Outsourcing The Cultural Transformation of India and Ireland

OutsourcingThe Cultural Transformation of India and Ireland

Outsourcing

What cultural norms, values and historyimpact a contrasting perception?

Introduction

• Past, present, and future of outsourcing and how it has affected the respective cultures

• Eleven dimensions of cross-cultural business• Application to each country • Adjustment of management style,

learning, and problem solving.

• Geert Hofstede Analysis and the GLOBE study

Introduction

Two case studies focusing on outsourcing• India:

• ICICI OneSource • Tata Consultancy Services

• Ireland: • Microsoft, Google, Oracle and Dell• Amgen

India - Affective vs. Neutral

• Best described as a Neutral society in the way that its people display affection and feelings

• Majority of Indians prefer to keep their feelings controlled• No displays of affection openly and in public

• Traditional way to show affection and caring from one partner to another is not by hugging, but doing things for each other

India - Affective vs. Neutral

• Significant Western influence can be observed in larger Indian cities

• People in south India are even more traditional that the Northern Indians

• Indian Supreme Court issued a warrant to arrest Richard Gere for kissing Bollywood star Shilpa Shetty at HIV/AIDS awareness event in New Delhi

Ireland - Affective vs. Neutral

• Irish people best described as happy, open, with many fun traditions

• Music and dancing are important factors of these traditions, they share and enjoy them in public

• Like to party and the pub is the center of the cultural, social and musical life

Ireland - Affective vs. Neutral

• More similitude to American culture than Indian culture

• Handshake is preferred greeting for women and men

• Men should refrain from being too physically demonstrative with women

• Maintaining minimum personal space is important

• Touching, patting or hugging other men in public are considered socially unacceptable

India - High Power vs. Low Power

• The Caste system• Brahmins• Kshatriyas (shot-triyas)• Vaishnavas (vaysh-navas)• Shudras

• The Class system• Lower class• Middle class• Upper class

India - High Power vs. Low Power

• Women• Prominent place in the history of Indian culture• Birth and marriage rituals celebrated for males• Sixty percent are illiterate• Laws to protect women at the workplace

• Still face discrimination

• Geert Hofstede analysis• Power distance score of 77 (high)• Third highest masculinity score

Ireland - High Power vs. Low Power

• Caste system• No caste system due to the belief in political, economic or

social equality

• Class system• Working class• Middle class• The new middle class

Ireland - High Power vs. Low Power

• Geert Hofstede analysis• Power distance score of 30

• Women• Laws in place to bring equality

• No bullying policy

India - Universal vs. Particular

• Best described as “Particular”

• Gender also plays an important role when applying the social norms

• Justice is not applied equally among all the members of the Indian society

• Public rules are not defined by the law, but by following the leaders and exemplary individuals for guidance

• Family is one of the most important factors

Ireland - Universal vs. Particular

• Best described as “Particular”

• Special attention at what is called the restoration of justice

• Northern Ireland implemented the Committee on the Administration of Justice

• Justice system does not apply equally to citizens and immigrants

Class ActivityIndia Game

Game

What country has one of the official top ten vacation destinations in the world?

• India (Kerala)

Game

Which has an older civilization?• India (3200BC)

Game

What is India’s population –1 billion, 1.2 billion or 1.4 billion?

• 1.2 billion

Game

Pronounce an Indian word –Balasubramaniumneelachandran

Game

How many kegs of Guinness are exported annually- 3 million, 6 million or 12 million?• 12 million

Game

Which two entertainers are not of Irish descent?- Colin Farrell- Jennifer Connelly- Pierce Brosnan- U2- Sean Connery- Enya- The Corrs

• Jennifer Connelly and Sean Connery

Game

How many Bollywood movies are produced per year – 1000, 1500, 1800?• 1,000

Game

How many Indians go to the movies on a daily basis – 5 million, 9 million, 14 million?• 14 million

Game

What is the cultural significance of St.Patrick?• Conversion to Christianity in 432AD

India - High Context vs. Low Context Cultures

• High context culture

• Religion has had a big influence on the culture

• Titles hold a strong meaning

India - High Context vs. Low Context Cultures

• Subculture• Arranged marriages• Hindus offer prayers to their tools of worship

• Subtleties• Greet by holding the palms together and saying Namaste.• Remove shoes before entering a house• Eat food with hand• Unacceptable to point at someone with their finger.

Ireland - High Context vs. Low Context Cultures

Low context culture• Big cultural divide between

people in rural and urban areas• Religion plays an important role

on the Irish psyche• Titles are relevant but never

directly related

Ireland - High Context vs. Low Context Cultures

• Subtleties• Offensive to refer to the Irish as British• Eire is the official name of the state

• Better to refer country as Ireland

• Subculture• Pub culture• Love traditions

India - Value Quality of Life vs. Value Materialism

• Family and community values are very important

• Family values are strongly influenced by ones job

• BPO (business process outsourcing) industry is changing the way young Indians think

Ireland - Value Quality of Life vs. Value Materialism

• Ireland leads the world for quality of life

• Group dynamic is more evident in casual contexts such as eating or drinking

• Family is at the root of Irish culture

India - Past, Present and Future

• Male children are highly desirable

• Shift in preference for female child

• Land of religious practice• Hinduism, Jainism and Buddhism

• Caste system

• British Invasion• Western Education

• Technology Shift• Positive $ Negative Feelings

Ireland - Past, Present and Future

• Celtic settlements• Trade, druidic religion

• St. Patrick arrived in 432 CE, most of the Gaelic Kings converted to Christianity as the primary religion

