Cross-Cultural Issues in Global Software Outsourcing

1. Cross-Cultural Issues in Global Software Outsourcing Geoff Walsham Judge Business School Cambridge University

2. Outline of Session • Case study of Japan-India outsourcing • Managing cross-cultural software outsourcing • Theorising cross-cultural interaction • Conclusions

3. Softco • Head office in Bangalore, India • One of the big successes of the Indian software industry • Started doing work in Japan in 1992 • Created Softco Japan in 1998 • Case study based on interviews in Bangalore and Tokyo in 2001

4. Selected Themes • Language • Cultural adaptation of Indian employees to Japan • Software requirements specification • Working the Japanese way • Chinese competition • Moving up the value chain

5. Language • Major Softco effort to train Indian software engineers to speak Japanese • But relative fluency only in spoken language • Business in Japan will be in Japanese in the foreseeable future • ‘There is a lot of resistance if you speak in English’ (sales engineer) • ‘Softco should talk some more Japanese’ (client interview)

6. Cultural Adaptation of Indian Employees to Japan • Food, drinking habits etc. • ‘After three months in Japan, I felt like running away …’ (sales engineer) • Longer term issues e.g. children’s education • Recruit Japanese employees?

7. Software Requirements Specification • ‘They (the Japanese clients) often start with a 2-3 line specification. You need to get out your proposal based on this. Business is carried out face-to-face with drinks in the evening’ (sales engineer)

8. Software Requirements Specification • ‘You need both top management commitment from the client organisation and line manager commitment. Unless the line managers think that you can work effectively with them, the relationship will not work well. Top management commitment is just a passport to the territory …’ (sales engineer)

9. Working the Japanese Way • ‘The Japanese attitude is let us think and develop together. In 1995, Softco was not aware of this, but they have slowly changed their way of doing business.’ (client interview)

10. Working the Japanese Way • ‘Making documents is not so familiar. There are many things which are not written. We understand between the lines. If you make software based on the Japanese specification, then you won’t make proper software.’ (client interview)

11. Chinese Competition • ‘India represents half the unit price (per software engineer) compared to Japan, whereas China is one-third’ • ‘ … communication is easier with the Chinese … Also, the cultural problem is reduced … we have a similar way of thinking’ • ‘Indian companies are, however, better than those in China technologically’

12. Moving Up the Value Chain • From software maintenance • To production of requirements specifications • To ownership of the whole project • Cross-cultural issues are even more important higher up the value chain

13. Managing Cross-Cultural Software Outsourcing(from Krishna, Sahay and Walsham 2004)

14. Strategic Choice of Projects

15. Managing the Relationship

16. Staffing Issues

17. Training

18. Theorising Cross-Cultural Interaction(see also Walsham 2002)

19. Cross-Cultural Interaction ‘We are short of both rich description of cross-cultural interaction, and theoretical explanations of the same’ (Goodall 2002)

20. Hofstede-Type Studies • ‘Much of the literature concerned with cultural and cross-cultural issues in the IS field has relied on Hofstede’s work’ (Myers and Tan 2002) • Five dimensions of culture: power-distance: individualism; masculinity; uncertainty avoidance; long-term orientation (e.g. Hofstede 1991)

21. Weaknesses of Such Studies • Assumption of cultural homogeneity • No significant analysis of detailed work patterns • Inadequate attention to the dynamic nature of culture

22. Alternative Analysis (inspired by structuration theory) • Different meaning systems: e.g. language; role of requirements specification • Different forms of power relations e.g. attitude to views of line managers • Different norms of behaviour e.g. business with drinks in the evening

23. Structural Contradiction and Conflict • Contradictions tend to involve divisions of interest between different groupings or categories of people (Giddens 1984) • By conflict I mean actual struggle between actors or groups … Conflict and contradiction tend to coincide because contradiction expresses the main ‘fault lines’ in the structural contradiction of societal systems (Giddens 1984)

24. Contradiction/Conflict in Cross-Cultural Working • Conflicts may occur if structural contradictions affect actors negatively, and they have the ability to act • Japanese resistance to speaking English • Indian resistance to employing Japanese • Documentation versus dialogue

25. Reflexivity and Change • Increasing recognition in the Japan-India case that cross-cultural issues were important • Move to ‘negotiated culture’? (Brannen and Salk 2000) • More movement on the part of the Indians than the Japanese (related to power relations)

26. Conclusions • With respect to globalization and ICTs, diversity needs to be a key focus (Walsham 2001) • To be more effective in business • Also to create a world of increased cross-cultural understanding

27. References Brannen, MY and Salk, JE (2001) ‘Partnering Across Borders:Negotiating Organizational Culture in a German-Japan Joint Venture, Human Relations 53(4), 451-487 Giddens, A (1984) The Constitution of Society, Polity Press, Cambridge. Goodall, K (2002) ‘Managing to Learn: From Cross-Cultural Theory to Management Education Practice’, in Managing Across Cultures: Issues and Perspectives, M Warner and P Joynt (eds.), International Thompson Business Press, London, 2nd edition, 256-268. Hofstede, G (1991) Cultures and Organizations: Software of the Mind, McGraw-Hill, New York.

28. References Krishna, S, Sahay, S and Walsham, G (2004) ‘Managing Cross-Cultural Issues in Global Software Outsourcing’, Communications of the ACM, 47(4), 62-66. Myers, MD and Tan, FB (2002) ‘Beyond Models of National Culture in Information Systems Research’, Journal of Global Information Management 10(1), 24-32. Walsham, G (2001) Making a World of Difference: IT in a Global Context, Wiley, Chichester Walsham, G (2002) ‘Cross-Cultural Software Production and Use: A Structurational Analysis’, MIS Quarterly, 26(4), 359-380.