Outsourcing
Tricks
and
Traps
10
things
you
should
know
before
you
outsource
by
Tom
Sudyk
While
walking
in
downtown
New
Delhi,
the
capital
of
India,
a
shoeshine
boy
tugged
on
my
sleeve
and
pointed
at
my
shoe.
A
glob
of
cow
dung
had
miraculously
appeared
there.
This
was
marketing
Indian
style!
I
knew
the
trick:
slip
up
to
the
foreigner,
put
something
disgusting
on
his
shoe,
and
then
offer
a
shine.
I
laughed
and
declined
the
offer.
I
spent
25
cents
for
a
shine
down
the
block.
Rule
#1 –
Being
paranoid
is a
good
thing.
Never
be
afraid
to
investigate
anything
that
is
unclear
in
your
mind.
You
can
be
polite,
but
do
not
accept
any
answer
you
do
not
understand,
and
confirm
all
answers
through
independent
sources
whenever
possible.
Deceptive
advertising
is
everywhere,
but
if
you
want
an
advanced
course,
go
to
India
or
another
developing
country
with
an
emerging
economy.
When
I
transitioned
my
career
from
law
enforcement
to
business,
I
thought
I
was
moving
up –
I
would
no
longer
need
to
worry
about
criminals.
However,
after
working
through
a
number
of
embezzlement
cases
with
my
companies
and
with
those
of
friends,
I
have
come
to
believe
that
there
are
many
criminals
in
business.
Nowhere
has
my
law
enforcement
experience
been
more
valuable
than
in
starting
a
company
in
India.
Following
small
clues
and
listening
to
your
intuition
are
critical
when
you
cross
into
a
new
culture
–
sometimes
there
is a
good
reason
to
be
paranoid!
Criminals
hide
things
by
lying,
therefore
cross-checking
and
confirming
information
should
be
instinctual.
Rule
#2 –
Being
polite
has
different
meanings
in
different
cultures.
Simple
misunderstandings
can
damage
business
relationships.
Cultural
difference
can
lead
to
misunderstandings
and
disappointment
–
add
money
and
the
situation
may
become
disastrous.
An
example
of
this
is
“the
polite
answer”.
In
our
culture,
the
question
“How
are
you
today?”
receives
the
polite
answer
“Fine.”
Everyone
knows
this
answer
does
not
always
represent
the
facts.
If
you
want
to
test
this,
give
a
truthful,
detailed
answer
the
next
time
a
store
clerk
asks
how
you’re
doing.
Then
notice
the
shocked
look
on
his
face.
Even
though
he
asked,
he
does
not
necessarily
want
to
know
about
all
of
your
problems.
Asians
are
much
more
polite
than
Americans.
The
term
“ugly
American”
was
coined
because
Americans
in
Asia
are
seen
as
not
being
polite
enough.
It
is
polite
in
Asian
culture
to
tell
someone
what
they
want
to
hear.
In
Asia,
when
we
say
“Can
I
have
that
report
tomorrow?”
the
polite
answer
is
“Yes,”
regardless
of
the
facts.
Is
this
response
untrue?
Usually,
just
as
the
response,
“Fine”
is
sometimes
untrue
in
our
culture.
This
polite
“Yes”
response
can
be
avoided
to a
great
extent
by
asking
a
more
concise
question:
“When
can
I
expect
that
report?”
Rule
#3 –
Understand
the
difference
between
advertising
and
reality.
Does
the
company’s
claim
fit
the
facts?
Is
there
a
way
to
confirm
these
claims?
If a
company
is
making
false
claims,
understand
that
this
reflects
upon
their
ethics
and
business
practices
–
you
better
run!
An
extension
of
the
polite
“yes”
is
over-promising
and
falsifying
qualifications.
Without
strict
laws
or
social
repercussions,
saying
just
about
anything
to
get
the
sale
is
often
the
norm.
Why
not?
The
logic
goes
like
this:
the
customer
wants
ISO
certification,
so I
will
claim
I
have
it.
If I
don’t
make
this
claim
I
will
never
be
considered,
and
if I
win
the
bid
I
can
hope
the
customer
never
finds
out.”
The
Internet
inundated
with
hundreds
of
websites
making
claims
far
beyond
their
real
capabilities.
Many
are
even
comical
if
you
look
a
little
closer
and
read
between
the
lines.
Rule
#4 –
Know
who
is
doing
your
work
and
where
it
is
being
done.
Are
the
company’s
physical
offices
capable
of
doing
your
work
in-house?
If
they
have
told
you
of
other
customers
they
work
for,
does
their
capacity
fit
their
claims
when
your
work
is
added?
On a
site
visit,
count
computers,
count
people,
and
most
importantly
be
sure
that
these
people
actually
work
for
this
company.
Rule
#5 –
Outsourcing
to a
different
country
takes
more
time.
Expect
delays
and
never
wait
until
the
last
minute.
Plan
ahead,
work
ahead,
and
stay
ahead!
America
is a
fast-paced
society.
We
thrive
on
getting
things
done
quickly
– we
expect
it
and
we
demand
it!
Most
other
cultures
do
things
at a
slower
pace.
This
requires
more
lead-time
on
projects.
Simple
things
like
incorporation
can
be
completed
in
one
day
here,
but
may
take
14
to
90
days
in
India.
Setting
up
telephones
and
high-speed
internet
may
take
weeks,
or
even
months.
Rule
#6 –
Know
the
cost
of
the
trips
you
will
be
taking.
