Cultural differences and outsourcing IT projects

Estimated reading time: 5 minutes

You’ve probably heard of the benefits of outsourcing already — lower costs, access to a wider talent pool, less in-house stress, increased efficiency, and more. But while these certainly sound good, there’s probably one factor that’s a source for concern or holding you back: potential cultural differences between you and the supplier.

Working with another company in your home country can be a challenge in itself — working with another company in a different country with a different culture, even more so. Being in the IT outsourcing industry for almost 23 years now, we’ve certainly seen our fair share of how differences between suppliers and clients’ cultures influence the success of a project.

In this blog, we aim to explore the driving factors behind these cultural differences, describe the common ways they manifest in outsourcing IT projects and remote collaboration as well as the problems they usually cause, and share the things that we at 1902 Software practice in order to overcome these differences in our collaboration with our clients.

Why do we need to talk about cultural differences?

Culture is a major factor in how people perceive the world and behave in social situations — as such, it’s no secret that it affects the way people do business, too. Differences in culture (which in this blog we’ll use loosely to refer to a set of assumptions, norms, traditions, values, and habits shared by a specific group) can be an unwelcome friction in an otherwise smooth project flow.

Yet despite this, cultural fit is something that’s not often taken into account at the start of a collaboration between two companies when there are budgets, timelines, requirements, and resources to consider first. Instead, it’s brought up when a project is already beginning to fall apart due to miscommunication and misunderstandings, and the main culprit that everyone turns to is, well, cultural difference.

But the fact of the matter is that cultural differences in business will always exist in some way — be it between two different companies in the same city having different internal work cultures, or two companies located at the opposite ends of the globe with employees carrying fundamentally different customs and values.

This blog will focus more on the latter in the context of outsourcing IT projects, but an important thing to consider is that at its core, it’s not cultural difference on its own that causes problems in collaboration; it’s ultimately how people choose to work with the difference.

So in this world where every business has to engage with other businesses to some degree, understanding cultural differences and learning how to address and work with them are definitely important first steps to making sure your project is successful.

Common cultural differences and their underlying factors

We’ll mostly focus on the cultural differences usually observed between the West and East since these are the ones that we’re most familiar with. And as with other comparisons like this, we’ll also be generalizing a lot while at the same time recognizing that there are always exceptions to these stereotypes.

This is not meant to compare and evaluate which culture is superior over the other, but simply to explore the rationale underlying each difference in the hopes of better understanding both cultures... which brings us to one thing that they have in common:

The tendency to believe that the right way is one’s current way of doing things

It’s only natural that we adhere to what we’ve been most accustomed to, but this type of mindset can easily cause a clash when working with people from different backgrounds. The truth is, neither is usually better than the other. Each culture is shaped by different factors, which is precisely why it’s important to keep an open mind when dealing with the following differences.

Collectivist vs individualist thinking

The West tends to be more independent and individualistic with their mindset, while the East tends to be more interdependent and collectivist. These are different patterns of thinking and perception that cultural psychologists have consistently found in these two societies (Varnum, et. al., 2010).

In the workplace, for example, this is shown in how close personal bonds among colleagues are encouraged in most of Asia, while there’s a clearer line between work and personal relationships in Europe and America. There are several factors that might play into this, including traditional religious beliefs and history, further reinforced by the type of media consumed in the society.

High-context vs low-context communication

Introduced by anthropologist Edward T. Hall, the concept of high-context and low-context communication refers to how much people rely on contextual factors like nonverbal cues and the message’s tone instead of the actual words explicitly being communicated.

In general, collectivist societies are the ones that tend to be high-context communicators, while individualist ones tend to be more low-context. This might be because high-context communication relies on some connection between the people involved, and this connection is much more prevalent in collectivist cultures.

Hierarchy and authority

There is usually a clearer hierarchy in Asian organizations compared to their Western counterparts. Seniority and authority matters, as demonstrated by the use of honorifics in most Asian languages, something that’s notably absent in English or other European languages.

In most Eastern societies, there’s an emphasis on order and governance which means that the people at the top have the final word for most business decisions. On the other hand, organizational structures in most Western companies tend to be more flat. One factor that may have played a role in this particular difference is how the West has traditionally had more democratic political institutions as opposed to some Eastern countries.

Now that we understand the roots of the most common cultural differences we encounter in outsourcing IT projects, let’s look at more concrete examples of how they manifest in project collaborations, and some tips on how to overcome them.

Next: Cultural challenges with outsourcing IT projects and how to deal with them »