Outsourcing and offshoring projects: It is autumn; we are in the Indian city of Pune. Twenty Indian project managers, business analysts and software engineers have gathered in a training room. They want to learn how they can successfully bring the cooperation with a customer whose team is distributed across Germany and the United States back on track. At the moment, however, every single one of them is frustrated. The global programme, in which they work, is destined for disaster.
Uncertainty adds to frustration
Collaboration with that client began last spring with such vigour and enthusiasm. But now everything is just sluggish. The programme manager has already been replaced, and the projects associated with the programme are being rescheduled. Uncertainty adds to frustration. The overall mood is strained, emails are responded to in monosyllables and conference calls are cancelled at short notice. The Indian team members ask: how can the transfer of know-how take place under such conditions? How are we to work cooperatively with the customer at all?
For their company, a world-renowned Indian IT service provider, a lot is at stake. The programme has a volume worth of almost twenty million dollars. An early stop would not only mean a financial loss. It would also damage the reputation of the company, which, of course, would be expensive to repair.
After lengthy evaluations, considerations and due diligence, the client, a multinational pharmaceutical company, has decided to finally outsource its core applications to the Indian company. Up to now, the pharma company has been buying software development services from another vendor in India. These included a few non-critical applications and databases in a pure offshoring model. But this new, comprehensive programme involves the heart of the company’s IT.
For many of the pharma company’s IT staff the core applications are “their babies”. The company’s executive board, above all the CIO and the CFO, have decided that it is time to entrust this now grown-up child into foreign hands. Their objective is to save costs and, at the same time, take a technological leap forward. This can be achieved by not only transferring know-how to the new Indian partner, but also by systematically organising a reverse transfer of technology, processes, best practices and skills.
At the training in Pune, I ask the Indian team to form small working groups and ask them to write down, in an unadorned fashion, where the shoe pinches. Here are the results:
- “We get the feeling that the client teams in Germany and the USA are not treating us at peer level.”
- “Our client does not share the big picture with us. But we need to know it in order to deliver the work we committed to.”
- “We are never clear about their expectations.”
- “We’ve been told several times to be more creative and self-driven. But when we become proactive, our colleagues in Germany and the USA do not welcome it.”
- “They don’t have confidence in our capabilities.”
- “It is difficult for us to understand their accent in the English language.”
- “They seem to value time and deadlines above everything else!”
Ten days later I meet the customer team in Frankfurt (Germany) and a week later the one in Cambridge, Massachusetts, United States. These teams participate in the same training, but with a reverse angle. How do the customer teams experience the cooperation with their new Indian colleagues? What do they find difficult? Where do they need help?
Their answers are as sobering as those the Indian team gave:
- “Our Indian colleagues seek approval from their management for everything we ask of them.”
- “Since we started working with the Indian service provider, micro management at our end has grown considerably!” · “The Indian team only delivers what was specified as a requirement. There is no thinking beyond that boundary.”
- “It’s bizarre: when we meet with the Indian team to discuss progress, only one of them talks to us. The other members of the Indian team sit, listen and nod approvingly.”
- “We have different expectations of when a piece of work is considered finished.”
- “I guess their English grammar is impeccable. But it is really difficult to understand spoken Indian English.”
- “Our Indian colleagues usually meet deadlines but the quality is often poor.”
Three dominant, recurring patterns
When reading these quotes, one might conclude that outsourcing to India was generally not a good idea. In those twenty years since I have been involved with outsourcing and offshoring projects to India, I have come to realise that there are three dominant, recurring patterns.
In the first pattern, a package of activities is curated to prepare both employees and the organisation for the upcoming changes. Employees are carefully brought up to par for collaborating with colleagues in India. Such preparation has to address the operational model as well as the intercultural dimension of the partnership.
In the second pattern, the outsourcing company organises merely a handful of informational sessions concerning how outsourcing should ideally be approached, who is responsible for what, and who the outsourcing partner is. What I also see quite often is that presentations are made about where the outsourcing partner is located (e.g. India), that country’s political and economic environment (e.g. democracy, free market) as well as key features pertaining to culture and traditions (e.g. importance of family, national festivities like Holi and Diwali, spicy curries, etc.). Such presentations are often made by staff members from the outsourcing partner company. It is, of course, true that Indians know their own country the best. But, do they have the acquired skills to view the implications of their native culture on professional life through the eyes of a foreigner specifically based on focussed research, deep realisation and extensive experience?
