Managing Outsourcing – The India story

For many managers their teams now include people from external partners, customers, suppliers and internal resources where they don’t have traditional management control. Outsourcing takes this the a new level with an external partner, often in another time zone and another culture. In some cases the managers involved did not welcome outsourcing. (It made their lives harder and exported the jobs of their colleagues).

Here is a typical story we hear in our outsourcing consulting and training work.

A US multinational decides to outsource some simple transactional activity to India. It makes sense on a strategic and cost basis.

Previously the task were carried out by relatively poorly educated US workforce, the systems and processes were pretty out of date but the quality level was OK.

The operational mangers in the US and the people actually doing the transition work have no experience of working with India or of managing remote and virtual teams or across cultures. This is not “business as usual” and they are very concerned that they retain control over the quality of the work done.

As a result they redesign the process, adding many more controls and checks than existed before. In the training they repeatedly emphasise that the system must be followed to the letter an that no deviations are allowed.

The Indian workforce they recruit at the outsourcing partner are well educated, many are graduates, some MBAs. As they operate the system they see several problems with the process but they do not have the authority to make changes.

The Indian managers, proud of their capabilities and achievements think they can do much more and push for greater responsibility and more work to come to India. The parent company is not ready to outsource more strategic or demanding tasks.

After a few months the Indians learn not to ask questions and just to operate the system as specified and controlled. If a problem comes us they escalate it to the US, as they have been told to. It is not very interesting work and staff turnover is high when a better offer comes along.

The US managers see lots of issues being escalated. “These Indian employees don’t have much initiative do they?” They respond by increasing monitoring and control to make sure the task is completed properly. Some who opposed the outsourcing originally say “I told you so”.

Indian employees react to this pressure by telling their partners what they think they want to hear, problems are not surfaced visibly and quickly and trust is undermined further.

Both parties are now stuck in a vicious cycle of increasing control, reducing trust and micro-management.

It’s easy to say that restoring trust is the answer but how do we build trust in a third party organization half a world away?

We need a systematic process to build capability (we would be fools to empower people who don’t have the capability to do the job), confidence (in both parties) and support (finding the right level of control and accessibility to manage the ongoing relationship).

Find out more about our outsourcing services and about our training for people in complex, matrixed, virtual and global organizations.

(Note: updated to fix broken links, August 2012)