Cultural differences in outsourcing

This report summarises the results of a major survey carried out by the National Outsourcing Association and Kingston Business School, on the impact of both national and organisational culture on outsourcing contracts. The survey results were supported by a series of interviews exploring the issues in relationship management which are also summarised in this report. Clients, Suppliers and Independent Consultants were included from both public and private sector organisations with over 100 managers taking part in the survey. The results demonstrate the complexity of evaluating a concept such as culture for all concerned, although a significant number of respondents do try to assess culture when negotiating contracts. In this study clients voted ï??serviceï?? as the most important element of culture and this was reinforced by the interviews where slow decision making, misunderstandings and aggressive behaviours were cited as evidence of poor service orientation linked to cultural differences. Culture was assessed in the survey by comparison of self and partner across nine dimensions, including service, attention to detail, innovation and focus on end results. Clients and suppliers tended to rate themselves higher than their partners on most of the elements assessed, in particular innovation. Suppliers rated clients as more aggressive, a statistic supported by the qualitative interview findings where ï??bullyingï?? was a clear issue. There were differences in all responses between those who classed their outsourcing as a success and those who did not, but in particular communications and relationships were viewed as more problematic, and they were less likely to report that their partner had prepared staff for cultural differences. Over 75% of respondents stated that they would take more account of culture next time, rising to over 80% for those involved in offshoring, indicating the importance of national as well as organisational differences. However it is also clear that some differences in culture are beneficial, and that it is critical to assess which cultural elements are important in what circumstances. An important outcome from best practice advice is that organisations need to assess their own culture and requirements as well as that of their partner, looking for potential matches or clashes. Holding cultural workshops, having metrics for communication and clear service expectations were also high on the list of ï??must doï?? priorities. The overall conclusion is that a crucial aspect of successful outsourcing - service orientation - is impacted by perceptions of staff attitudes and behaviours, and that further work on development of a service quality measurement is needed. This report also includes a range of excellent best practice advice from leading experts and practitioners in the field.