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Offshore Outsourcing Challenges

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									Offshore Outsourcing Challenges
Before you consider offshore outsourcing, it is prudent to review the
challenges that may be encountered. The risks include cultural
differences, communication, quality measurement, managing specifications,
security, and organizational issues.
Cultural differences can cause risk when you presume that your culture
does things the right way and that other cultures do things the wrong
way. Worse yet is when you assume that everyone understands your culture,
or when you assume that you know theirs.
Interesting enough, these biases are not specifically American; although
it might seem so when you talk to other executives from foreign companies
that work with American companies. American companies come across as both
arrogant and ignorant at the same time. US companies will be well served
to solicit help from international business consultants when doing
business with a different culture for the first time.
Measurement of quality can be risky due mainly to differing methodologies
for measuring quality along with the ownership of the quality process
itself. Outsourcing partnerships must agree to a standard measure of
quality and to the steps in the measurement process such as design
reviews, which might catch quality problems before they happen. This
could include inspections throughout the process along with orders
“padded” with additional inventory to account for unexpected quality
problems. Also, there is no substitute for strong documentation of work
processes to insure adherence to quality standards.
Offshore outsourcing communication can be fraught with risk due to time
zone differences, language differences, and technology challenges.
Dramatic time zone differences can slow communication in our fast paced
business world, while language differences can cause errors and rework in
addition to conflict in the workplace. Both the offshore outsource
partner and the US headquartered firm need to invest in staffing who are
fluent in the language and have specific cultural knowledge.
Security breach or the loss of intellectual property can also be real
concerns. In this case, extensive reference checking is in order to
verify the integrity of the partner before going into contract.
Additionally, an outsource partner should have documented policies
protecting the rights of the US based firm; of course, this policy needs
enforcement. A good rule of thumb is to provide sufficient sensitive
information needed to complete the work, but no more than that. Auditing
the outsource partner’s facility ahead of time is a good idea; the audit
should include a viewing of the security policies and inspecting the
physical plant for security.
Further, specifications or requirements can be a troublesome area and
once again is a problem stemming largely from poor communication and
rushed schedules. The offshore partner can be pressed to meet tight
schedules without proper “pre-flight” planning. This pre-flight planning
time is well spent on the front end of a project since expectations can
be thoroughly communicated along with concrete specifications of the
final product. Slowing down and verifying milestones and commitments
makes for successful projects, while last minute expedites and verbal
instructions open the project to unnecessary errors.
In summary, US organizations may be structured and operate differently
than the partner organizations. Accommodations to these differences might
include routine meetings with key project management personnel from both
sides; weekly meetings may prove the best frequency. These meetings
should include the review of project status reports while providing a
forum for problem solving.
Dr. Joe Greco is Director for the Center for the Study of Emerging
Markets (CSEM) located in Fullerton, California. As part of the College
of Business and Economics at California State University, Fullerton, CSEM
was established to promote the flow of global information and technology
between the academic and business communities. In particular, CSEM
studies offshore outsourcing and it economic and cultural impact on US
based emerging markets. You may contact Dr. Joe Greco at 714-278-4125 or
csem@fullerton.edu

								
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