In the third pattern, I’m called in when the roof is already on fire. Outsourcing projects are often approached as a purely technical, organisational and financial undertaking. The underlying assumption is that planning, processes, technology and lower costs will inevitably lead to success. While decision makers involved in this pattern do hear and read that there are also “soft factors”, they decide to address these if and when they become wildly disruptive. In reality, however, inefficiency and dissatisfaction fester for quite some time until they suddenly erupt.
In all three patterns the people involved need to be approached based on their professional, mental and emotional standing with regards to the outsourcing programme. Those who have fears and reservations need to be informed about potential problems and failures. In my experience, it pays off to be totally honest. This is particularly important in the case of India because there is much confusion in the West about certain cultural characteristics in India (e.g. human rights, inequality of the sexes, caste system, etc.). This is the basis to show that you can solve problems which typically arise when outsourcing, and that it is realistically possible to develop a successful cooperation. Fearful pessimism must be paired with realistic optimism.
Outsourcing to a faraway country and deny any cultural difficulties
Those, on the other hand, who only see a fantastic opportunity in outsourcing to a faraway country and deny any cultural difficulties need to be informed of possible problems. They also need to know how to address such problems. This is especially important in the case of India due to the fact that many people from the West easily become enchanted by this country. I have often seen that people actually project many inner desires on India and thus romanticise it – even in a professional context. Euphoric optimism must be paired with informed realism.
And, finally, it must be made clear to both groups that neither active nor passive sabotage of the project will be tolerated.
The case being presented above belongs to the third pattern: fire in the roof. I was called by the pharma company to develop a curriculum for intercultural competence. I trained hundreds of employees in Germany, the United States and India, and supported the change management team at various levels.
It is a truism that many outsourcing projects nowadays are spread across multiple geographies and are virtually organised. But regardless of whether a project team is globally distributed or sits in a building just around the corner, it has become rare that all team members belong to the same ethnic, national or cultural group. Multiculturalism has become the norm, and so has the demand for intercultural competence.
Although outsourcing and offshoring have matured over the past 20 years or so, program and project managers from North America and Western Europe still struggle to appreciate their Indian colleagues’ approach to work. Reciprocally, Indian team members often feel disengaged when working with their counterparts in the West.
When, on the one hand, companies and people from India and, on the other, Europe or the United States cooperate, there will usually be intercultural conflicts. In most cases that has to do with one of the following five dimensions:
- Hierarchy
One of the first things that Western Europeans and North Americans experience when cooperating with teams in India is the importance that seniority, status, and hierarchical order enjoy in India. A manager’s door is not always open, Indian employees stand up when a boss or client enters the room, and a team member without leadership role refrains from expressing contradiction to a leader’s statements. Still today, the heritage of the caste system subliminally influences thought and behaviour.
- Leadership
Many people from the West learn the hard way that the leadership style common in Europe and North America (such as involving the team in decision-making), is not shared by all cultures around the world. In Germany and the USA you apply a participative style to managing employees. The individual is expected and expects to assume far-reaching autonomy. In India, however, many managers and employees alike prefer a more authoritarian style.
- Communication
In most cases, I know the person from the West feels that he or she communicates sufficiently with colleagues in India. Anything more detailed would be leading up to cumbersome micro-management! The person from India, however, gets a creeping feeling that important information is being withheld. He or she feels as if they were at the bottom of the “food chain of communication”.
- Time management
In Indian mythology there is a concept which suggests that your soul has a time budget of 311 trillion years to realise what it has been destined for. Also, there is the widespread notion that every soul lives through numerous incarnations on Earth. Even though individuals in India might not remind themselves of this concept in everyday life, its mythological power has an impact on the way work is approached. Depending on a situation’s context the individual may award spiritual fulfilment more importance than schedules and technical perfection. In most industrialised countries in the West, on the other hand, behaviour is moulded by Abrahamic mythology.
An individual has limited time at hand (one incarnation), and time is perceived by many to be a limited resource. Depending on a situation’s context, adherence to deadlines and delivery of perfect work may be valued more than oneness with creation!
