Vendor Selection Pitfalls: Make sure you have the right strategy, and understand your partner’s business culture, before engaging a new partner overseas.
Building successful international business relationships can be very challenging. That’s what our client in Portland learned. To build their second generation product, they outsourced the whole job to a firm in India. A year later, the Indian firm hadn’t met project goals. They had over promised and hired too many staff who were out of the depth. It was clear the project was failing.
But before we talk about a solution, what happened? How could things go so wrong?
Understand The Culture
Selecting a vendor is difficult. Even when its just down the street. Hiring a team on the other side of the world throws a lot more uncertainty into it. They completely trusted their vendor to do a great job. What our client didn’t understand about Indian business culture is where they got into trouble. Indian businesses are not at all shy about taking on business they aren’t prepared for. Its businesses usual to sign a contract and only then go out and start looking for resources. Indian culture prioritizes time and schedules differently then Western culture. And that leads to problems right off the bat. And if the firm can’t find good resources for the job, most overseas client aren’t aware of it until it’s too late.
Another problem is finding the right skills and keeping them. Because India is so incredibly competitive, job turn over is very high. Some firms have over 30% turn over every year. But all these problems can be navigated easily if you know the business culture and have the right strategy. For our client we turned the project around by firing the outsourced vendor and hiring a new team. The new vendor had a long track record with us. So we knew what they could do and more importantly we had a great relationship with them. In India a solid relationship will go a lot further than a solid business deal.
Keys To Success
An important aspect of building a relationship is understanding the concept of face. The idea of having good face in Asia is a bankable notion. In Asian culture someone who has a good face has a good reputation with peers, businesses, community and even family. It’s all inclusive. As your relationships are cemented so is your reputation and that’s why it’s so important to have real, long term business relationships.
Another key to success is being very hands on. That means treating your partner like an extension of your own business. Think about those relationships again. Asian partnerships are much more enmeshed than western partnerships. So you have got to spend time with your partners on regular basis to keep those relationships alive.
Understanding and navigating international business culture takes different skills in different countries. Business culture varies dramatically from one region to another, which is why understanding business cultural preferences is so important. It’s why we created the business synergy compass, to guide businesses to success in the new global economy.