Editor’s note: “International Business Corner” is a new weekly column written by Joan Keston that will be providing information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months, she will be writing about important issues that international businesses face as they compete in the 21st-century global business environment. This article is part of a series about building international bridges and addresses the composition of that bridge regarding outsourcing of services.
RALEIGH – You might ask, “Do I really need to think about an international bridge when I am merely outsourcing services or software development? I’m not selling anything and I’m not worried about product liability, so why do I need to understand the foreign business culture?”
The answer is still "yes" if you expect to be successful for the long term.
Business Culture
Corporate ethics and culture and the work ethic vary greatly among countries, the expanse between developing countries and the industrialized nations in this regard being enormous. The overall corporate identity that we assume exists often does not. Many developing countries do not have professionalized corporate entities and function more or less as family businesses. Often a business that is successful splinters into smaller individual businesses as the partners or family members seek to grow their own businesses. This tendency impedes the growth and development of larger, professionalized corporate entities that have long-term goals and objectives.
The work ethic of employees is very different from that in the U.S., as is their protection by legislation that is usually very much in favor of the employee. Employee dedication to the growth and success of a company varies, as does commitment to the quality of the services.
The corporate culture in the U.S. is backed by a governmental philosophy that greatly supports business achievement. This is not the case in all developing countries – or at least it is still evolving to be more supportive. Intellectual property, privacy and identity-theft legislation are critical concerns for outsourcing software development or services such as accounting. Most developing countries have some such laws, but the enforcement of those laws in developing countries is often very difficult and even arbitrary.
Be Pro-Active
Outsourcing software development and services requires a commitment by senior management. To be successful in your endeavor over the long run, that commitment must entail a pro-active and hands-on approach in order to influence the corporate culture and work ethic in the country where the services are to be performed. An active presence in developing countries with a direct involvement in the surveillance and enforcement of your intellectual property and privacy rights is also vital.
Pick the Right People
To run an effective development operation in a foreign country, it is essential to employ the right people to manage the foreign organization. The foreign management team must know the country’s business culture and have a broad array of business and political contacts. Trusting your foreign team leader is a critical factor, as is the team leader’s understanding of a U.S. company and the ability to work with the international executive or corporate development executive. They are crucial in the selection and formation of a successful team.
Communications
Effective communication is a key element for assuring success. Establishing a communications channel that fosters respect and consideration for different business culture is important and sets the tone for positive working relationships and a strong reliable team. The business discipline of regularly holding communications that cover specific topics and actions to be taken and reported upon will help ensure smooth and decisive communications. Your international executive must take the time to visit the foreign operations and show that you respect and care about your business associates in the foreign country.
In summary, your international outsourcing bridge must include people who have a deep appreciation of the country’s business culture, a comprehensive understanding of the laws in the foreign country and their enforceability and the ability to manage your foreign operation with effective leadership and communications.
Joan Keston has experience with mature as well as entrepreneurial companies, domestically and internationally, and with an executive managerial and legal background. She has a deep understanding of the business culture and issues involved in doing business in developing countries as well as Europe. She is the Senior Managing Principal at Keston & Associates, Ltd., an international business consulting firm located in Raleigh, N.C., and a partner at Paladin and Associates, Inc. Her firm assists companies establish business operations throughout the world. She can be reached at 919-881-7764 and jkeston@kestonassociates.com.
