/index.asp?fid=17) which points out that 36% of the outsourcing deals failed because of the “social factor”. Although it is tricky to distinguish between cultural and solely social problems, this survey gives interesting numbers. 

Looking forward for you reply!

Regards,
Vladimir Kovalskiy

[Magdalena Szarafin]

Hi

I think these differences are more intensive if you perceive the outsourcing of continental Europe companies. They tend to choose the region region of Central and Eastern Europe as their outsourcing destination.

Why the CEE region?:

- CEE countries belong to the Eueropean Union which implies the same legal and institutional environment,
- employees in the CEE region are well-qualified and their wages and salaries are lower than those of their Western colleagues (however, the cheap of today are the expensive of tomorrow),
- key CEE locations can be reached within few hours, when the journey to India takes much more time and is more expensive,
- "outsourcing is people business: while India is a good partner for UK and US, companies from continental Europe prefer Poland, Czech Republic and Hungary due to similar cultural background and their local language skills (German, French, Spanish, Italian etc.).

Best regards

Magdalena Szarafin

[Magdalena Szarafin]

Hi Vladimir

There is an interesting event in September 2009 in Helsinki: Workshop on International Strategy and Cross-Cultural Management. Maybe relevant for your research project, here is the link:

http://www.eiasm.org/frontoffice/event_announcement.asp?event_id=665

Best regards

Magdalena Szarafin

Thank you for the articles, there are right on the mark! Besides those I have found many interesting others at the CMCT site. By the way, the correct link to the first article is http://www.cmct.net/article_risk_factors.html

According to my experience, not so many Japanese offshore deals consider cultural awareness diversion in three risk factors you described in the article (they are focusing on the mixture of what is called Japanese-corporate-national-culture). I suppose diversion into three separate factors is practical approach as it is a “check-list” for the well-planned offshore collaboration.

Once I engaged in a project when Japanese part have chosen the way of constant education of Russian engineers on-site and use some of them as buffer for abroad communications. Thus, all cycle would be locked on a group key managers – no transfer of Japanese managers and specialists was considered. That led into long transaction period (over 5 years!).

Are you working with Japanese customers or planning to execute India-Japan projects? As the India and Japanese cultures, although being Asian, still differs.

You mentioned surveys and reports on the topic in your articles, could you point out the most significant of them?

I would like to notice survey by Unilog (RETHINKING THE OUTSOURCING OF INFORMATION SYSTEMS - THE NEW SUCCESS FACTORS http://www.logicacmg.com/reg/index.asp?fid=17) which points out that 36% of the outsourcing deals failed because of the “social factor”. Although it is tricky to distinguish between cultural and solely social problems, this survey gives interesting numbers. 

Looking forward for you reply!

Regards,
Vladimir Kovalskiy

[shubh]

Yes, some of the problems you mentioned here are notices by many organizations offshoring various services to reduce production or operation cost. But most of such problems can be successfully dealt by conducting online training sessions for the vendors.

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