• New religion brought new attitudes towards change• Education, status and social

scene• Ranks among the highest

educational participation rates in the world at 81%

Ireland - Past, Present and Future

• More than 65% of students go on to complete higher education programs

• Over the past 50 years, Ireland has had the highest economic growth rate in the E.U.• Study abroad programs

• Global outlook has led to movies, sports and music

Web Site / Field Tripucam-productions.com

Case Studies

Reverse Outsourcing from India to Ireland

Introduction• Background of Outsourcing

• Y2K bug

• Problems with Outsourcing• Staff attrition• Increasing costs• Customers unhappy


Hindustan Computers Limited Technologies• Fifth largest IT services company• Has the largest BPO operation in Ireland• Invested 16 million pounds in three different

expansions over last seven years

Pic


ICICI OneSource• Ranks fifth among BPO firms in terms of export revenue• Invested five million pounds• Facing opposition from the locals• Hiring from the local population• The model used to set up the call center is identical to

the ones set up in India


• Polaris Software Labs Limited• Leading providers of products and solution offerings in

the banking, financial services and Insurance domain. • Hires only graduates from the top universities

• Develops its centers in three phases:• Provides independent quality assurance• Provide software development• Provide round-the-clock customer service


Tech Mahindra• Sixth largest software exporter in India• Joint venture between Mahindra & Mahindra Limited

and British Telecommunication• Created a center of excellence for business services• Created 200 jobs thus generating 21 million pounds

over the next three years


Tata Consultancy Services• Worlds largest and oldest provider of IT consulting

services and BPO centers• Chose Ireland because of its high standards of business

excellence• Presented with the UK trade and Investment special

recognition award

Why is Ireland a Preferred Country for Outsourcing?

The battle for outsourcing:• One of the most popular countries for outsourcing throughout

the 90's • Low corporate income tax rate and its flexible, educated, and

growing young workforce• In the late 90s, other countries with much lower wages, such

as India, China and Eastern Europe became a more lucrative option for outsourcing.

• Countries that outsourced to India experienced problems because the quality of the job was not what they were expecting

• Over the past decade, Ireland began to reclaim those lost jobs and has become one of the hottest European economies.


Offers more than just off-loading non-core activities or functions such as call centers:

• Physical location - closer to North America than India• English speaking country• Closer to the culture of those countries with a significant

presence in outsourcing, specifically Western Europe and the U.S.

• Began to apply consulting expertise to increase revenues and reduce operation costs for foreign companies


Accenture Ireland offers four levels of outsourcing

1. Technology infrastructure. This is the basic layer. Companies outsource their Information Technologies activities to other countries

2. Business application.Management and maintenance of applications is hosted in a different country.


Accenture Ireland offers four levels of outsourcing

3. Business processes. Technical and infrastructure operation of the organization are outsourced, but also the business processes.

4. Business transformationEncompasses all of the above layers.


Represents a good outsourcing opportunity for transnational companies with branches in other European countries

• Mid-size European companies in the same industry are outsourcing similar functions.

• The host company supports these services for organizations within the same industry on a completely secure and confidential basis.

• Better acceptance when jobs are being outsourced to the European Nations instead of India


Ireland’s strength in outsourcing has bypassed the limits of the European borders:

• Microsoft • Planning to spend $500 million to build new European data-processing

center• The third massive data-storage and search-processing warehouse• First 'mega data centre' deployment outside the U.S. • Employs more than 1,200 people at three campuses in Ireland, its major

European base• Oracle

• Invested £80 millions in a global Research and Development (R&D) center.

• Hired 250 employees for this facility• Google

• Planning to hire more than 500 employees• Bring a total of 1,300 Google employees into Ireland.

• Dublin is headquarters for all of Google's business in the Europe, Middle East and Africa (EMEA) region

• Biggest Google operation outside the U.S.


Accelerated expansion has had its pitfalls:• Dell had a difficult experience finding enough employees to

support its most recent expansion in the country• Competing with other first world class companies like

Microsoft, Apple, and Pepsi Co.• Dell found qualified talent in other European countries such as

Spain, France, and the Netherlands

Why Did Amgen Choose Irelandto Expand Its Operations?

• In 2005, Amgen announced plans to build a €1.3 billion manufacturing plant in Cork, Ireland

• Country selection started with 20 possible countries

• Selection rapidly narrowed to three countries: Ireland, Switzerland and Singapore

• Tax benefits:• Reduced its top corporate income

tax rate in 2003 from 16 percent to 12.5, placing it well below European Union average of 30 percent and U.S. rate of 35 percent.

• Top U.S. pharmaceuticals firms, such as Pfizer, Eli Lilly and Boston Scientific already have an established presence in Cork

• Qualified workforce to work in different levels of an organization• Large pool of engineering resources and large subcontracting

networks that allows for timely completion of Amgen manufacturing plans

• English speaking country - offers a great opportunity for optimal communication

Why Did Amgen Choose Irelandto Expand Its Operations?

Ireland - Conclusion

Things to keep in mind with outsourcing• As a citizen of that nation

• Family/tradition is key• Equality/less reverence for titles

• As a company• Expertise• Tax benefits• Less tolerance

India - Conclusion

Things to keep in mind with outsourcing• As a citizen of that nation

• Family/tradition is key• Titles are important

• As a company• Cheaper labor• Employees have

more tolerance• Respect culture, religion

and traditions

Documents

Outsourcing The Cultural Transformation of India and Ireland