While going for outsourcing one should remember that there will be cultural differences. There will be a cultural variation among people. Mainly corporate and national or regional differences create conflicts in outsourcing relationships. In case of corporate differences, a company and outsourcing partner can have differences in working style, authority and structure of the organization. While in cultural differences there can be differences of religion, nation, language, values etc.
Outsourcing has tremendous benefits in every business area, From the finance industry to the IT industry in today’s world every company prefers to go for outsourcing. Between 2023 and 2027, the outsourcing sector is projected to experience substantial growth, with an estimated increase in value of USD 75.89 trillion. This expansion is anticipated to occur at a compound annual growth rate (CAGR) of 6.5%.
So let’s understand the concept of cultural differences in outsourcing relationships and the ways to navigate it.
Importance of cultural compatibility
1. Increased efficiency –
When people of the same culture, values and ethics work there is a lesser chance of misunderstandings. Ultimately it leads to a streamlined process and results in increased efficiency. This may not be the case with cultural differences in the workplace.
2. Greater flexibility –
In the case of a culturally compatible environment, it has been seen that people are generally open to different ways of working and eventually it provides greater flexibility.
3. Shared norms and values –
When people with shared norms and values work together there is less possibility of miscommunication and misunderstanding among people they have a better understanding which leads to better work.
4. Better quality of work –
Cultural compatibility offers a chance to work efficiently and effectively as there is better understanding among individuals leading to faster goal achievement.
Benefits of cultural differences –
1. Increased productivity –
In a workplace with cultural differences, there will be people of different perspectives, experiences and knowledge means different talents will work together to achieve common goals resulting in better work and a more productive environment.
2. Increased creativity –
In cultural differences when so many minds come together to work they bring different perspectives, experiences, working cultures, problem problem-solving skills resulting in increased creativity among individuals.
3. Encourage a wider range of skills –
Cultural differences automatically allows employees to come with different skill sets and expertise which benefits in better product or service offering.
4. Increased profits –
Many surveys have found that companies with diverse management means a company having employees of different cultures performs well. A company might profit if they hire skilled employees who speak Japanese, Chinese or any other international language fluently while dealing with international clients.
Key ways to navigate cultural differences –
1. Establish regular communication –
In outsourcing relationships, people with different cultures and cross-cultural issues might arise. To navigate cultural differences a company should arrange a meeting every once in a while with an outsourced team for clear communication and to avoid misunderstandings leading to better performance. Making sure that every employee can communicate in English and are available to attend meetings while working in different time zones.
2. Set clear goals –
When there are cultural differences in outsourcing relationships, it becomes crucial to define clear goals, priorities and responsibilities for every individual. Defining what quality of work you want and what are your expectations is important and also make sure that everyone is aware of these things. Cultural variation should not be a problem in progress.
3. Relationship building –
In outsourcing relationships where there are cross-cultural differences, it becomes mandatory to build better relationships with the team for better performance. Through in-person meetings, once in a while video conferencing, and various activities will help to maintain a fellowship in outsourcing relationships with cultural differences.
4. Conflict resolution –
We want it or not but if people with cultural differences, speaking different languages, and values will work together, cross-cultural issues will arise. To solve any conflict one should approach the situation with a problem-solving mindset and should give an unbiased judgement for conflict resolution.
5. Embrace cultural awareness –
While navigating cultural differences in outsourcing relationships, embracing cultural awareness is important. Understanding each other’s cultures, and customs, and respecting values and language will help out in building a strong relationship resulting in improved performance.