Cross-Cultural Issues in Global Software Outsourcing

1
Cross-Cultural Issues in Global Software
Outsourcing

• Geoff Walsham
• Judge Business School
• Cambridge University

2
Outline of Session

• Case study of Japan-India outsourcing
• Managing cross-cultural software outsourcing
• Theorising cross-cultural interaction
• Conclusions

3
Softco

• Head office in Bangalore, India
• One of the big successes of the Indian software
  industry
• Started doing work in Japan in 1992
• Created Softco Japan in 1998
• Case study based on interviews in Bangalore and
  Tokyo in 2001

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Selected Themes

• Language
• Cultural adaptation of Indian employees to Japan
• Software requirements specification
• Working the Japanese way
• Chinese competition
• Moving up the value chain

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Language

• Major Softco effort to train Indian software
  engineers to speak Japanese
• But relative fluency only in spoken language
• Business in Japan will be in Japanese in the
  foreseeable future
• There is a lot of resistance if you speak in
  English (sales engineer)
• Softco should talk some more Japanese (client
  interview)

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Cultural Adaptation of Indian Employees to Japan

• Food, drinking habits etc.
• After three months in Japan, I felt like running
  away (sales engineer)
• Longer term issues e.g. childrens education
• Recruit Japanese employees?

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Software Requirements Specification

• They (the Japanese clients) often start with a
  2-3 line specification. You need to get out your
  proposal based on this. Business is carried out
  face-to-face with drinks in the evening (sales
  engineer)

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Software Requirements Specification

• You need both top management commitment from the
  client organisation and line manager commitment.
  Unless the line managers think that you can work
  effectively with them, the relationship will not
  work well. Top management commitment is just a
  passport to the territory (sales engineer)

9
Working the Japanese Way

• The Japanese attitude is let us think and
  develop together. In 1995, Softco was not aware
  of this, but they have slowly changed their way
  of doing business. (client interview)

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Working the Japanese Way

• Making documents is not so familiar. There are
  many things which are not written. We understand
  between the lines. If you make software based on
  the Japanese specification, then you wont make
  proper software. (client interview)

11
Chinese Competition

• India represents half the unit price (per
  software engineer) compared to Japan, whereas
  China is one-third
• communication is easier with the Chinese
  Also, the cultural problem is reduced we have a
  similar way of thinking
• Indian companies are, however, better than those
  in China technologically

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Moving Up the Value Chain

• From software maintenance
• To production of requirements specifications
• To ownership of the whole project
• Cross-cultural issues are even more important
  higher up the value chain

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Managing Cross-Cultural Software
Outsourcing(from Krishna, Sahay and Walsham
2004)
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Strategic Choice of Projects
Minimize cross-cultural issues through project choice Embedded software Middleware
Use relationship to learn About lead-edge software To gain domain expertise/move up the value chain
Choose applications s/w only when good cross-cultural working feasible Cross-cultural match Or major effort through staffing/training
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Managing the Relationship
Use systems to harmonise between outsourcer and supplier Coordination/control systems Processes Technology
Understand differences in norms and values Hierarchy/power Business practices
Encourage negotiated culture Bridgeheads and exchange mechanisms Staffing and training
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Staffing Issues
Recognise limits to cultural adaptation Indians cannot become Japanese
Employ locals in some key contact posts As salespersons in the foreign office As on-site workers in the bridgehead teams As key contact points in the offshore site
Use locally-relevant recruitment and retention incentives Salary But also status/expertise acquisition
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Training
Give pre-posting cultural training for supplier employees Language Cultural practices, norms and values
Develop systematic on-the-job cross-cultural training To reflect on ongoing experience To share knowledge with colleagues
Recognise that training needs are two-way For supplier and customer
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Theorising Cross-Cultural Interaction(see also
Walsham 2002)
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Cross-Cultural Interaction

• We are short of both rich description of
  cross-cultural interaction, and theoretical
  explanations of the same (Goodall 2002)

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Hofstede-Type Studies

• Much of the literature concerned with cultural
  and cross-cultural issues in the IS field has
  relied on Hofstedes work (Myers and Tan 2002)
• Five dimensions of culture power-distance
  individualism masculinity uncertainty
  avoidance long-term orientation (e.g. Hofstede
  1991)

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Weaknesses of Such Studies

• Assumption of cultural homogeneity
• No significant analysis of detailed work patterns
• Inadequate attention to the dynamic nature of
  culture

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Alternative Analysis (inspired by structuration
theory)

• Different meaning systems e.g. language role of
  requirements specification
• Different forms of power relations e.g. attitude
  to views of line managers
• Different norms of behaviour e.g. business with
  drinks in the evening

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Structural Contradiction and Conflict

• Contradictions tend to involve divisions of
  interest between different groupings or
  categories of people (Giddens 1984)
• By conflict I mean actual struggle between actors
  or groups Conflict and contradiction tend to
  coincide because contradiction expresses the main
  fault lines in the structural contradiction of
  societal systems (Giddens 1984)

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Contradiction/Conflict in Cross-Cultural Working

• Conflicts may occur if structural contradictions
  affect actors negatively, and they have the
  ability to act
• Japanese resistance to speaking English
• Indian resistance to employing Japanese
• Documentation versus dialogue

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Reflexivity and Change

• Increasing recognition in the Japan-India case
  that cross-cultural issues were important
• Move to negotiated culture? (Brannen and Salk
  2000)
• More movement on the part of the Indians than the
  Japanese (related to power relations)

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Conclusions

• With respect to globalization and ICTs,
  diversity needs to be a key focus (Walsham 2001)
• To be more effective in business
• Also to create a world of increased
  cross-cultural understanding

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References

• Brannen, MY and Salk, JE (2001) Partnering
  Across BordersNegotiating Organizational Culture
  in a German-Japan Joint Venture, Human Relations
  53(4), 451-487
• Giddens, A (1984) The Constitution of Society,
  Polity Press, Cambridge.
• Goodall, K (2002) Managing to Learn From
  Cross-Cultural Theory to Management Education
  Practice, in Managing Across Cultures Issues
  and Perspectives, M Warner and P Joynt (eds.),
  International Thompson Business Press, London,
  2nd edition, 256-268.
• Hofstede, G (1991) Cultures and Organizations
  Software of the Mind, McGraw-Hill, New York.

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References

• Krishna, S, Sahay, S and Walsham, G (2004)
  Managing Cross-Cultural Issues in Global
  Software Outsourcing, Communications of the ACM,
  47(4), 62-66.
• Myers, MD and Tan, FB (2002) Beyond Models of
  National Culture in Information Systems
  Research, Journal of Global Information
  Management 10(1), 24-32.
• Walsham, G (2001) Making a World of Difference
  IT in a Global Context, Wiley, Chichester
• Walsham, G (2002) Cross-Cultural Software
  Production and Use A Structurational Analysis,
  MIS Quarterly, 26(4), 359-380.