Finding the right outsourcing partner is more than just about having the technical prowess. While outsourcing has been helping teams reduce costs and gain operational excellence, both teams need a better understanding – for the day-to-day operations and otherwise. This understanding comes when the accounting firms and outsourcing teams are culturally aligned.
Indian and the Phillipines are among the countries leading in global accounting outsourcing. When an accounting firm in the US outsources their jobs to these countries, there are obvious differences in their cultures, festivals, communication styles, time zones and so much more. These cultural differences can often complicate cross-border coordination among organizations. Misunderstandings that arise from different cultural norms may lead to communication breakdowns, process failures, and unsatisfactory results. Failing to invest in bridging cultural gaps can put outsourcing teams at risk.
What is the role of Culture in outsourcing?
The values, practices, communication styles, and social norms shared by a group of people within an organization is referred to as business culture. In outsourcing, cultural differences arise when businesses in different regions collaborate differently, resulting in diverse ways of working and managing projects.
For example, in countries like the US, businesses often adopt direct communication and individual accountability. In Asian countries like India, hierarchical respect is also given its due importance. These differences can lead to misunderstandings, mistrust, and inefficiencies if not addressed the right way.
The basis of outsourcing is in its nature of working across borders. This means that businesses need to build culturally aware teams. Building cultural gaps isn’t just about knowing the differences, it is about learning them, acknowledging them, and respecting them while making business decisions.
Common Cultural Barriers in Outsourcing
- Communication styles: While in some cultures communication is more clear and direct, in countries like India and the Philippines, it is more context-driven. There are non-verbal cues, contexts, and relationships. These differences can confuse project discussions. If a team is used to direct communication, a lack of feedback may be perceived as agreement. This may lead to an issue later when there are more indirect communicators.
- Perception of time and deadlines: Just like in the case of communication, different cultures have different attitudes towards time management. While some cultures are stringent about adherence to deadlines and committed times, others may have a relatively flexible attitude, where processes may take a higher seat over time. This can lead to frustration when one party expects strict adherence to deadlines and the other may see delay as a part of the process.
- Hierarchy and workplace decision making- The role and the rigidity of a hierarchy in the decision-making process differ across cultures. In some cultures, decision-making may be concentrated at the top of the pyramid, while others may give more importance to inputs from the lower levels. In others, decisions may be made collaboratively. Here, inputs from all team members are given equal importance regardless of their rank. These differences can have an impact when one party might expect quick decisions from empowered team members, while the other may be required to escalate it through the chain of command.
- Conflict resolution- Different cultures also impact the approach towards conflict resolution. While some teams prefer to confront heads-on and resolve issues through direct discussion, others tend to maintain peace and harmony so that conflict can be avoided or managed. When working with outsourced teams, it is important to understand how conflict can be viewed or managed in your partners’ cultures without offending them and building tension.
Strategies to overcome cultural barriers when outsourcing
- Both teams should undergo cultural training – Cultural sensitivity is not something you need only when outsourcing. It can help you become a better employer and a more sensitive human. Cultural sensitivity training for both in-house employees and outsourced teams can help bridge the cultural gap that affects parts of this partnership. Training programs should cover communication norms and styles, attitudes toward hierarchy, conflict resolution styles, and approaches to deadlines. By understanding the expectations and social norms of their partners, teams are more likely to collaborate effectively.
- Appoint Cultural Liaisons- Hiring a point of contact who understands both cultures and bridges the gap seamlessly can help with cultural differences. These are the people who can help resolve misunderstandings and foster better communication. These individuals need to be culturally aware and able to mediate differences, helping both sides align on work processes and expectations.
- Leverage Technology for Effective Communication- Technology is advancing at a rapid pace. Cross-geographical communication and conversation may seem difficult. But there are ways to bridge them. Modern communication tools such as Slack, Microsoft Teams, or Zoom can help real-time communication, reducing the chance of miscommunication. Both firms should also establish clear communication protocols— daily check-ins or weekly reviews, for example. Continuous communication can play an important role in ensuring there are no gaps or misunderstandings.It’s also beneficial to create a repository of commonly used phrases or terms that may have different meanings across cultures. This ensures consistency and reduces the possibility of misunderstandings during conversations or written communication.
- Adopt a Hybrid Management Approach- To bridge cultural gaps, businesses can adopt a hybrid approach to management that blends the strengths of different cultural practices. For instance, companies can respect hierarchical decision-making while incorporating elements of collaborative input. This balance ensures that both parties feel respected and that the most effective strategies are employed.
- Adaptation and Flexibility- Flexibility is crucial when managing cross-cultural outsourcing relationships. Organizations must be willing to adapt their practices and expectations based on the cultural context of their outsourcing partner. This may include adjusting deadlines, rethinking management approaches, or modifying communication styles.
- Clear Contractual Agreements
A clear, detailed contract is essential to minimizing misunderstandings. The contract should outline roles, responsibilities, deadlines, communication expectations, and conflict resolution processes. This document will serve as a guideline to ensure that cultural differences don’t negatively impact the project’s progress.
Building Culturally Sensitive Teams – End Note
As businesses continue to broaden their horizons and operate in a global marketplace, cultural sensitivity will help build the gaps that prevent accounting firms and outsourcing partners from achieving their complete potential. By proactively addressing cultural barriers, firms can strengthen their partnership, and improve overall employee satisfaction and operational efficiency.
At Finsmart Accounting, our outsourcing model is designed to integrate the teams effectively. Known as the Embedded Outsourcing model, we understand the challenges that come with cross-geographical operations. That is why, we have a team of experts who can seamlessly integrate into the systems without disrupting the flow. To know more, write to us at connect@finsmartaccounting.com.
Director Growth Strategy & Alliance
Maanoj Shah is a finance and outsourcing expert with strong Business Strategy and Scaling-up experience. Over the last 20 years, he has incubated multiple businesses and helped build global enterprises in verticals as diversified as hospitality, technology, and healthcare.