- Quality assurance
There is no absolute measurement for quality. Rather, it always refers to a given context and certain conditions therein. The benchmark for quality is set rather high in Western industrialised nations. People and corporations live in a largely well-functioning and at times luxurious environment thanks to rich financial means. Countries, however, which are only at the beginning or in the middle of their industrialisation refer to a standard of quality that is subjectively good, but poor from an industrialised or economically almost saturated viewpoint. These different perspectives have a deep impact on what kind of results engineers strive for.
Of course, everyday life in big metropolitan cities located in India is becoming increasingly more modern and progressive. More and more highly educated and far-travelled Indian citizens share values characterized by openness to the world and critical distance to traditional social norms. However, the majority of the approximately 1.2 billion Indians continue to adhere to traditional values and customs. With good reason: their cultural identity is based on a history of civilisation reaching as far back as at least 5,000 years.
This article was first published in Outsource #36.
About the Author: Waseem Hussain is the Founder & CEO of a services company with a specialization on business with India. Before, he was the business manager of a globally operating outsourcing company, after heading a joint venture between a Swiss and an Indian software development company. His key strengths are quickly grasping the clients’ situation, crafting executable strategies and implementing steps towards success.
I find that of CEO level cultural mismatch is more important than ability. When this will vanish that we can expect growth and customer satisfaction.
Aloke
Interesting point!
Thank you Aloke.
I think anyone who hasn’t spent considerable time in India makes up these simplified assumptions and claims he/ she know India and indian culture. After living in 5 different countries and being born in India I have one simple thing to say, India doesn’t have any specific culture. E.g. people from urban background and rural background behave as if they are from different cultures except they use same spices in food, that too in different quantities. Another example u sighted a cast system which reflects why we stand up when boss or customer walks down to us, it’s lot more than you are understanding; I used to stand up whenever my grandfather or my uncle had serious talk with me even though we are from same cast 🙂 Anyways there is always something to learn for everyone just wanted to pass on a message, you don’t know indian culture unless you spend considerable time there; and studying Indian culture from literature is biggest mistake one can easily commit.
In my experience of dealing with teams from various countries across the globe I would say the following:
1. Culture does play a role but not from the religious point of view, 2+2=4 in any culture, may it be North American, European, Japanese, Asian….. The issue has more to do with what is valued at work place, in India the an employee who “knows” about everything is valued more, that results in “jack of all trade” situation while the west and Japan (especially) the value is more for a specialist role. I say Japan especially is due to the fact the I have dealt with R&D engineers of a large Japanese automotive company, name withheld, having engineers working on a COMPONENT for their life, they know ins and out of the component. Loyalty to the company and the working tenure of the employee in the company is far higher in Japan than anywhere else resulting in “super-specialists”. So the specialist would have an edge over the jack of all trades. THIS IS NOT TO SAY THAT IN INDIA ONE WOULD NOT FIND SPECIALIST.
The next point is more important than the first but when coupled together they form a potent combination
2. The self confidence of the engineers is lower, justifiable though. The engineer in India is exposed to far lower lab facilities in India than those in the west, this results in lower self confidence among the fresh or relatively fresh engineers. This is exactly why they need more and more of information as the larger the amount of information that they have the more confident they feel.
In a nut shell my suggestion on the outsourcing would be to choose the company not just on financials but also on the kind of training that the company provides to its employees especially at the junior level and depending on the size of the company and IF POSSIBLE to dig into the educational credentials of the employees of the company as there are large number of engineering colleges in India, some of them operating out of very small building and some of the colleges like IITs have world ranking as well.
Viney Chaddha
Outsourcing or Offshoring to India, there is more to it then just cost savings. Often the complaint from the customers is that they have to spend way too much time over the calls, emails with the Indian team that it sometimes shadows the cost advantage and large numbers that you get in India.
But the success in offshoring needs the customer team to be conversant with the constraints and advantages of working in a follow the Sun model.
1) Always look for some brief F2F interaction in the beginning of each engagement between the key members of both the teams. This helps bridge most of the cultural barriers.
2) Have daily scrum calls/video calls
3) Rely on the vendor manager for his/her judgement of team skills
4) Always insist on a technical manager not just pure play line manager which some of the vendors would push for.
5) Involve the vendor key team in strategy discussion
The list can be longer based on type of engagement, type of project, etc. But bottom-line is that success of offshoring depends on a joint effort by the 2 teams. The collaboration has to be more than the co-located teams.