Although more and more western and in particular Scandinavian companies choose the digitalization and automation as the path to make their business more efficient and competitive, there are still quite a few of those that see offshoring as the best way to reduce their cost base and stay ahead of the competition. Collaboration pitfalls and barriers in offshoring projects are numerous. Here we explain a few of them based on observations made in multiple offshoring projects primarily between Scandinavia and South Asia.
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Differences in management models
The management models between the Scandinavian and asian cultures are very different. Scandinavian models are based mostly on consensus and put lots of emphasis on collaborative decision making. In Asia and in particular India the management model is very authoritative and hierarchical and the workers are normally not involved in decision making at all. The management models are inherently incompatible and are the root cause of many collaboration failures.
In addition there are also several differences between Asian and Scandinavian workers when it comes to work-life balance. Asian workers tend to work much more, exceeding by far the number working hours usual for Scandinavian workers. This creates some pressure and tension in offshoring projects for instance as onshore Scandinavian workers would receive questions after working hours from their offshore peers and would feel stressed to respond straight away.
High turnover is also having certain effect on the work environment. Asian and in particular Indian workers are changing jobs every few months while in Scandinavia it is common to work several years or decades for the same company. In addition, Asian workers are expected to take care of their families and are often taking extended leaves due to family issues. Scandinavians on the other hand are often very loyal to their employer as well as they can rely more on the social welfare system for taking the care of their families.
High turnover and absence also affects collaboration in a negative direction as it makes it harder to create good relationships at work, reduce the trust, respect and it causes substantial overhead and waste due to frequent on-boarding and knowledge transfers.
Finally, the time difference between Scandinavia and South Asia is also a well-know factor, although it plays smaller role since the time difference is also limited (i.e. 4.5 hours between Norway and India). The offshore partners tend to internalize it and compensate by simply starting working later.
Tools and infrastructure
Efficient tools and infrastructure are often considered as a basic prerequisite, which we are not even conscious of anymore. Communication issues in offshoring projects are unfortunately still very common. In particular one could mention poor telephony and internet lines as well as poor videoconferencing facilities. These kind of issues make the collaboration very hard. Still there are many businesses that struggle with this kind of issues. In an offshoring project this becomes a top important prerequisite. The off-shore and on-shore teams are so dependent on the infrastructure that it simply has to work as efficiently as possible.
Transfer and search barriers
Morten T. Hansen in his book “Collaboration” defines several collaboration barriers, in particular search and transfer barriers. The search barriers are related to not being able to find what you look for in the organization while the transfer barriers are related to not being able to work with people you do not know well.
Transfer barriers in offshoring projects are mainly caused by knowledge transfer phase which is too short combined with very high resource turnover. Offshore workers are often simply unable to acquire enough knowledge and understanding of the subject matter in the short time that the knowledge transfer is allocated to, as well as the knowledge quickly evaporates as a consequence of high turnover. Search barriers on the other hand occur mostly due to insufficient understanding of the onshore organization. Here the turnover and knowledge transfer also plays an important role. Poor understanding of the organization leads to inefficient communication and delays in involving the right people at both ends.
Collocation of the workers in the same office space can remedy some of the drawbacks related to the distance. However even in this case one may end up with different subcultures and groups. Although people are collocated and sit close to each other at the same location they still may tend to speak their native language instead of english. Instead of helping the communication the collocation the two groups will simply end up disturbing each other.
Lack of diversity
Scandinavian high tech workplaces are often very homogeneous and dominated by natives. It is also quite common with high expectations when it comes to use of native language although there are virtually no Scandinavian high tech workers who aren’t incredibly fluent in English. This may contribute to building a work environment which is little open for non-native speakers, does not acknowledge anything else and does not provide a good basis for efficient collaboration between offshore and onshore teams.
At last also the culture is often a major obstacle to efficient collaboration. Cultural differences make it very hard to communicate due to differences e.g. in non-verbal communication. In particular the nodding for yes and no may be completely different in Indian culture than in Scandinavia. Another issue is related to “try and fail” approach which is relatively common way of finding solutions in South Asia. Scandinavians on the other hand take much more rational approach and require more evidence and data before even starting looking at a certain problem or task.
Moreover Scandinavians are simply more cautious and reserved when assessing and reporting the progress, while Asian contractors often may be tempted to provide better reports than the reality as they fear the consequences of negative reports from their own management.
Finally the offshore workers may show difficulties thinking independently enough and making the decisions on their own as they are constrained by their own hierarchy and management. In Scandinavia lack of independent thinking could be regarded as a insufficient competence and creativity which in turn contributes to reducing the trust and respect and again affects the collaboration negatively.
This were a few examples of reasons why collaboration in offshoring projects may be challenging and even fail. In our next article we will look into how to address these issues and improve them.