Why Offshore Development is Often Not Successful

Off Shore Development issuesOver the past few years, more and more people are choosing to outsource tasks, but there have been just as many discussions related to why this option somehow does not work. For instance, the book titled Outliers: The Story of Success, by Malcolm Gladwell, shows how and why outsourcing does not work at all times.

The book elucidates on a number of airlines disasters that have taken place in the past few years. A study was conducted by Geert Hofstede, in which he calculated the Power Distance Index or PDI. PDI is a measure by which a person in a particular country reacts to a figure of authority. For instance, if a country has a high PDI, the people in that country will respond better to an authoritative figure and question their decisions lesser.

The NTSB or National Transportation Safety Board regularly conducts studies and it would come as a shock that one of their studies revealed that many of the airline accidents were country and airline specific. Top of that list were Korean Airlines and Colombian Airlines. Some of the main reasons that were mentioned in the study included:

  • There was no single large error, rather a serious of smaller ones that eventually ended in a fatal one.
  • The first officer is supposed to point out any errors that the captain might be making and double check everything. In almost all the accidents, the black box information shows that the first captain had pointed out mistakes, although not clearly enough.

It was seen that both Korea and Colombia ranked high on the PDI scale and this was one of the reasons for the fatal accidents.

  • There was an obvious difference in the power structure shared between the captain and the first officer, which is perhaps why the latter was not confident enough to point out the problems clearly.
  • This power difference would have led to a gap in communication and situations wherein the first officer would not have wanted to embarrass the captain.
  • In many of the cases, the captain was extremely exhausted and sleep deprived, which caused a further rift in the lines of communication.

The conclusion was that since the captain and the first officer were living inside a cultural framework, their behaviours and adherence to the social structure lead to fatal endings.

There might be many who would think what the connection between airline accidents and outsourcing could be, there is actually a deep rooted one. In an outsourcing scenario, there are two parties – the buyer and the provider. Depending on how high or how low the buyer and provider rank on the PDI chart, would define the way the work would take place.

For instance, a buyer with low PDI, outsourcing work to a provider with a high PDI would probably result in a submissive provider. Let’s say the buyer is from the Great Britain and the provider is in India; when the buyer asks if the project will be completed within a week, chances are that the Indian provider will promise to try his level best to ensure the same. However, if the same buyer is outsourcing the work to a company in Austria, the answer to the same question could be an outright no!

Now, keeping this in mind, there is a brand new way of looking at the same survey.

  • The Power Distance Index certainly defines how a buyer and provider interact and set the norms of a project into place.
  • The buyer does not make his expectations clear, and considers his task done, as soon as the provider stops asking the questions.
  • Inept governance and lack of communication, which can normally been seen within the office of the provider. For instance, the manager of the service providing firm could ask his developer in how much time the project will be completed. In a country with high PDI, the developer would probably promise an impossible timeline, which will further be conveyed to the buyer.
  • PDI also means cultural differences, which can lead to misunderstandings and finally a situation that is not truly beneficial to either parties.

With a better understanding, clearer interactions and a willingness to leave cultural and societal baggage behind, there is a chance for outsourcing to be successful, each time!