In a May 2004 study entitled “Leading Causes of Outsourcing Failures,” the Outsourcing Center[1] surveyed 305 buyers and providers in North America, Europe, Asia and India to assess their experiences and opinions about outsourcing failures. One-third of respondents were buyers, two-thirds were providers. They concluded that 25% of the reasons for outsourced project failures are due to poor communication (16%) and cultural fit (9%). If you believed 25% of your outsourcing projects would fail because either you or your provider didn’t understand each other, even though you both speak the same language, or innocently offended each other because you didn’t understand each other’s cultural mores, you would do something about it wouldn’t you?

Multi-cultural or cross-cultural training is a key success factor when considering outsourcing. Gerard (Geert) Hendrik Hofstede is an influential Dutch sociologist whose life’s work includes the study of the interactions between national cultures and organizational cultures. Hofstede defines five dimensions of culture in his study of national work related values which are:

• Individualism vs. Collectivism: measure of how greatly members of the culture define themselves apart from their group memberships
• Long vs. Short Term Orientation: A society's “time horizon” or the importance attached to the future vs. the past and present
• Masculinity vs. Femininity: the value placed on traditionally male or female values
• Small vs. Large Power Distance (PDI Scale): A measure of how widely the less powerful members of society expect and accept that power is distributed unequally
• Weak vs. Strong Uncertainty Avoidance: A metric of how extensively members of a society are anxious about the unknown and try to cope with anxiety by minimizing uncertainty

Having an understanding of the Hofstede PDI scale provides insight into one of the foremost causes of cross-cultural communication failures—the difference between high context and low context communication. The low context communicator expects straightforward conversation. If there is a problem, s/he expects a straightforward answer with specifics. In high context countries, subordinates acknowledge the power of others based on their formal hierarchical positions. The subordinates offer their superiors great respect. Out of respect, the high context communicator doesn’t directly inform their superior of project issues due to the concern that the superior may suffer an offense. Neither person is doing anything wrong. They are merely observing the cultural norms of their respective countries.

Effective cross-cultural training solves the issues that resulted in the 2004 survey’s 25% of project failures. Preparing employees to work outside of their native country or to work with offshore outsourcers is extremely important for outsourced project success. Basic multi-cultural training includes:

• Action plan for living abroad
• Communication characteristics and role
• Doing business in the country
• Eating and drinking
• Education, studies and professional training
• Introduction to culture and history
• Laws, norms, taboos and values of the society
• Leisure activities and customs
• Social contacts, friends and acquaintances
• Relations at work and management
• Women’s life and role in society

Without understanding these cultural norms, communication breakdowns lead to project failures. One of the greatest mistakes any IT organization can make is to enter into an outsourcing agreement without first subjecting its key players to basic multi-cultural training. They'll perform their due diligence in selecting a vendor, but fall short in their due diligence in training their resources.

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[1] The Outsourcing Center is a wholly owned subsidiary of the Everest Partners, L.P.; Two Galleria Tower, 13455 Noel Road, Suite 2100; Dallas, TX 75240; PH: 214-451-3000 FAX: 214-451-3001; http://www.outsourcing-center.com/