When things go wrong with offshore outsourcing, people often blame national cultural differences. But those variations are not the real villain of the piece, says Mark Kobayashi-Hillary.

An executive at a big British firm called me recently to ask if I could come and host some training sessions on the cultural issues arising from outsourcing to India. I agreed and started to investigate what kind of advice might be needed.

It turned out the company had outsourced most of its finance and accounting function to a major India-based supplier and was in the midst of an 18-month transition programme – which was becoming quite painful.

The onshore operational team were struggling because the offshore team didn’t respond quickly enough, failed to respect deadlines, and never asked for help when they didn’t understand the tasks they were set.

The management were struggling because they had been promised operational efficiencies – a better world-class service at a lower price, yet in reality service levels had decreased. On several occasions, important account filing deadlines had been missed, resulting in fines for the firm.

The management started to micro-manage the onshore team and the onshore team started to do the work that had been outsourced because they had no faith in the ability of the offshore team to deliver. It was a complete mess.

As I listened to the stories from various levels of the company, I found a recurring theme. Most of the issues could be traced back to the difficulties of working with an Indian offshore firm that operated in an entirely different way, with a different business culture.

Onshore, the accounting team worked using a flat structure. The management had been a part of the team and worked their way up through a mixture of experience and competence – they were able to guide and coach their team.

bangalore street scene

A Bangalore street scene. Onshore staff must learn to communicate better with offshore staff
(Photo credit: Sari Rai/silicon.com)

The offshore team was entirely different. Its junior staff were freshly qualified accountants almost straight from university, while the managers were highly qualified more senior accountants. The managers had greater seniority and more time on the job but not necessarily more experience of this type of client.

The onshore team found that as deadlines loomed and they needed fast decisions from the offshore team, they were hampered by a business culture where no one but the boss could make a decision on changing priorities.

The onshore team found that even when they attempted to set up meetings and regular communications with the offshore team, they would be promised deliveries that never materialised, or they would be let down just before the expected delivery of work, with no time to manage any contingency plans.

Does all of this sound familiar? It sounds like a textbook case of working with an Indian supplier. The people saying yes when they mean no, the deference to managers who have never done the job they are supposed to manage, the inability to make decisions because of a strictly enforced hierarchy.

To be fair to the supplier involved, I never met its team or asked for their side of the story, but I could see the supplier was actually guilty of something quite different from what the client perceived.

The client felt the problems were all about national culture. Its managers thought the way business is done in the UK and India was very different. But the reality was that this was an outsourcing issue alone. It was a first-generation deal.

The onshore team was moving from having their accounting colleagues just down to the hall to a situation where business targets were measured by key performance indicators and where a supplier constantly monitored its service level agreement (SLA).

It’s true the supplier was struggling to find a way to integrate the client’s collegiate culture into its hierarchical system, but if the supplier stepped back from the SLA and started communicating more simply, almost all the issues would have been resolved.

The stereotypes of offshore outsourcing do prevail, and many of these cultural issues really do exist. But it’s worth remembering that there is often a bigger barrier to overcome than national culture – and that is business culture.

Mark Kobayashi-Hillary is the author of Who Moved my Job? and Global Services. He lectures at London South Bank University.