Cultural dimensions in offshore outsourcing

Commerce has historically been a force for cultural cross-pollination. From Marco Polo’s tales of the Chinese court to the CocaColanisation of the world by American exporters, the flow of trade has promoted cultural insight and understanding between the people of the world.

Today business is more international than ever before, with not only goods but business processes and IT systems effortlessly crossing national and continental borders.

But the globalisation seen in the past two decades has been so rapid and on such a scale that the concomitant cultural familiarisation has been unable to keep pace. While technological developments have overcome the geographical distances between workers on different sides of the planet, in many cases the cultural distance is still pronounced.

And that has a genuine impact on performance. Not only is a lot of communication lost if the subtleties of intonation and reference in speech are not understood, it is also nigh-on impossible to manage individuals without understanding their attitudes towards work, towards each other and towards their managers.

Therefore, for organisations that outsource work offshore, promoting greater cultural understanding – and therefore more effective communication – between the various parties around the world will trigger improved productivity and project success.

Unfortunately, the area of cross-cultural comparison is as nebulous as it is fraught with accusations of stereotyping.

“If we are talking about long-term relationships, stereotypes can cloud our judgement,” says Dr Stephanie Morgan, an associate lecturer in organisational psychology at Birbeck University.

“But there is such a thing as a national culture. And that impacts the way people think about time, what their work ethic is and what their motivations are.”

Understanding these factors is of course crucial when working with individuals in or from a particular country.

As Martyn Hart, president of the National Outsourcing Association, explains, few organisations have the intellectual apparatus to fully address the ‘cultural gap’ between in-house and offshore staff.

“Home-grown staff come with in-built cultural ability; cultural knowledge comes free with the employee,” he says. Managers are therefore used to taking cultural norms for granted.

These norms will not necessary stand where staff are from an offshore outsourcing partner. And that requires adjustment.

Bridging the gap

Companies that have actively addressed the cultural gap see more beneficial offshoring partnerships, says Hart.

Executives at insurance provider Norwich Union, for example, are required to spend time in the company’s chosen offshore locations to better understand the people they employ – either directly or indirectly. Others invite their offshore workers to spend time in the company’s home country.

“For many organisations I have spoken to, having people from a foreign culture spend time with them has been a mutually rewarding experience,” says Marianne Kolding, associate vice president of the European services and software research group at market watcher IDC.

One reason why people do not put the necessary effort into developing cross-cultural understanding in outsourcing partnerships is the false assumption that cultural differences have already been eroded.

Although the rise of global media and the Internet are improving mutual appreciation around the globe, “people still underestimate how much misunderstanding can occur between people from different cultural backgrounds,” says Birkbeck’s Morgan.

Kolding agrees: “It would be nice to think that we all understand each other perfectly, but that’s not the reality. It may be a lot better than 40 years ago, but it’s baby steps.”

Of course, national culture is not the only psychological factor at play in outsourcing partnerships. Companies have very individual organisational cultures, usually passed down from their leaders and it is important to take these into account when selecting and managing an outsourcing provider.

However, becoming more familiar with the cultures that are currently reshaping the global economy is an imperative for all businesses. “Even if you think that you are safe in your own little parochial world, you are probably influenced by what is happening in India and China,” says Kolding.

And there is no time to waste in addressing the problem, thinks Morgan: “Western businesses have been touring the world and ignoring the culture issues that arise. They will begin to find they need to make an investment in understanding people.”

Click to read country profiles

  • India
  • The sub-continent that likes to say yes
  • The reluctance of India’s IT and BPO workers to say a direct ‘no’ may hamper project success
  • Russia & Eastern Europe
  • The Soviet Legacy
  • The Soviet past of Eastern Europe leaves it with technological nouse but business naivity
  • China
  • Opening the cocoon
  • After centuries of isolation, the Communist giant is now catching up with the ways of West
  • The Philippines
  • Dial M for Manila
  • A call-centre paradise is thriving despite pockets of unrest

Further reading

Offshore 2.0
Organisations are now looking to their sourcing partners for technology and business process innovation

China’s offshore opportunity
The Chinese IT outsourcing industry has many challenges to overcome. But it also has the resources to pull it off


Alan Dobie

Alan Dobie is assistant editor at Vitesse Media Plc. He has over 17 years of experience in the publishing industry and has held a number of senior writing, editing and sub-editing roles. Prior to his current...

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