Culture has often been cited as one of the biggest barriers to successful offshore outsourcing. While we all know and agree that that is the case, and often talk about it, not all of us understand specifically how different cultural aspects show up in offshore projects and how the resulting barriers can be addressed.

To know more about how culture differences show up, one can either rely on research studies or on first hand observations and experience. When it comes to research, Geert Hofstede's work in identifying cross-country cultural differences based on five measures: power distance, individualism, uncertainty avoidance, long-term orientation and masculinity, is a good starting point. A few examples: Western countries like U.S. and U.K. are more individualistic compared to the collective culture in Latin America and Asia; Asian countries like China and Japan score high on long term orientation while western countries are more short-term oriented. Richard Nisbett, a social psychologist, found that Easterners perceive objects holistically through a wide-angle lens whereas Westerners perceive them in isolation, through a narrow lens with sharper focus. Another study looked at culture and mum effect, which occurs when one or more stakeholders who have information indicating a project is failing decide to remain silent and let the project continue. It indicates that the risk of mum effect is higher in Asia than in the West. Of course, there are caveats and assumptions in these studies so they should serve only as initial anchors rather than absolute truth.

First hand observations and experience bring out much more specific aspects. For example, Utkarsh Rai, author of Offshoring Secrets highlights specific aspects of the Indian culture that show up while managing offshore projects—the compare and contrast culture, the workplace socialization practices, the importance of age and seniority, the sensitivity to criticism and the difficulty in saying no. This is in stark contrast with some elements of the western culture—the directness of criticism, the slightly circumlocutory style of communication and the focus on productivity in U.K. and the informality of work culture, the direct but sometimes overbearing style of communication and the "it's all about time and money" approach in the U.S.

These cultural differences impact interactions, communication, interpretation, understanding, productivity, comfort and commitment.

So how can we address them? Companies have adopted two routes so far: cultural awareness and culturally compatible resource deployment. Cultural awareness involves conducting workshops and sessions both offshore and offshore to make both sides aware of each other's cultural practices. In fact, such sessions are now included as a freebie in many large outsourcing programs. Culturally compatible resource deployment involves having local, native onsite persons manage the onshore client relationship or even having a culturally compatible offshore workforce (example U.K. and South Africa). The two things to be kept in mind while doing this are firstly whether the cultural barrier is addressed internally within the service provider's organization and secondly if the erosion of cost advantage is worth it.