Global Outsourcing Myths & Mistakes: Regaining Control Part 2
Global Outsourcing Myths & Mistakes:
Regaining Control (Part 2 of 2)
[For Mistakes 1-4 (newsletter Part 1) please click here]
| 5. | Outsourcer management does not fully understand how to work across cultures The outsourced vendor appears to commit to performance targets, deadlines, etc. but routinely ignores these promises. Here is a quote from a manager:
You spend time and money from your budget to recover from late deliverables and poor quality. This is another hidden and unplanned cost. | |
| Analysis and Recommendations | ||
| a) | Outsourcing managers and executives find themselves managing an offshore effort due to an organizational need. Often they do not receive training in how to be effective in multicultural environments and how to manage operations thousands of miles away. For example in many cultures not saying anything is not equivalent to saying “yes”. Yet in the western mind-set, we assume that it is a “yes”. The situation gets worse with use of acronyms and expressions like – “He threw me a curve ball”, “I need this ASAP” etc. In addition, we expect everyone to come directly to the point and say what is on his or her mind. This is not how business works in most Asian cultures. Therefore many western managers end up with poor results when they depend on offshore resources. Though they can develop this skill over time, training in this aspect of offshoring will help them get up to speed rapidly. [Contact Auerbach International for in-person and written training resources]. | |
| b) | Clearly define the processes for managing in a distributed environment; after all you are dealing with issues on the other side of the world…. physically or culturally. | |
| c) | Determine well in advance your offshore managers’ competencies; you need to make sure that they can meet your needs. | |
| 6. | Offshore implementation teams do not fully understand how to work with western clients This is same issue as number 5, but from the offshore provider side. The business development and senior staff whom an outsourcer meets to set up a contract understand the issues well. But this soon gives way to implementation and actual work – whether it is development, QA, support, IT or manufacturing. These teams are not well versed in understanding the nuances of working with a western client. In addition to language and accent issues, their sense of what a deadline means to the client is not understood. The offshore teams work very hard, but when the clients complain about not delivering, the morale offshore tanks and further compounds the problem. This can set up downward spiral. | |
| Analysis and Recommendations | ||
| a) | Make sure the vendor provides training to their implementation teams about working with western clients. [Contact Auerbach International for in-person and written training resources]. | |
| b) | Help these teams understand issues specific to your environment which may be above and beyond the generic cultural issues. | |
| c) | Assuming this extra resource is available, you may be able to have someone from the offshore vendor stationed at your site (also known as “on-site coordinator”), which may help the problem. It is an option. But it will not work for all situations. You need to evaluate cost of such staff (which will be like adding a person at US costs) and loss of efficiency from an additional layer of communication. | |
| 7. | Dealing with low offshore productivityA headquarters manager recently commented, “My staff in the US can do the work of two people offshore.” He is not alone or unique. Many managers mention variations of this theme. They complain that low productivity in the offshore operation is eliminating the cost benefits that you used for justifying the move to offshore in the first place. Added to low productivity are costs associated with travel, communications and duplication of equipment, to name a few. The implied conclusion by at least some of the home office staff is that offshoring is not saving money after all and was a bad idea to begin with. | |
| Analysis and Recommendations With time, offshore productivity can begin to suffer; this is especially true when an offshore operation begins to grow. You need to take stock of various possibilities that impact productivity. Here is a checklist:
How have you integrated these criteria into your own offshoring plan? | ||
| 8. | Basing your vendor payments on “outcome-based” metrics What you don’t measure will generally get neglected. You should identify the critical areas and establish metrics; just the fact that you have communicated your decision to watch these key metrics often improves performance. | |
| Analysis and Recommendations Traditional outsourcing models focus on input: for example, staff hours, person months, emails answered or number of calls processed. On the other hand, outcome-based metrics focus on output, i.e., reaching business goals such as customer satisfaction, customer loyalty, cost as a percentage of revenues, etc. | ||
SUMMARY AND NEXT STEPS
While many companies are frustrated with offshore outsourcing, you need not be one of them. The first step is to do an assessment to get a handle on how well the offshore initiative meets your objectives and which of these issues apply in your situation.