My training and consultancy organisation, Global Business Culture, is extensively engaged by multi-national companies who are involved in outsourcing deals to India and who recognise that one of the major challenges they face is working virtually with a large, culturally incompatible team.  Indeed, I would maintain that the major challenge in any India outsourcing programme will – in the short to medium term – be of a cultural incompatibility nature.
The challenges faced by international organisations which embark on these outsourcing projects are fairly widely recognised and could be typified as:
•    Unwillingness on the Indian side to take the initiative
•    Lack of understanding of western markets and client expectations
•    Communication difficulties
•    Overly hierarchical structures and leadership styles which slow everything down
•    Ambition and family pressures driving attrition
•    Etc, etc.
The short to medium term impact of these issues is that they add significantly to the cost of the entire outsourcing project and that the expected savings are nowhere near as great as initially envisaged.   Attrition, training needs, slowness of response, natural mistakes, unwillingness in the ‘home’ teams to help Indian counterparts, more attrition, more training – all of these things rack up unforeseen costs to a level where cost benefits can, actually, be non-existent.
And this leads me to my real point.  It might appear a no-brainer that organisations will (in a time of recession) automatically look for cost savings through off-shoring to India but at a point in the cycle where short-term cost saving seem to be the acute necessity of so many global firms, will FDs and CEOs be willing to put the significant levels of investment in without seeing immediate and tangible cost benefit returns.
Those organisations who take a more objective view will probably still invest in off-shoring for the longer term benefits but those organisations who are driven by more pressing, short-term goals may postpone the investment until things get better.  Paradoxically, the need to save costs might prevent people taking the long-term, cost saving option.
I argued in an earlier blog that US short-term mentality has got us into this current economic mess and I’m worried that the same short-term mentality might export even greater problems to the burgeoning markets of India and China.

This entry was posted on Tuesday, January 13th, 2009 at 19:18 pm and is filed under Working internationally. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.