Outsource Magazine

Outsourcers continue to enter new markets requiring them to make decisions on management styles.  Do they keep with their home business culture, spreading it across the world or adapt to local needs? 

This is the second part (read the first half here) of my article on human capital and how outsourcers manage it. This information is culled from five outsourcers operating in multiple markets across the globe. The outsourcers were very different from each other; some were founded in the US, others in India and some in South America.

Management Style

When multi-national companies confront the challenge of managing across business cultures they must make decisions on how to cater to local preferences while running a corporation aimed at consistency. For outsourcers, this problem becomes magnified because many of them leverage global teams to accomplish objectives. The firms break management structure into two groups: internal ethos and internal processes.

Management Structure: Internal Ethos

Ethos is a great word. It wraps up morals, norms, spirit, atmosphere, values and principles into just five characters. It’s rare that I use this word when writing about organisations because it’s hard to find human resource programs that focus on a company’s mission, principles, tone, and feeling in addition to instilling values. After speaking to these companies, ethos just kept popping up again and again in my notes. I realized that as young nimble firms (the average age was just seven years), outsourcers have the flexibility to shift to more powerful ethos, such as HCL moving to “Employees First” about six years ago in order to achieve their goals.

Softtek leverages an approach called “The Human Element.” Every employee goes through a day-long introduction to the organisation’s culture, which is based on this theory.

“In some regions, our strategies are different from what employees would expect from local organizations. We overcome this challenge by teaching our canons of action, which are principles of expected behavior,” notes Beni Lopez, CEO of Nearshore from Softtek.

In China, it took Softtek longer to instill the principles, reporting that it took about a year for its China centre to embrace the philosophy. Employees felt uncomfortable operating with the new set of values. “A culture of openness - of needing to report problems so resolutions can be prescribed - is our goal. We meet it by continually reinforcing good behaviour and rewarding it.”

Management Style: Process

Although most outsourcers had a consistent internal ethos they champion, they also aimed at creating an internal management culture that worked locally.

“There is a preference for unified structures, but each region has its own preferences,” says Lopez. “We focus on process and the people involved in the process. Management is different in each region because there are differing expectations, but we focus hard on messaging openness and accountability.”

Softtek finds that the employees in the US and the UK are the most challenging to bring into a unified approach; China, Brazil and Argentina have been much easier.

Others developed bridges by recommending local management styles based on the needs of the local workforce but keeping process consistent. HCL’s teams in Brazil engage in greater manager/employee contact than in the US.  More meetings are scheduled to meet the preference of Brazilians. HCL’s goal is to avoid thinking that all employees need the same thing to succeed.

In China, Freeborders instituted a matrixed organisation, something quite foreign to the locals yet successful. The reality of most of these companies is they use a more Western management style with a touch of local approaches. The focus is on performance- and merit-based rewards, a successful way to motivate a young and inexperienced talent pool.

All of the outsourcers said understanding local business culture is critical, even if they plan to lead with differing practices. This seemed to tie into their approach in recruitment practices; an understanding that everyone was different but that unified processes deliver.

From a group that sells unified process this is expected. Repeatedly I was told that all employees do certain things in the same way, such as submitting expense reports, writing progress reports, using software etc. Beyond these ideas, however, local management was the most popular.

Workforce Environments: Creating and Caring for Employees

Many of the outsourcers talked about the stress employees encountered inside their organisations. Between the expectations of training, long hours and extensive travel schedules, most expressed that working for an outsourcer is not easy.

HCL talked about this in the context of their “Employees First” campaign. Khorana told me the goal of the program was to ignite the passion inside employees. When it launched, HCL asked employees to share issues and, based on the responses, changed such things as expense reporting processes and public leadership reviews.

The result is compelling. Khorana said now, five years after launch, employees don’t report problems based on internal needs. Instead they ask questions about external issues, presenting ideas that they think HCL should pursue, such as markets or verticals.

“The questions we get now ask things like ‘why don’t we work with this type of firm?’ Employees feel better internally allowing them to focus externally,” says Khorana.

Most of the firms talked about creating an environment of empowerment, creativity, and innovation. 3i Infotech’s Sarma said his company focuses on creating an entrepreneurial environment so employees are excited about their work and feel empowered to innovate and modify what the company as a whole can deliver. Sarma said they acquire firms that are entrepreneurial to continue to grow this environment.

Workforce Planning

Succession planning is another item of concern for these companies. Freeborders identifies people for succession planning, picking out high performers to develop for future roles. He said this was a new idea inside China since its business culture typically promotes long-term employment. “In China ongoing plans are in place for mid-level and senior-level talent,” says Reesing.  Because client consistency is so important, there seemed to be more focus at lower levels on succession than inside a typical multi-national. Many leaders told me they have not seen succession planning like this at other large firms. As Gauri says, project delays impact the client and must be avoided.

What We Can Learn

As the world flattens, people remain different. Global management must align its goals with the local needs of the people pushing them to delivery. Outsource firms gained their global strength through processes. This is their business. But they have invested a tremendous amount of effort in considering how the people running the processes work and make accommodations based on locality. Human capital is a focus because it has to be.

Multi-national organisations can learn a lot from their success and challenges.

Thank you to the outsourcers who took time to speak with me for this article:

Beni Lopez, CEO of Nearshore, Softtek
Som Sarma, Head of 3i Infotech’s Global IT Services Division
Shami Khorana, President of HCL America
Vishal Gauri, President (North America) & Head of Customer Solutions, Nagarro
Jim Reesing, EVP Freeborders