Outsourcing jobs to India.
Outsourcing to India
The process of globalization led to significantly increased competition in most business fields. Local companies are forced to compete in their domestic market with foreign companies that come with less expensive products and services. In order to maintain their competitiveness, companies must apply strategic alternatives that allow them to reduce their costs while maintain their quality level. Outsourcing is one of these strategic alternatives. Most corporations started by outsourcing their production process to cheaper destinations in order to reduce production costs and to be able to provide competitive prices. In addition to this, companies decided to establish several production plants near the markets they intend to address. Furthermore, companies continued the process by outsourcing it jobs in order to reduce costs with the workforce and to benefit from the knowledge and experience of employees in other countries.
The most preferred destinations for outsourcing are represented by China and India. These emerging markets resent several advantages for Western companies that outsource some of their processes. They provide a wide talent pool and skilled workforce at lower costs. Additional expenses are also less expensive in these countries. Given the fact that numerous companies outsource their processes and benefit from reduced costs, this situation determines other companies to follow this strategy.
However, when deciding to outsource some of their processes, companies must also take into consideration the disadvantages of this activity. For example, some of the customers that purchased consumer goods have complained about the quality of these products. This is because the workers in these countries are not necessarily able to reach the high quality standards imposed by these companies and their customers.
Advantages of Outsourcing to India
The outsourcing process is connected with the globalization that started to impact India since the early 1990s the country’s government identified the potential opportunities that could be exploited with the right strategies in order to improve the country’s economy. Therefore, the government developed and implemented a series of liberalization and privatization reforms. One of the most important reforms is represented by the privatization of the telecom services sector. The strategy determined a series of business opportunities for Indian and Western companies because numerous inbound call centers, telemarketing services, and data processing centers were developed (Outsource2India, 2011).
This was followed by the outsourcing in the it industry. Initially, companies outsourced medical transcription services. In addition to this, the Indian outsourcing market provided services that refer to data processing, medical billing, and customer support services. The range of the outsourcing services provided by the Indian market significantly developed, and it currently includes also database marketing, web sales and marketing, accounting, tax processing, transaction document management, and others.
There are several advantages that India can provide to companies that want to maintain their competitive advantage. The most important advantage is represented by the reduced costs that Indian companies provide for their outsourcing services. Some of these companies claim that by outsourcing to India, Western companies can save more than half of their operating costs. In addition to this, India is able to provide a continuously growing workforce that is highly educated, skilled, and trained in several technical fields. The technical talent that characterizes most of the Indian workforce allows the country to provide cost effective services. This way, outsourcing companies can expect not to reduce the quality standards they established.
In order to support these quality standards, Indian companies that provide outsourcing services focus on using cutting edge software, technology, and infrastructure. These are considered to be the most important ingredients that determine high quality services. From this point-of-view, India is advantaged in comparison with other outsourcing destinations. This is the reason for which India is preferred for outsourcing it and other technical services, while China is preferred for outsourcing production services.
There are certain aspects that must be taken into consideration when companies decide to outsource their services. One of these issues is represented by time zones differences. This is another advantage that India has in comparison with other outsourcing countries. The outsourcing companies in India are able to provide continuous assistance.
When investing in other countries, companies are interested in the economic, political, and social environment in these countries. This is because the stability of their environment contributes to the company’s stability. The fact that the Indian political environment is a stable one has determined Western countries to choose this outsourcing destination. The country’s government is committed to support the development of the it sector by financing technology and infrastructure.
The Cultural Dimension
The cultural environment is an important factor that U.S. companies assess when outsourcing some of their processes. The cultural differences between the Western civilization and the Indian one refer to numerous aspects that must be understood by all stakeholders when outsourcing. Indian employees respond to different types of motivation than U.S. workers. Therefore, it is necessary that U.S. companies benefit from the advice of specialized Indian companies.
Given the cultural differences between the two countries, in order to make correct business decisions, U.S. companies should not behave in India in the manner they behave at their headquarters. Significant research in the field has been conducted by Geert Hofstede in order to help individuals and companies understand the differences between cultures and to reduce the conflicts determined by these differences. The cultural dimensions identified by Hofstede as factors of influence are represented by power distance index, individualism, masculinity, uncertainty avoidance index, long-term orientation.
The Cultural Dimension of India
The highest scores of India’s cultural dimensions are represented by the power distance index and by the long-term orientation. This means that these cultural dimensions are representative for the country. India has a power distance index higher than the world average. This means that there is a high level of inequality of power and wealth in the Indian society. It also means that the country’s population accepts this situation as being something normal (ITIM, 20090. The fact that the country’s long-term orientation is higher than the world average reveals a perseverant and parsimonious culture.
