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Offshoring to India:
Best Practices
The cost advantage of doing certain jobs in offshore locations, most notably in India, is sufficiently compelling that this practice has spread to nearly every major industry. But offshoring can lead to various results, positive or not so positive, depending upon how well it is handled. Some companies have been so successful that they are continuing to expand their Indian operations rapidly, while others have been disappointed by missed deadlines, exasperated customers, and unexpected costs from high employee turnover. This newsletter first describes a common set of issues and then focuses on offshoring best practices for working with Indian partners.
A Typical Case
Dieter Schwartzkopf, an IT project manager, is working on a high stakes offshoring project. The project completion date is scheduled for two months from today. Based on regular meetings and reports from India, Dieter's impression had been that the work was approximately 80% complete. However, the last couple of conference calls with Atul, his project manager counterpart in India, have left him with an uneasy sense that things are not going according to plan. When Dieter asked Atul about meeting milestone targets coming up for the end of next week — these targets involve some very concrete deliverables — he detected a bit of hesitancy. During the conference call this morning Dieter tried to press Atul on the milestones, and Atul responded with a weak "Yes" to questions about meeting deadlines.
At this point Dieter has no idea whether the team will actually come through or not. When he described his concerns to another headquarters-based project manager who has been involved in offshoring work with India before, the other manager mentioned that he had gone through a similar experience in which he thought that the project was 80% complete, but it was actually nowhere near that point, and that his Indian counterparts had been very reluctant to give him a true assessment. Now Dieter is really worried.
What causal factors might contribute to the issues in this offshoring situation? The comparative profiles from the GlobeSmart web tool that are displayed below suggest that there could be significant differences between common sponsors of outsourcing initiatives, located in countries such as the U.S. or Germany, and their Indian counterparts in Bangalore, Hyderabad, or Chennai. For instance, based on their own cultural context, the Indians are likely to demonstrate greater respect for hierarchy, have a more indirect communication style, and place greater importance on relationships. They may be reluctant, therefore, to contradict the expectations of a headquarters manager in an open meeting, and uncomfortable broaching issues in a direct style, especially with someone whom they do not know well. Atul, the Indian manager, probably has plenty to say, but Dieter needs to work together with him to create a shared style of exchanging information, surfacing issues, and resolving problems.
The Perspective from Headquarters
In order to arrive at practical solutions to offshoring issues, it is helpful to further explore the experiences of the different parties involved. Offshoring is not an easy process to begin with from a headquarters perspective. Most companies do not at first realize, for instance, that transferring a specific task offshore requires extensive documentation and standardization of processes that in many cases were previously implicit and unrecorded. A large amount of work may be required to document how client issues have been addressed and how various types of problems have been solved.
In addition, offshoring often means the elimination of jobs in a company's home country that can be done more efficiently abroad. Terms such as "change management" and "process improvement" are sometimes regarded with skepticism by people who see them as fancy words designed to cushion the blow of job cutbacks. Employees who view offshoring in this fashion are likely to be cautious about sharing their knowledge or expertise with others whom they see as a threat to their employment. They might also be anxious to limit offshoring duties to a restricted set of activities in order to minimize the number of pink slips that go out to long-time friends and colleagues. Lack of clarity about information sharing practices can cause employees to either hold back vital information or to share technology that could potentially leak to competitors.
The reduced cadre of employees who remain in the company's home country are probably even more pressed to maximize their productivity than before. Because the focus of offshoring efforts is normally increased efficiency and cost savings, project managers at headquarters are going to want to push to get things done quickly, and also to minimize their own involvement in tasks that are seen as repetitive or optional. They are therefore not in an ideal frame of mind for building warm relationships with new overseas partners or engaging in lengthy explanations or instruction. The impact of this mindset can be a predisposition to find fault as well as a lack of trust towards an overseas partner unless such thinking is brought to the surface and shifted to a more collaborative frame of mind.
The Perspective from India
Although offshoring can have wrenching consequences for people in the headquarters location, a key to pursuing this type of effort successfully is to make sure that employees based at headquarters have an adequate understanding of the perspective of their Indian counterparts and are able to build a mutually beneficial partnership with them. Below are some sample comments from Indians who have been involved in carrying out offshoring work as either employees or contractors. Although there are many positive views as well, the emphasis in the comments cited here is on areas that could be improved:
"Our conversations are always held at a time that is convenient for headquarters. I don't mind working long hours, but I wish they would show us a bit more respect and not assume that the world revolves around them."
"Sometimes when we have conference calls the people on the other side are speaking so fast that it is very difficult for me to get into the discussion, especially if they don't invite our opinion. When this happens I feel like they are just talking by themselves without having a real conversation with us."
"I wish they would trust us more. We have to prove ourselves every day."
"They even require us to make personnel changes without consulting us regarding the qualifications of the individuals involved."
"It is difficult to say no because we are concerned that they will stop sending us work if they begin to doubt our capabilities."
"They see us primarily as a low cost vendor. We can and want to do a lot more challenging work."
Ten Best Practices for Successful Offshoring
There is a growing body of best practices that take into account both headquarters and offshore perspectives. While these may not all apply to every company's situation, we have found it helpful for joint project teams to review and discuss such practices, and also to consider what they themselves have learned and are willing to implement together.
- Face-to-Face Contact
Although saving money is an important objective, offshoring participants have found that starting the relationship with face-to-face contacts is a worthwhile investment. Travel ideally takes place in both directions, with visits from India to the company's home country operations for project planning and/or training, and visits by technical experts or project managers to sites in India in order to get to know and better assess the capabilities of the expanded team.
- Setting Performance Expectations
It is important to not only clarify project parameters from the beginning, but also to make the nature of the working relationship clear. When offshoring partners have not worked together before, it takes some time for trust to be established. Veterans of this type of work recommend a process for setting goals jointly and measuring progress towards milestones, with gradual delegation of responsibility and trust based upon performance.
