Why Culture Differences Is Important in Outsourcing IT

Why Culture Differences Is Important in Outsourcing IT

Outsourcing has been hailed as the modern way of getting quality software quicker and for less investment. But the issue of cultural differences can separate success from failure.

To outsource software development simply means hiring third-party programmers/ companies, usually foreign, to undertake software projects. Outsourcing has grown quite popular, with global ITO revenue peaking at $62 billion in 2018. But even with the benefits that outsourcing brings, there’s still the major challenge that is cultural differences.

An IT outsourcing arrangement brings together individuals from different backgrounds. The client and contractor may come from different countries and even continents, speak different languages, be in different time zones, have different religions, and have different beliefs. All these factors may lead to striking cultural differences. Read on to know what impacts these differences can have and how to overcome them.

H2: What is the Impact of Cultural Differences in Outsourcing

Cultural differences in not something to be ignored. A good number of ITO arrangements fall apart because cultural differences were not addressed from the beginning of the working relationship. Impacts associated with unaddressed cultural differences in outsourcing may vary from case to case. The most common ones include:

• Ineffective communication and interpretation: the vendor may fear to disagree/ contradict the client or ask questions where things are not clear because of their social restrictions.
• Slow progress: differing cultural beliefs on working styles and approaches can lead to a project taking longer than intended.
• Strained working relationship: lack of understanding of each other’s culture can damage the working relationship.
• Dissatisfactory results: poor communication of feedback, differing missions, and inability to talk openly can, in the end, lead to undesired results.

H2: How to Deal with Cultural Differences

If you can overcome cultural disparities, outsourcing can be the best decision for your firm. So, how do you beat it? One way to minimize these differences is by conducting multicultural awareness programs for your staff. Such a program should be aimed at helping your employees to understand the culture and norms of the vendor you contract. However, to avoid these cultural-related problems altogether, you might want to consider nearshoring, one of the three types of outsourcing.

H3: Nearshoring: Outsourcing Without Culture Differences

Nearshoring is the practice of contracting a vendor who is geographically close to your country. Often, it involves hiring contractors in a country that shares a border with your own. Nearshoring offers solutions to those firms who want to enjoy the benefits of offshoring without many of the barriers associated with it. When you nearshore, you eliminate issues that may arise from cultural differences. That’s because neighboring countries usually have many things in common, otherwise known as a shared culture that helps you establish human connections. These may include social norms, ways of thinking, and work style.

Other benefits of nearshoring are:

• No time zone differences, hence quicker response times
• Better understanding of the country’s legislation
• Efficient communication due to shared language
• Greater speed to market
• Fast and inexpensive travel

H2: Summary

Offshore outsourcing offers IT companies a way to save costs and time while increasing efficiency. However, its drawbacks, more so, cultural differences, can have detrimental effects on your agreement with a service provider. Nearshoring allows you to enjoy the offshoring benefits with shorter to no cultural learning curves.