New studies reveal that the most important key to success is the effective management of the outsourcing relationship. Cultural differences, however, still pose a major problem in outsourcing transactions because many organizations fail to understand what role of both tradition and corporate culture play in dealing with outsourcing providers.

While modern technology has brought about digitalization and enabled businesses to overcome location barriers, it has also put new challenges such as cultural differences to the forefront. Understanding cultural barriers then becomes the key to ensuring that there is no miscommunication in the company and in making way for a smooth workflow.

Below are some tips you can follow to handle cultural differences when outsourcing for your company:


Tip #1: Ensure effective communication

To understand and address cultural differences, there must be constant interactions between you and your employees. This is essential as most software development companies now employ the agile method where teams are able to provide quick responses to feedbacks they receive on a project.

Under this work strategy, teams regularly assess the project in daily meetings to ensure that companies produce the right product. Evidently, this is where effective communication comes in as honest interaction is crucial in creating an empowering process for all team members to voice out and express their thoughts and opinions. Communication also contributes to creating a conducive atmosphere for cultural understanding.


Tip #2: Cultivate an inclusive corporate culture

A study by Accenture, a management consulting firm, shows that 69% of all outsourcing deals fail because of the lack of cultural compatibility. This means that the outsourcing company needs to consider that it has its own corporate culture that employees all over the world will have to deal with. Corporate culture is basically the way things are done within the company and the way people interact and share values.

To illustrate, IT managers who handle the previously mentioned agile teams need to understand the working practices of their members. Outsourcing software development companies have to be more culturally aware so that they are able to create a working environment that respects all team members and, in turn, pave the way for the agile team’s quick collaboration.


Tip #3: Hold regular team-building activities

Given the constraints of face-to-face interactions, it becomes all the more important to create activities that will help overcome the language and cultural barriers among the team members. Outsourcing for team members means that there should be different programs aimed at providing a better understanding of each other’s culture.

If a “meet and greet” type of activity is impossible, online meetings solely intended for getting to know each other in the team are highly encouraged to minimize the risk of miscommunication in the future. Compatibility among the workers is important and addressing these cultural gaps through training and team-building activities can be advantageous for the company.


Tip #4: Provide well-defined expectations

Overcoming cultural gaps also means that there is a degree of agreement among the different parties involved. This is possible if there is a degree of clarity as to what each team member is assigned to do and what he/she is expected to complete at the end of the day. Going back to the example of software companies employing agile teams, employing agile method actually enables the companies to remain competitive in the market by reacting and adapting to changes swiftly.

However, if the goals and the process are not defined clearly, the team members will only rely on their own methodologies which may not be in line with what the company needs. Well-defined instructions and structured processes create a more conducive environment for flexibility and proactivity, especially in outsourcing.


Tip #5: provide good leadership

This aspect is relatively easy to overlook. Often, you may think about how hard it is to work with a certain group of people with different cultures and beliefs and you tend to forget that you have a role to play in this relationship.

It is so common for people to have this mindset that outsourced employees will not know how to work with them. What is often overlooked is that it is you who may not know how to work with your employees. Handling cultural differences is a two-way street and leadership or governance is a big factor in ensuring cultural understanding. It is through good leadership that excellent product qualities are met and the company gets the value it needs from the employees.



With (1) effective communication, (2) inclusive corporate culture, (3) regular team-building activities, (4) well-defined expectations, and (5) good leadership, it is possible for you to handle cultural differences in outsourcing.  Keeping them in mind alongside hiring a good team will ensure a successful outcome for you and your business.

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