Tag Archives: cultural fit

Outsourcing: Overcoming the cultural gap

By Eduardo Coll – Santex’ Operations Director

In the past, outsourcing was a business dynamic only related to major multinational companies. Nowadays, small and medium firms are able to take advantage of this global trend as well. The software industry is no stranger to this tendency: The traditional approach of face-to-face in-house software development has been shifted to a more virtual nature using cutting-edge communication technologies and applications such as instant messaging, teleconferencing, videoconferencing (Skype & Google hangout) and NetMeeting.

But outsourcing does not end with the sealing of a contract and letting the services run. As the business world becomes increasingly interconnected, a new problem is bound to affect the internal structure of organizations, including software factories: The success of a project is highly dependent on the quality management of the outsourcing relationship and cultural differences are one of the biggest issues that companies stand against when externalizing their projects overseas.

Outsourcing fairy tale stories have led people to think that we all live in a globalized world where distance, borders, place and time no longer matter.  However, according to a study made by Accenture in 2008, more than 60% of all outsourcing deals fail, completely or partially, mainly because of a lack of cultural compatibility between the vendor and the client. Therefore, it is critical to understand that large gaps still exist and they have a genuine impact over performance. Time Zone differences, language barriers, distance, difference in customs, diverse decision-making styles as well as occasional face to face meeting, all add up to a series of intangible challenges that companies must deal with when outsourcing.

A great example of cultural difference can be observed when applying diverse software methodologies: In India, China and Southeast Asia there may be a focus on well-defined instructions and structured processes. Work usually proceeds more comfortably in Waterfall and V-model processes. On the other hand, Latin America and Eastern European cultures are similar to that of Western Europe and the USA, may be a more conducive environment to accept the flexibility, proactiveness of Agile methodologies and direct communication.

Another example that shows the importance of the cultural gap is communication: Software development is a communication-intensive industry, especially during the requirements stage which is relied on to remove uncertainty from the process. Because of language barriers, many times conversations lose effectiveness and critical information is missed. When addressed incorrectly, the problems encountered during this phase can create further delays which impact on the project schedule.

The above mentioned facts prove the importance not only of cultural compatibility but also of cultural adaptability. In order to be successful on this global trend, companies need to develop culturally intelligence, which is a form of organizational capacity in functioning effectively in culturally diverse situations. Today, firms can no longer choose their outsourcing providers and destinations only from a cost-effective perspective; other criteria should be introduced to a company’s outsourcing strategy.

How we address the cultural gap at Santex

Outsourcing involves relying on global virtual project teams where managing across cultures is recognized to be a critical factor and a major managerial challenge that requires significant time and effort.

Initiatives for Staff: Fostering international openness  

  • Team members travel back and forth to participate in different activities and local venues from our different offices in Peru, Argentina and the US
  • Everyone at Santex take English classes twice a week with US native speakers
  • Hold monthly Tech-meetups with our offices in Lima (Perú), San Diego and Iowa (USA)
  • Team Building activities: Sport days, Santex changemakers program (volunteering group)

Initiatives for Clients: Managing expectations

  • Set realistic expectations
  • Provide internal visibility
  • Define a successful and appropriate working framework to facilitate the flow of ideas and various initiatives for maximum added value
  • Communicate effectively throughout
  • Consider a face-to-face configuration meeting to bridge the differences

About the AuthorEduardo Coll is a natural born leader. He used to be a Master Java developer for the company but his communication skills opened him a different professional path as an Operations Director.

Sources

Are you leaving money on the table when it comes to IT Outsourcing?

The importance of cultural fit, talent acquisition and scalability.

Clients and outsourcers must work together to agree on deals that work for both parties without compromising either one’s ability to deliver value.  Back in the days when we started in 1999, outsourcing’s primary advantage was cost savings, but now this is no longer the case. There is way more “up for grabs” for clients to take advantage of, but only for those who know how to play it right.

Much is being said in the IT outsourcing sector about the imminent change in which clients and outsources are structuring deals nowadays. Clients are looking for shorter commitments, more flexibility and closer management over the way things happen abroad, leaving sometimes a huge added value going to waste while the relationship last.

It is a fact that outsourcing is not for everyone. One of the reasons you hear many different opinions is because a few key elements must be aligned between the parties, for the relationship to be successful.

The maturity level and cultural-fit of the organizations, are a must. The first serves the purpose of being in an agreement as to where you see value is being added and where you don’t, while the second one sets the working environment and dynamics for that value to be maximized and delivered towards a common goal.

In most cases, short-term relationships lead to little to no added value. If you are looking to plug in a few resources and push a project for a few weeks or months, chances are you are better off hiring a local freelancer than a more established IT outsourcing company.

If on the other hand your organization is seeking a strategic partner to share a meaningful more long-term and mutually beneficial relationship you are always going to be better off with a more serious and established company that can offer a more comprehensive service and talent to increase your chances of a successful delivery.

Another key aspect where clients get the most out of the outsourcer is when they don’t see them as just “developers” but let the outsourcer weigh in its opinion and take a risk just as they would with an internal employee. Sometimes letting the outsourcer take the driver’s seat can have big pay offs and lead to significant changes in the client’s strategy if managed properly, and materialize in better business results at the end. It all depends on the working environment and dynamics set by the client.