This scenario begins with tightly spaced goals and deadlines along with close consultation and supervision. As milestones are attained and performance is demonstrated, control is reduced in favor of step-by-step delegation of wider responsibilities. This sequence is preferable to an ongoing atmosphere of constant checking and mistrust from the headquarters side on the one hand, or the false assumption from the Indian side on the other hand that trust does not have to be earned. An unhealthy progression of events for an offshoring operation is for trust to be granted initially based upon naive assumptions about capabilities or resources, and then jerked away when the first disappointment occurs. Throwing tasks over the wall and hoping that they will get done properly is seldom a recipe for success in a new offshoring relationship.
- Ground Rules for Team Communication
Establishing ground rules for team interaction can also help to reduce conflict and ensure that potential issues are tackled in their early stages. Agreement about how quickly the whole team should be notified after a potential problem is identified, for example, makes it easier for Indian team members to step forward with concerns. Many of them have a strong sense of duty towards their work that can override their reluctance to bring up problems directly, providing that the rules for surfacing issues are clear. Other ground rules regarding time windows for responding to messages, the hour of day when calls will be held, and rotation of calls to "share the pain" between time zones can all contribute to team clarity and therefore more efficient working patterns.
- The Weekly Check-in
Establishing a regular rhythm for checking in with each other, regardless of whether there are any outstanding problems or not, creates a positive context for addressing problems when they do arise. Such a regular rhythm of communication can also be supplemented and enriched by using multiple forms of communication (videoconference, instant messaging, e-mails for confirming action steps after meetings) to ensure a steady flow of information and early identification of problems.
- Process Visibility
Often team members in India have tried various approaches to resolving a technical issue, yet in a conference call setting they might report simply that "It won't work" rather than providing a more complete explanation, such as, "We are looking for a solution and we have attempted several countermeasures but still have not been able to find a solution at this time; here are the steps we have tried..."
Offshoring project teams find it useful to share spreadsheets that visibly track progress towards completing tasks, including descriptions of measures that have been tried in order to address outstanding issues. This type of readily visible progress report also helps to reinforce due dates and performance in meeting deadlines. Deliverables can be color coded as green, yellow, or red (moving ahead, encountering difficulty, or stalled) to signify the current state of progress. This provides a neutral way to characterize the current situation that is accepted by all team members. When a project task is encountering difficulties, the conversation is thus more likely to focus on how to respond instead of whether or not there was a problem to begin with.
- One-on-One Communication
As mentioned in connection with the cultural dimensions displayed above, Indians who have been raised in traditional settings have probably learned to communicate in relatively indirect ways and to show deference towards their seniors or superiors in social or business contexts. This may make it difficult for them to raise problems or objections openly in a group setting where higher-ranking managers are present.
One piece of advice for circumventing this aversion to public confrontation is for a project manager to check in one-on-one with key counterpart(s) on the Indian side before and after meetings. Issues are sometimes raised in this context that the Indian manager would hesitate to mention in a larger group setting. When these are known in advance, they can be discussed in a constructive manner during meetings without even citing the source. A related practice is to request an Indian manager to gather issues from his or her team before a meeting so that these can be incorporated into the meeting agenda in an objective, non-confrontational fashion.
- Virtual Meeting Facilitation
Because so many of the exchanges with offshore partners take place in a virtual communication environment, facilitating such virtual meetings properly is vital to effective teamwork. In addition to the usual techniques for effective conference calls (see our previous newsletter on this subject), team members who have taken on the role of facilitator can:
- Share graphics as well as voice through the use of file-sharing programs
- Use virtual communication technology features to allow issues to be raised anonymously by any team member
- Ask "What is missing?" towards the end of the meeting, leaving plenty of room to answer so that neglected issues can surface
- Mutual Progress Reports
Indian teams who are doing offshoring work sometimes mention that they feel they are being micromanaged and interrogated at each step, especially when delays or other project glitches have taken place that raise the level of attention and intensity from headquarters. Offshoring team leaders located at headquarters report that a better team atmosphere is created when there is a two-way conversation: Indian partners are asked for their report, but the headquarters team leader also provides a report that includes an account of his or her own group's obstacles and mistakes as well as accomplishments.
- Asking the Right Question
People who are accustomed to "getting a straight answer" are sometimes stymied by responses from Indian team members that they see as vague or not directly to the point. Within an Indian context it is fine to ask a similar question in a variety of different ways so long as this is not done in an overly forceful or offensive manner. There is often another way of formulating a question that an Indian counterpart finds much easier to respond to openly — this is the "magic question" that suddenly opens up a deeper realm of insight and understanding. Such questions may flag an issue without forcing conflict, or even acknowledge a possible area of difficulty without assigning blame. For example: "It sounds to me like there may be a problem with completing this portion of the project before the deadline. What is the most difficult issue that you are facing?"
- Creating a Development Path
With salaries in the most popular offshoring locations being driven up by eager new market entrants, it is difficult or even impossible to match every salary increase that employees will be offered by competing firms. However, much of the turnover in offshoring settings is driven by the feeling among employees that they have been tasked with repetitive, low-level work and are not seen as real partners. This situation can lead to low motivation and premature departures of the most gifted and ambitious workers. When overseas employees or suppliers are treated as partners who can add greater value through increasingly complex and demanding projects, they are likely to be motivated not just by higher levels of compensation at another firm down the street, but also by learning and taking on more challenging work in their current jobs.
Offshoring has become a reality in a competitive global economy. Companies that take into account both headquarters and offshore perspectives while systematically implementing best practices across their organizations are able to maximize the benefits of offshoring — they also have the best chance of limiting unintended negative consequences.
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