Understanding Cultural Differences in Offshore Outsourcing

In a recent Accenture study, cultural issues were listed as one of the main reasons for problems in offshore outsourcing deals and over half of National Outsourcing Association (NOA) members surveyed recently also said cultural differences are still an issue in offshore outsourcing deals.

Two factors that are rarely present in any domestic projects, but cannot be avoided when going offshore, are geographical distance and cultural differences.

Geographical distance might be a factor in terms of unfavorable time zone differences but today most of the offshore service providers ensure that their business hours are adjusted to ensure that you have several hours of overlap per day in common.

However the impact of cultural difference is something that should not be ignored when going offshore. Depending on the location you are offshore outsourcing to, cultural differences can vary from minor if you nearshore, for instance in Ireland or Eastern Europe to a real cultural clash if you offshore to low cost countries in Asia such as India or China.

So far India has been the most favored offshore outsourcing destination and continues to be a dominant player in this field. The Indian service providers have matured over the years in providing offshore outsourcing services and are able to manage cultural differences when working with clients across different geographies. However, one area that has so far not received significant focus is educating their clients on these cultural differences. Unless the clients understand these cultural differences, it is hard for them to understand and appreciate them. For example, if you are in a meeting with an Indian service provider, you will observe that the most senior person in the team from the service provider will lead the discussions and his sub-ordinates would only speak when his / her boss asks them to do so. In UK business culture sub-ordinates can interrupt a conversation at anytime if they have a valuable contribution, but if this etiquette was followed in India it would be considered disrespectful. 

Another typical observation with Indians is that they are never comfortable saying “No”, especially if you are a client. For example, if you go to a store to buy a shirt and realize that the shop is about to close, you can still walk in (even after the till is closed)  and the store will ensure that your needs are being served, even it means that they have to keep the store open for another 30 minutes. In IT project scenarios, project members will not mind compromising their family commitments just because they cannot or do not want to say “No” to their clients.

Most Indians are not comfortable giving bad news. They believe that they should give people good news and when it comes to giving the bad news, they are either very quiet or find alternative ways to communicate the bad news. This is an important aspect to understand as many clients get “surprises” about their project related issues at a very later stage and keep wondering why the issue wasn't highlighted during the weekly review meeting.

So the key in offshore outsourcing is not just finding the right projects and the right people to deliver them, but building capability within your team to work with in a culturally diverse environment. Though this may sound very difficult, the solution is simple. Most client organization can successfully “bridge” the cultural gaps by implementing the following tips.

1. Training – Most of the offshore service providers have special “western cultural orientation” programmes for their team members working on offshore projects. These training programmes help them to understand the culture of a specific country including business culture. On similar lines it is important for client organizations to build a training programme for their own staff to educate them on the culture of the offshore destination. This can be achieved by

• Identifying an internal team member who has experience with both the cultures. For example an organization may have a person of Indian origin who has spent considerable time in India and then moved to your country. Usually a person who has worked in India for a couple of years and then relocated to your country (and spent about 5 to 6 years there) would be the most ideal candidate. This person would be able to educate your team on the cultural differences and can act as a lead trainer.




• Seek the services of an offshore advisory specialist. Offshore advisors have vast experience in working with different cultures and have a culturally diverse team who can impart the relevant training to your team members. Most of these offshore advisors understand the cultural differences at different stages of outsourcing and hence are an ideal choice for such training programs




• Request that your service providers carry out training programs specifically tailored for your teams. This could also prove useful to a certain extent and has its own limitations based on the vendor’s experience of doing business in that particular geography. Also ideally the cultural training should be carried out prior to engaging with a vendor so that from day one of the interactions, your team is able to leverage their knowledge regarding the business culture of the vendor organization.




• Since the business culture of each company is different, it is important for you to educate the service providers about your company’s culture - the attitudes, thought patterns and behavior norms. Many companies ignore this aspect, but this is an opportunity to improve the productivity and experience of their onshore-offshore teams.

2. Visiting the Offshore location – This is very helpful and provides your team members an opportunity to experience what the offshore location is like and how people communicate, behave, work, socialize, etc. However, it is not possible for an organization to send all their team members to the offshore location as it would be an expensive proposition. But sending different people (wherever possible) each time there is a requirement for someone to travel would prove useful. Also ensure that people who have visited the offshore location share their experiences with their colleagues and are made a part of the training programme to make most use of their experience.

3. Organizing Cultural Events – As mentioned above, most of the offshore service providers have training programs for their staff. Also, most of the offshore service providers today celebrate events such as Valentine’s Day, Independence Day (US), Halloween Day, Christmas, etc to educate their teams. On similar lines, clients can organize events (with the help of the offshore advisors, vendors) that are important in the offshore location. This will give the client team a learning opportunity.

4. Movies as a training guide – English movies are seen across the globe and as result, many people worldwide educate themselves, besides entertainment, from these movies. Companies can also adopt a similar learning approach by encouraging their people, who are involved with the offshore projects, to watch local movies / documentaries (with English Subtitles) from the offshore locations.

The tips mentioned above is not an exhaustive “To do” list to bridge the cultural gaps, however it is a guide to help your team members understand and enable them to appreciate the cultural differences that they would come across while working on a day to day basis with the offshore teams.

To summarize, offshore projects have special aspects that managers must be familiar with, such as cultural diversity. The long-held belief that technical qualifications are sufficient to ensure project success has proved to be wrong from everyday on-the-ground experience of global multicultural teams in the offshore outsourcing environment. To ensure the success of the offshore project a multi-skilled, collaborative approach to bridge the cultural gaps is very useful. By learning from others experience, bridging the cultural gap at an early stage can help you avoid the cost in terms of cross-cultural communication blunders, project delays, team conflicts and overall productivity.