Cross-cultural Risk Factors With Outsourcing

Globalization is becoming increasingly prominent in almost every type of industry, but the upsurge in the IT industry is phenomenal. Firms want to benefit from economies of scale, improve the level of efficiency and gain access to the wider labour market. IT outsourcing is now a highly publicized concept and most industries are now moving in the direction of offshore outsourcing. Due to the ever growing importance of outsourcing we must focus on some of the factors influencing outsourcing relationships such as trust, flexibility, communication and cultural issues. This article is centered on cross-cultural issues in IT/IS outsourcing relationships.

Every country is unique with its own traditional lifestyle and culture and for globalization to succeed it is extremely important to understand how to tackle cross cultural issues in order to promote a better understanding and working relationships. Companies that outsource face increased coordination costs and it is extremely important that the cross-cultural challenges are fully understood for their projects to succeed. One of the researchers in this research paper highlighted the importance of handling cross-cultural factors by saying that it can make or break an offshore project. Companies use bridgehead teams to work in client countries for monitoring outsourced business processes and take important managerial decisions. They face many challenges not only relating to different styles of working but cultural issues such as attitude toward authority, social behaviour and language barriers.

One of the widely recognized studies in this area has been done by a Dutch researcher Geert Hofstede. He describes culture as a collective programming of mind which distinguishes the members from one group or category of people from another. The social environment influences the individuals self-concept and their attitude to risk and uncertain situations. People brought up in different societies have different attitudes when dealing with superiors. This has been referred as Power Distance. In high power distance societies, sub-ordinates accept all the decisions made by the superiors and are generally afraid to disagree. In low power distance societies sub-ordinates prefer to be consulted in the decision making. Some researcher measures power distance in terms of social inequality. Societies form a certain hierarchical structure based on wealth, intelligence, social status and others. In such societies there is a high power distance and where people are treated equal irrespective of status and power, there is a low power distance. India has a high Power Distance.

Individualism/collectivism shows how an individual perceives himself in culture, either as an individual entity or as a tightly knit group. In individualistic culture individuals are expected to take care of themselves, whereas in collectivist culture individuals owe allegiance to their group in which they belong. In a highly individualistic country employees prefer to work independently. They desire well-defined objectives and give priority to their personal goals and rights and prefer to work on a contract guide. Superiors, in such cases must use outcome controls to monitor the performance of workers. In collectivist countries employees have more interpersonal relations and prefer to work in harmony with group members. Team members have a sense of duty and obligation towards their group members and give priority to social norms. Employees have a moral obligation to their employer and appreciate any training and learning opportunities. Managers, in such a situation use behavioural control to monitor progress. Indian culture shows a mix of Individualism and collectivism.

Another factor is the gender roles that exist in different cultures under masculinity/femininity. In a more masculine culture men are supposed to be strong and assertive that focused on material success whilst women have a gentle, caring side and focuses more on the quality of life. However in a more feminist culture both men and women possess similar qualities and are concerned with relationship and are both focused in improving the quality of life. The Indian culture has always been a pre-dominantly masculine culture. Uncertainty avoidance is where employees prefer to work under a set of strict rules, in other words they expect things to be more predictable. The uncertainty avoidance index indicates the tolerance a culture exhibits towards unfamiliar or ambiguous situations. However in weak uncertainty avoidance countries employees are averse to rule books and are adventurous with ideas and change. Hence managers can consider adopting informal modes of control instead of requiring employees to follow a set of procedures. India has a high uncertainty avoidance index.

Some researchers have also identified the English language skills as one of the major barriers in cross cultural relationships. India in comparison to China has the language advantage as Indians are more proficient in the English language than Chinese. The Chinese seem to be better in reading the English language than speaking or listening. E-mails will therefore be more effective than teleconferencing. However, the response from e-mails may be slow and activities that require an immediate response will be affected, especially when there are conflicts involved.

About the Author:
The Author has been writing for over 20 years. He is a qualified journalist and has worked in PHP Application Development writing for the last few years especially about Outsource Software Development and Software Development Company. For more information visit http://www.OTSSolutions.com/

Source: http://www.articlesnatch.com/Article/Cross-cultural-Risk-Factors-With-Outsourcing/4048500

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