The country’s masculinity index is also rather high in comparison with the world average, which means that there is a significant gap between men and women’s values. In addition to this, this index means that the female population in this country tends to be more competitive and assertive than that in other countries, but not as much as the male population.
The country’s individualism index is slightly higher than the world average. This means the Indian society is characterized by collectivism. In other words, Indians are oriented towards integrating in strong groups, usually represented by extended families. The lowest score in India’s case is represented by the uncertainty avoidance that is significantly lower than the world average. This means that the Indian culture is more open to unstructured ideas and situations. It also means that the Indian society is characterized by a small number of rules intended to control situations.
The U.S. Cultural Dimension
The highest dimension in the case of the U.S. is represented by individualism that is significantly higher than the world average. This means that the country’s population has an individualistic attitude and people are usually self-reliant and look out for themselves and for their family members. The country’s masculinity index is also significantly higher than the world average. In other words, male are dominant in the society and in the power structure. This determines the female population to become more competitive and assertive.
The country’s low uncertainty avoidance index reveals the fact the U.S. society is characterized by a small number of rules and it is not oriented towards controlling situations. In addition to this, the country’s culture tolerates various ideas (ITIM, 2009). The country’s power distance index is lower than the world average, which means that the U.S. society is characterized by equality between social levels. This determines cooperation between power levels within the country and a stable cultural environment. The lowest dimension in the case of the U.S. is represented by the long-term orientation. This means that the society is interested in meeting obligations and in cultural traditions.
The Work Environment in India
It has been observed that Indian workers prefer formal behavior and feel somewhat uncomfortable and disrespected by informal behavior. Given the fact that the Indian culture is oriented towards traditions and norms, it is recommended that foreign business partners, employers, and employees use a formal behavior at work.
Indians value and manage time in a different manner than Americans do. They take a lot of time getting to know their business partners and co-workers. They do not value meeting deadlines and schedules as other people do. They require significant amounts of time in building trust in their business partners (Stylusinc, 2004).
In the Indian workplace the work of the employees is monitored by supervisors that must assist and advice subordinates. However, certain Indian companies have developed and implemented modern control techniques. There are also numerous rules about working in groups. For example, in the case of group discussions, participants speak in a certain order, following certain rules. They grant significant respect to women, which allows them to easily adapt to the workplace. Humor is not valued within the Indian workplace, their culture encouraging formal relationships between employees.
The Work Environment in the U.S.
The U.S. work environment is significantly different than that in India. The business environment in the U.S. is results-oriented, encourages and support performance, efficiency, and productivity. The U.S. managers are trained in time management, given the fact that they must reduce the time spent for certain tasks and activities.
In addition to this, the work culture in this country is rather informal. Even so, employees must respect the work relationship they have with their superiors. In comparison with Indians, U.S. workers hold frequent meetings. The common characteristic is represented by the fact that participants in the meeting must respect certain speaking rules. The dressing code is variable and is established in accordance with the company’s activity, size, and with each job. In the Indian workplace, employees must usually follow strict dressing codes (Immihelp, 2011).
In comparison with Indian companies, American ones pay great attention to the corporate social life. In other words, such companies organize numerous events, parties, and team building sessions. The Indian companies are rarely characterized by such phenomena.
Communication Across Cultures
There are several cultural differences between various regions in India. This means that companies that want to do business in this country must thoroughly assess the region they intend to address. In order to benefit from accurate results, it is recommended that these companies hire specialized human resources and marketing companies in India that are familiarized with the cultural environment and that are able to provide insight about the aspect that interest Western companies. In addition to this, such companies can provide recommendations and they can collaborate with foreign companies in developing and implementing personnel selection and recruitment, motivational, and marketing strategies that are suitable with the Indian environment.
Companies that do business in India must train their American employees when sending them to work in the company’s Indian subsidiary. They must learn the public behavior that is accepted in India, conversational and networking rules, and the business etiquette. Asian and Arab countries have significantly different business etiquette. They differ in the number of meetings required for discussing deals and signing contracts, receiving and giving gifts to business partners, and communicating with foreign collaborators.
Negotiation and Decision Making
Many of the business techniques used in the U.S. are different in India. Even if American businessmen have strong communication and negotiation skills and knowledge, this knowledge might not be applicable in the Indian business environment. For example, American businessmen spend a lot of time scheduling meetings, while Indian businessmen prefer to focus on the people involved in the meeting and the event it is associated with (Executive Planet, 2010). This means that Indian businessmen are more flexible than their U.S. collaborators. This can be observed in the environment of the meeting that is usually a relaxed one.
U.S. businessmen should take into consideration the fact that numerous Indian businesses are owned by families. This is probably because of the collectivism orientation of the country that encourages and supports such types of business ownership. In addition to this, Indian businessmen prefer to relate to business partners that share such values. They also enjoy discussing personal issues in business meetings. Indians are considered to be curious people and might feel offended if their curiosity is not satisfied.
