Cross-Cultural Risk Factors in Offshore Outsourcing recently ran a decent article on Cross-Cultural Risk Factors in Offshore Outsourcing that overviewed three risk factors that can have a serious impact on the success of an offshore outsourcing relationship that are worth a review.

  1. Corporate Culture Differences
    There’s a chance the client’s corporate culture and the vendor’s corporate culture could be at opposite poles. One could be bureaucratic and the other entrepreneurial; one could make decisions top-down and the other on consensus; one could encourage employees to step-up while the other beats them down; etc. A lack of alignment will present serious obstacles in interactions and have significant bottom-line impacts for both organizations.
  2. National Culture Differences
    Cultural conditioning runs deep, especially in countries like China where the roots of their culture stretches back millenniums. Your people could be autonomous while the vendor’s people are group-oriented. Your people could be absolutist in their ethics and conduct and your vendor’s could be situational. You could want results while they want to save face. If you don’t understand these risks, you won’t be ready for the inevitable pitfalls you will encounter.
  3. Cross-Cultural Competencies of Key Players
    A wide range of players is involved in your organization and that of your supplier. Some will work from their domestic base of operations while others will travel or go on expatriate assignments. But all will be neck deep in the challenge of trying to achieve business objectives in a culturally diverse global environment. In addition to the technical, managerial, leadership and interpersonal skills required for their jobs, the people occupying these roles need to have cross-cultural competence if they are to be successful and not put their company at risk.

Thus, before you enter into any outsourcing agreement, you should perform a cross-cultural due diligence. For more on how to carry one out, see the Cross-Cultural Risk Factors in Offshore Outsourcing article. For more on the types of cultural differences you may encounter in China, Germany, India, Japan, Korea, Mexico, and Thailand, see the SI series on Overcoming Cultural Differences in International Trade.

Overcoming Cultural Differences in Trade with …

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