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Cultural Barriers to Offshore Outsourcing

Cultural Barriers to Offshore Outsourcing

by
April 28, 2020

Considering the current situation worldwide with the COVID 19 virus, more and more companies are looking to cut costs in order to survive. Many of those organizations will consider offshore outsourcing as a way to decrease expenses, aiming to get access to a skilled labour force, a boost in flexibility and receiving sufficient quality of service.

However, companies must consider a factor that is more subtle and not as easily measurable – culture. Peter Drucker once said, “Culture eats strategy for breakfast”. And when we discuss culture in the context of a nationality scale things get even more complicated.

What should you look for and consider when you’ve decided to use an offshore outsourcing partner?

Let’s start from Geert Hofstede’s cultural dimension theory which is 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 interactions, communication, interpretation, understanding, productivity, comfort and commitment. It’s interesting to observe how nationalities differ more and more in these categories beyond the distance. As an example let’s consider a country in Europe like the Netherlands as opposed to an Asian country – India.

People in western countries, in general, seem to be a lot more individualistic compared to those in the East. Add to this the fact that westerners tend to be a lot more proactive, a lot of issues may arise if the cultural difference is not considered beforehand.

What difference does it make?

From my experience, some people such as the Dutch are interested in hearing what others are thinking about an idea. They want everyone in the team working on something 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 direction in order to deliver the expected results. Here’s what a study, done by Jens Dibbern, Jessica K. Winkler and Armin Heinzl, 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, you may have heard that 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 to have a short discussion to mention that they don’t have experience with 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”. Additionally, the way to criticise is also completely different. In the DACH region, people are blunt and direct. They just approach the team and say directly what is the issue and discuss how to solve it.

In other regions though approaching a developer directly about not performing well and placing responsibility on them for a missed deadline will not go well. You have to be very polite and explain the mistake and don’t make the person feel bad about it. If you consider offshore outsourcing you must take all those customs into account.

Direct or Round-about communication

In terms of communication practice, there is one important pattern. Nowadays, in the western world, we want all team members to be involved and to have open meetings with everyone. We believe that such behaviour will lead to higher engagement on all levels and better results. It works well in most of Europe and the US. But not as much in the East – you’ll see a very different picture there. The main difference is that their team has a project manager and all the meetings, communication and information are going through him. Making time-pressing changes can be difficult and in some ways pointless.

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:

  1. Clear definition of roles and mechanisms
  2. Clear contact persons on different organizational levels and with different functions
  3. Strong leadership and coordination – You have to lead them and not rely on their unsupervised know-how
  4. Provide detailed documentation
  5. Consider the offshore outsourcing team as a real team and part of your company. Don’t consider them as just transactional people who have to do a job for a certain payment
  6. 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 – Don’t have the usual open meetings just communicate with the PM directly

One additional thing you can consider is to delegate a team member to the outsourcing partner that has a similar culture to yours. He should stay there and help the offshore team to understand the differences and what is expected.

In conclusion

If you consider offshore outsourcing to a country with a very different culture you must be ready to address it. In the end, you must know what is important for you and how you measure the success of such a partnership – whether by the decreased costs, better delivery, clients’ satisfaction, etc.

Stoyan Mitov

Blogger at JAXenter, business development director at Dreamix, co-founder at Grajdanite.bg and active sportsperson by passion.

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