Also, in order for the negotiation to reach its expected results, it is recommended that the foreign business partners respect the rules that Indian workers must obey towards their superiors, even if they do not necessarily agree with these rules. The Indian business etiquette also reveals the conditions that must be met when participating to certain events with their business partners.
Negotiations between U.S. And Indian business partners are often characterized by misunderstandings derived from cultural differences, language barriers, and the lack of understanding between the parties involved in the negotiation. The decision making process in India is quite slow and thoughtful. Therefore, it is not recommended to rush Indian business partners into making decisions, because this is considered aggressive, rude, and disrespectful. It is recommended to benefit from proper training when doing business in this country (Gorrill, 2007).
Companies in the U.S. are continuously interested in improving the efficiency and productivity of their personnel. Their interest is revealed by the attention these companies pay to training programs and development of their employees. These companies value their human resources and understand that they must invest in their professional development in order to improve the company’s productivity.
In order to help Indian employees to adapt to the American work culture, companies enroll their employees in intercultural training courses designed for the process of business outsourcing. There are numerous specialized companies across the world that provide such training services. These intercultural training services are designed in order to suit the needs and characteristics of each country (People Going Global, 2008).
Although India provides a large talent pool of skilled it workers, foreign companies feel the need to train their India employees. This is intended to help them familiarize with the American work culture and to try to adapt these workers to American work standards (BPO Watch, 2009). The differences between the two types of work cultures determine U.S. companies to invest in staff training.
The types of motivational strategies developed and implemented in India and in the U.S. are another divergent point between the two countries. The motivational strategy used by most U.S. companies relies on communication with the employees. These companies are interested in the feedback of employees regarding certain aspects. They try to include employees in the decision making process and to allow them to express their opinion about certain activities of the company.
Another important aspect addressed by the motivational strategy is represented the rewards and punishment system. Companies in the U.S. pay great attention to providing significant financial rewards and bonuses to employees that prove high efficiency. However, the rewards system depends on the type of activity and on the importance of the job. For example, positions that are characterized by high risks decisions are paid more, while positions that deal with more routine activities, like those in human resources, are paid less.
The situation is different in India. It has been observed in internal motivation factors are preferred by Indian employees. In other words, they prefer to be stimulated by employment packages that ensure them long-term stability. In addition to this, they are interested in learning opportunities that allow them to develop their career (BPO India, 2010). Indian employees put less emphasis on financial motivation. They are also interested in career advancements, in traveling, and in other benefits.
Companies that want to do business in India must pay attention to their communication with employees. In Indian companies, the manager supervises and controls the activity of his subordinates. The manager also gives advice to his subordinates on their tasks. Given the fact that Indian workers value self-esteem, criticism must be made in order to take this into consideration. American managers that are sent to work with Indian subordinates must be thoroughly trained in order to be able to adapt to the Indian culture. It is not recommended to determine Indian employees to adapt to the U.S. work culture because this might reduce their productivity. Therefore, it is their manager’s job to help them achieve efficient results in accordance with the objectives established by the company and by its stakeholders.
1. The Outsourcing History of India (2011). Outsource2India. Retrieved February 19, 2011 from http://www.outsource2india.com/why_india/articles/outsourcing_history.asp.
2. India (2009). ITIM. Retrieved February 20, 2011 from http://www.geert-hofstede.com/hofstede_india.shtml.
3. United States (2009). ITIM. Retrieved February 20, 2011 from http://www.geert-hofstede.com/hofstede_united_states.shtml.
4. Doing Business in India: A Cultural Perspective (2004). Stylusinc. Retrieved February 20, 2011 from http://www.stylusinc.com/business/india/business_india.htm.
5. Work Culture and Office Environment in the U.S.A. (2011). Immihelp. Retrieved February 20, 2011 from http://www.immihelp.com/newcomer/work-culture-office-environment-usa.html.
6. Cross-Cultural Communication (2010). Retrieved February 20, 2011 from http://www.cba.uni.edu/buscomm/internationalbuscomm/world/asia/india/india.html.
7. Gorrill, J. (2007). An Indian Culture Overview. Communicaid Group Ltd. Retrieved February 20, 2011 from http://www.communicaid.com/%5Ccross-cultural-training%5Cculture-for-business-and-management%5Cdoing-business-in%5CIndian_business_culture.php.
8. Cross Cultural Training: India (2008). People Going Global. Retrieved February 20, 2011 from http://www.peoplegoingglobal.com/cross-cultural-training-india/index.html.
9. It Firms Pull Out All Stops on Staff Training (2009). BPO Watch. Retrieved February 20, 2011 from http://www.bpowatchindia.com/bpo_news/infosystraining/september-25-2009/firms_pull_out_all_stops_on_staff_training.html.
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