Cultural Barriers to Offshore Outsourcing
April 28, 2020
COVID 19 hit us all in surprise. Many business are cutting costs now due to the uncertainty in what will happen in the future. Additionally, organizations will consider offshore outsourcing now only as a way to decrease expenses but a way to get access to a skilled labor force, a boost in flexibility and receiving sufficient quality of service.
Culture though is the factor companies must consider. Why? Peter Drucker once said, “Culture eats strategy for breakfast”. And when we discuss culture in the context of a nationality things get even more complicated.
You’ve decided to search for an offshore outsourcing partner? What should you consider?
Geert Hofstede’s cultural dimension theory is a great start. It’s a framework for cross-cultural communication. Essentially it considers the cultural differences between nations in aspects such as individualism/collectivism, power distance, activity/passivity and communication styles. All those factors can impact commitment, interactions, , interpretation, productivity, comfort, communication and understanding. It’s interesting to see how nationalities differ more and more in the above categories farter and farther they are from each other. As an example let’s consider the Netherlands that is based in Europe with India in Asia.
People in western countries, in general, seem to be a lot more individualistic compared to those in the East. Moreover, Europeans tend to be a lot more proactive. Thus a lot of issues may arise if the cultural difference is not considered beforehand.
What difference does it make?
Let’s take Dutch people as an example. They are interested in hearing what others are thinking about an idea. They want everyone to understand the big picture in order to provide good suggestions for improvement and so on.
Let’s narrow it down to the context of software development. If you have a team of developers based in an Asian country such as India you’ll soon realize that even though they may have great engineering skills they need very detailed specifications in order to deliver the expected results. Here’s what a study, done by Jens Dibbern, Armin Heinzl and Jessica K. Winkler observed:
“On the working level—development, testing, etc. you have to give very precise specifications. And they will do exactly as prescribed. But if you don’t say ‘you should also consider this or that’, if you don’t specify in a clear way—that’s why you encounter a lot of problems in software development projects, because they are not able to relate to the whole.”
Furthermore, communication style differs greatly
For example, Indians are notorious about not saying “No”. But if you’re not aware of that you may receive an end product that isn’t at all what was expected – despite their best efforts. It may have been better in short discussion to mention that they don’t have experience in building certain feature as opposed to just saying “Yes boss. We understand it all” and get to it.
Another interesting element is body language and customs. Indian people express themselves with a nod which doesn’t mean necessarily always mean “Yes”. Different is also the way you criticize. People living in the DACH region are direct & blunt. They just say directly what is the issue and discuss how to solve it.
It can be different in other regions. Approaching an engineer directly about not performing well and placing responsibility on them for a missed deadline will not go well. You should avoid making the person feel bad about a mistake and politely explain it to him. When considering offshore outsourcing you must take all those into account.
Direct or Round-about communication
Nowadays, in the western world, we want all team members to feel engaged. That’s why we strive to be as open as possible and to communicate as often as we can with everyone. We believe that such behavior will lead to better results. It works well in most of Europe and the US. Not as much in the East though. The picture there is completely different. The main difference is that their team has a project manager and all the meetings, communication and information are going through him. Adapting quickly and making changes can be burdensome.
How should you address all these when considering offshore outsourcing to an Asian country?
I would like to share several key findings from the Jens Dibbern, Jessica K. Winkler and Armin Heinzl study:
- Clear definition of roles and mechanisms
- Clear contact persons on different organizational levels and with different functions
- You have to lead them and not rely on their unsupervised know-how -> Strong leadership and coordination
- Provide detailed documentation
- Consider the offshore outsourcing team as a real team and a part of your company. Don’t consider them just as transactional people who have to do a job for a certain payment
- Manage cultural differences
a. Adapt them to your culture – For example make it very clear that it is OK and necessary for questions to be asked if something isn’t clear, instead of just saying “Yes”
b. Adapt your onsite team to the Outsource team Culture – Communicate only through the person who is the point of contact
One additional thing you can consider is to delegate a team member to the outsourcing partner that has a similar culture to yours. This person should communicate clearly what is expected and help manage the differences.
If you consider offshore outsourcing to a country with a very different culture you must be ready to adapt and do the necessary to build a productive relationship. It is your responsibility to know what is considered important for such a partnership to be a success. And it is up to you to do your homework before starting the offshore outsourcing journey:)