Outsourcing Internationally

Over the years we have worked on scores of projects involving outsourcing projects to India, China, Mexico etc. and our brief is always the same – to try to make the interface between the outsourced operation and the home teams in the West work more effectively. I have come to recognise a pattern with regard to where things tend to go wrong and therefore the things that need closest attention. You may think that how you structure performance metrics, for example, is not a cultural issue but it most definitely is.

The issues highlighted below are not in any particular order but all play a major role in reducing cross-border efficiencies. Some of these areas of interest are inter-personnel and can be significantly improved through quality, targeted training; other areas are more strategic and need to be addressed as such at the most senior levels of an organisation.

Corporate structure: Most outsourcing destinations are hierarchical. There’s no getting away from that – they just are and will be for the foreseeable future. The fact that society at large is hierarchical in most emerging economies also mean that the local mindset within the business environment is also hierarchical. This is neither a good thing nor a bad thing – it is just the reality of the situation. The problem is that lots of Western companies want to introduce a much flatter structure into their outsourced operations. Why? Is it because flatter is better or that we feel the need to have the same approach everywhere around the world?

Before starting your outsourced operation you really need to think long and hard about corporate structure. If you are to avoid the curse of high attrition rates you need to analyse how you will organise your corporate structure. Are you going to impose a standardised, Western approach or will you adapt your approach to ensure best fit for the territory?

Metrics: This is a perennial problem. We measure everything and then punish if the metrics are not met. The standards are always (understandably) high but when I challenge the ‘home’ teams as to whether these metrics were always met when the work was done back home, the answer is usually that they weren’t even measured back in the day. The problems accruing from this are threefold:

• The home teams lose confidence in the India teams because they are perceived as failing to meet their KPI’s on a regular basis
• The outsource teams see failure to meet the metrics as detrimental to their chances of moving ahead with their careers. If I can’t hit my targets, do I have a future here?
• The result of this is that the two sides spend lots of time arguing about whether or not the metrics have in fact been hit – almost ensuring that next month’s metrics will also be missed.

It is so important that the metrics you set the outsource teams have some kind of resonance with the needs of the home team. Metrics are often quantitative and the complaints of the home teams are usually qualitative. If you set quantity as the metric – that’s what you get. Lots more thought generally needs to be put into this area. Honestly, I’ve never worked on an outsourcing project where this dissonance hasn’t been a major source of frustration.

Attrition rates: These are notoriously high in outsourced BPO and KPO environments. This becomes a real problem when you need to build in-depth corporate, client or product knowledge within the remote teams. If people leave on a regular basis – you constantly have to train new people and this can result in poorer service and increased costs.

So why are attrition rates so high? There are lots of reasons but some of the key factors are:

• Aspiration – people want to progress and they want to do so quickly. If I can’t find that progression with this organisation because it has a flat structure, I can go next door and they’ll give me the promotion/salary hike/ job title I’m looking for.
• Boring work – let’s face it, we often sell the off-shoring model to the home teams by telling them we are moving all the boring, repetitive work offshore. Well not surprisingly your highly educated, ambitious, enthusiastic colleagues in India, China, the Philippines etc. also find this boring work of little interest. So they move looking for a more stimulating environment.
• Feeling like a commodity – Employees in emerging markets like to have a close, familial relationship with co-workers but very often they are just seen as a commodity at the end of an email delivering a product. This is not conducive to developing a one team approach where people feel valued.

There are other reasons in addition to these and you really need to have policies and processes in place to counter this trend – and I firmly believe that the home teams need to take a leading role in addressing this. It can’t be simply left to remote leadership because so many of the problems tend to originate outside the country.

Using initiative – the most consistent issue that comes up when talking to home teams about the challenges they face when working with co-workers in outsourced destinations is that they do not show any initiative. This complaint comes up every single time I work on these projects. On the other hand, I get lots of complaints from the remote teams about the incredibly poor instructions they receive from the US or the UK.

So what’s going on here? Again it’s complex and deeply cultural in origin. As already stated, most emerging market business cultures are hierarchical and as a result leadership style tends to be more authoritarian in nature. Leaders are expected to give direct and precise instructions and followers are expected to do what they have been told to do. Instructional style in the West is more subtle and indirect. People in the West are familiar with being given vague goals and left alone to work out how to achieve those goals.

The result of this is that Indians often receive only partial instructions and they then do precisely what has been asked of them – but this will frequently fall short of what the home teams actually wanted to be done. Lots and lots of work need to be done on this to iron out a misunderstanding on both sides. Fail to address this issue and you are guaranteed to be building in inefficiencies.

Over-assumptions – the home teams just often assume that their remote colleagues will somehow automatically understand the way things work in the West, what client expectations are in the USA, how a product line fits into a wider supply chain etc. Why should they be able to do that if they’ve never been to the States or have no previous knowledge of your industry?

The average age of workers in the BPO and KPO industries in India, for example, is very low – maybe around 24 years old. Your team in India are probably very technically capable, talented and enthusiastic but they are not necessarily commercially astute. How can they be a 24? Imagine if 80% of the people back home were 24 – you’d probably be lacking commercial acumen there as well.

Don’t just train people on technical, process and product issues. Look at their commercial development as well. The comments above are not meant as a criticism of either the home team or the remote teams – they are simply issues I have come across on a consistent basis over the past 15 years working globally on these matters.

If you are interested in discussing how you can improve efficiencies and performance in these type scenarios let me know. We have a great deal of experience and can add really, practical imput to help you become more efficient.