Offshoring deals may founder on cultural differences

Survey: Accenture has warned that 'soft issues', rather than physical hurdles, pose a danger to today's outsourcing contracts

Cultural differences are one of the biggest reasons why offshore outsourcing deals fail or run into problems, according to new research.

In an Accenture study, two-thirds of 200 US business executives said that miscommunication arising from cultural differences has caused problems when outsourcing offshore.

Different communication styles were identified as the key factor that causes problems between onshore and offshore workers, by over three-quarters (76 per cent) of the managers questioned.

Different approaches to completing tasks, different attitudes toward conflict and different decision-making styles were also cited as major cultural factors that frequently cause upsets when managing an offshore outsourcing relationship.

Kris Wadia, senior executive in Accenture’s network of global delivery centres, said that the physical obstacles to offshore outsourcing such as telecoms and facilities have largely been resolved.

He said in a statement: "However, the soft issues, particularly cross-cultural communication, will continue to present the main challenges to realising global sourcing's full potential for the foreseeable future."

Over half of National Outsourcing Association (NOA) members surveyed recently also said cultural differences are still an issue in offshore outsourcing deals.

At a NOA event last week, David Skinner, partner at law firm Morrison & Foerster, said this is particularly true in multi-sourcing where the client is often dealing with many managers from different suppliers in different countries.

He said: "It is one of the biggest multi-sourcing issues. You have got to manage the cultural differences."