Understand
the
potential
cost
of
the
trip
and
be
ready
to
walk
away
from
a
deal
if
it
doesn’t
feel
right.
Expect
to
make
at
least
three
trips
before
setting
up
in
India,
especially
if
you
are
starting
alone.
Travel
expenses
may
reach
$8,600
per
person
for
each
trip
you
make,
not
including
time
away
from
the
office,
which
could
be
up
to
seven
days.
When
people
talk
about
jumping
on a
plane
and
setting
up a
business
or
partnership
in a
foreign
country
within
a
few
days,
I
cringe.
First
of
all,
it
may
cost
you
more
than
just
the
airfare
or
your
time.
The
real
price
is
paid
when
the
deal
goes
bad.
No
one
goes
into
a
deal
expecting
it
to
go
bad,
but
oftentimes
the
demise
of
the
deal
happens
because
of
relationships
and
the
character
of
the
partner,
as
well
as
their
inability
to
perform,
communicate
and
work
well
as a
team
with
your
staff.
Rule
#7 –
Watch
the
money.
Understand
your
foreign
business
operations
and
know
what
things
cost
in
the
country
you
are
working
with.
If
possible,
do
not
leave
large
amounts
of
money
in
accounts.
Wire
transfers
are
a
quick
and
cost-effective
cash
management
tool.
A
friend
of
mine
called
me
one
day
and
said
he
thought
he
had
been
defrauded.
I
inquired
about
the
facts
and
concluded
he
was
probably
right.
I
asked
him
how
much
he
had
invested
and
the
answer
shocked
me:
$1,500,000.
After
meeting
with
the
FBI,
investors,
and
attorneys,
it
became
clear
that
a
good
investment
right
here
at
home
had
been
fraudulent.
When
you
invest
overseas,
your
recourse
is
limited.
Because
of
this,
many
companies
choose
to
farm
out
work
and
not
get
into
business
operations
overseas.
If
you
establish
an
office
in a
country
like
India,
you
must
understand
that
your
in-country
management
needs
cash
for
operations.
Whenever
possible,
cash
on
hand
should
be
kept
to a
minimum
in
order
to
reduce
any
temptation.
Incremental
theft
through
schemes
involving
ghost
employees
or
fabricated
service
invoices
are
harder
to
detect
–
vigilance
is
important.
Rule
#8 –
Beware
of
stakeholder
sabotage.
Evaluate
who
the
stakeholders
are
in
the
process
and
understand
their
concerns.
Final
decision
makers
should
believe
in
the
financial
benefits
of
outsourcing
and
have
the
rank
and
judgment
to
veto
a
deal
based
on
intuition
(Rules
1 &
3).
Financial
savings
drives
outsourcing
decisions.
Yet,
the
managers
responsible
for
the
work
being
outsourced
bear
the
risks
of
the
outsourcing
process
– a
failure
could
cost
them
their
jobs.
This
is a
natural
business
tension
that
we
are
all
familiar
with,
but
corporate
pressure,
urgency
and
cultural
unawareness
create
a
dangerous
combination
that
can
prevent
the
point-person
from
heeding
the
warning
signs
of a
bad
deal.
The
mandate
is
charge
ahead
at
all
costs.
Rule
#9 –
Maintain
a
risk
/
reward
balance.
Recognize
that
a
properly
laid
foundation
will
increase
the
financial
advantage
of
outsourcing.
Buy
a
little
insurance
by
proceeding
carefully.
Outsourcing
is a
risk
/
reward
balancing
act.
As
you
gain
more
experience,
you
can
take
more
risks
and
gain
greater
savings.
Trying
to
outsource
key
functions
in
short
periods
of
time
increases
your
risk.
Learning
the
ropes,
working
through
cultural
communications
and
building
trust
in
your
overseas
management
team
are
all
risk-reducing
events.
Laying
a
good
foundation
is
critical,
as
is a
structured
growth
process.
Rule
#10
–
Begin
with
the
end
in
mind.
In
today’s
economy
most
companies
are
considering
outsourcing,
and
if
they
are
not,
their
competitors
are.
Therefore,
they
will
be
forced
into
outsourcing
in
order
to
remain
competitive.
To
gain
perspective,
think
of
outsourcing
as
your
plant
or
office
space.
You
know
you
are
going
to
need
your
facility
to
operate,
so
you
evaluate
the
advantages
of
renting
versus
buying.
Many
companies
rent,
then
buy
later.
They
learn
what
their
business
needs
are,
and
when
the
time
is
right,
sign
a
mortgage
for
a
building.
Of
course,
some
continue
to
rent
if
it
makes
business
sense.
When
you
approach
outsourcing,
follow
a
similar
logic.
If
this
is
going
to
be a
core
part
of
your
long-term
growth
strategy,
you
probably
need
to
own
the
overseas
operation
(or
at
least
have
owner-like
control,
such
as a
long-term
lease
or
option
to
buy).
If
you
expect
to
be
an
owner
in
the
future,
it
changes
the
learning
process.
If
you
begin
with
the
end
in
mind,
you
can
tailor
your
early
ventures
to
gain
the
experience
necessary
to
meet
your
long-term
objectives.
Remember,
it
takes
more
time
(Rule
#5).
Often
steps
may
need
to
be
taken
months,
or
even
years
in
advance,
so
look
for
a
partner
who
can
help
you
through
that
process.
Tom
Sudyk
is
the
CEO
of
EC
Group
International,
located
in
Grand
Rapids,
Michigan.
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