Cultural barriers and outsourcing in U.S.-India business relations

Global Business Analysis - India

Global Business Cultural Analysis:

India

During the past few decades, global trade agreements have opened up one of the most important international markets: India. Due to these agreements, and especially with regards to internet businesses, the relationship between the U.S. And India thrived at a never-before seen level, as cultural barriers started succumbing to outsourcing en masse.

As more and more American companies realized the relatively low costs of outsourcing labor, especially IT-related, to India, the country started rising from a sleeping giant to an awakened and still-growing global power.

India, which occupies 2.4% of the world's landmass, supports "over 15% of the world's population."

According to the Central Intelligence Agency, India's median age is 26.3 (the U.S. is at 36.9 by comparison), which characterizes the country as "one of the youngest" among large emerging world economies (i.e. Brazil or China).

As recently as 2010, according to the U.S. Department of State, 70% of the total population lived in over 550,000 villages, with the remainder in towns or cities. Due to the business expansion in India, however, the country has seen mobility toward the city, especially in the younger population. Furthermore the caste system, heretofore a strong determinant of social status, has been relegated in favor of the "quiet social transformation" brought about in recent decades.

This paper strives to examine the recent phenomenon at the base of the changes in Indian society, with a specific outlook towards understanding both Indian culture, and global business culture, as it relates to India and the United States. For this reason, the paper will be separated into four sections: Indian Culture, Business Culture, U.S. Vs. Indian Culture, and Considerations. Each of these four sections will address a specific cultural aspect, and will strive to put it into perspective both in a theoretical and practical sense, and provide recommendations for U.S. businesses that want to invest in the growing Indian economy.

Indian Culture

The topic this section seeks to address is varied and complex. In order to understand India, one must understand Indian culture, and in order to understand Indian culture, one must understand history, customs, and modern traditions. It is, thus, quite a difficult exercise to understand explaining Indian culture in a few short pages; however, in order to cover all important aspects, the section will begin with a short history, after which it will expand upon past and present cultural phenomena.

Civilization in the Indian region began over 5000 years ago, with a population that settled along the banks of the Indus River. The country's history and culture is, thus, among the earliest in the world. The subsequent centuries saw constant migration, invasion and integration of various populations in the Indian region, yet by the beginning of the modern era, Indian had established itself as a thriving civilization.

During its medieval times, India flourished under a number of rulers. This era began with the Palas, in the 8th century, who dominated Northern India. During this time, the Senas started establishing their rule in Bengal, and eventually took over Pala kingdoms. During the time of the Senas, the region saw relative peace, as the Sena ruler kept his dominions safe and intact.

Two more important dynasties followed, the Pratihara and the Rashtrakutas, both of whom had good merits in keeping the dominion safe, and providing social services to the people, respectively. However, in the mid-9th century, the most well-known and perhaps the greatest of the Empires began: the Chola Empire. This Southern dominion "covered a large part of Indian peninsula, as well as parts of Sri Lanka and the Maldives Islands," according to the India Government website (2011), and had as merits both expansion and a period of relative wealth for the territory.

The centuries that followed saw a Muslim invasion, a Timurian invasion, and multiple dynasties and empires. Nothing would be as monumental, however, as the ultimate take-over by Great Britain in the mid-1700's. By the mid-1800's the Empire had established a definitive dominion over India, and its reach lasted until the 20th century. The beginnings of foment in India were seen in the civil disobedience and the "quit India" movements, whose leaders, among other, were Mahatma Gandhi and Nehru, the incomparable Indian leaders that are still venerated today. In 1950, India elected its first president, thereby cementing itself as a world nation.

Due to its extensive and complex history, India has cultural richness not found in other countries. The country's values and beliefs are ultimately products of this history, of which a snippet has been presented above, and one must strive to understand all aspects of India in order to be prepared for the social interactions and responsibility that come with opening a business in India or even simply interacting with Indian businessmen and women.

One must first understand that because of this complex history, Indian people are proud of their heritage and their diversity, which is visibly prominent in culture and even climate. India has some of the most beautiful beaches, and the highest mountain peaks in the world. One sees a multitude of colors in the country from fruit, to clothing, to nature, thereby making the country a "feast" for the eyes. The culture, many state, is a varied as the country's geography.

According to the country's website (2011), "Indian culture varies like its vast geography. People speak in different languages, dress differently, follow different religions, eat different food but are of the same temperament"

Furthermore, according to Indian customs, the country is based on a "society" idea, which juxtaposes with the American "individual" ideal, thus, there are many festivals and celebrations that take into account the whole of society. However, to juxtapose this as well, is the fact that though society partakes in many events, society is also divided into a rigid hierarchy known as the caste system. Social cases are defined by various groups, which are sustained by arranged marriages to ensure that the caste system is kept intact. As aforementioned, however, this system is being quietly broken down by the increasing opportunities available in the country.

No matter what class, however, in India the family is always headed by a patriarch, and usually includes an extended family, living under one roof. The culture discourages divorce, despite the fact that most marriages are arranged, and that many women marry before the age of 18. This particular aspect has been portrayed in America through numerous films and television shows, the most recent of which takes place in an outsourced sales office of American trinkets, where the girls have to struggle with arranged marriages, and the conflicts they pose. This modern portrayal, however, is by the American media, and many women in India still subscribe to the arranged-marriage philosophy without questioning it.

Though defined by the various cultural specificities mentioned above, and by its wealth of history, the country today is also defined by its national symbols, by its cuisine, clothing and art, which will be subsequently examined. For example, the Indian nation relies on four important symbols. These include its flag, its national bird and flower, its anthem and its national animal.

Though these may seem like trivial symbols, they are important for India and its image in the world. For example, the tricolor flag, which was adopted upon the country's independence, in 1947, utilizes a wheel with 24 spokes to represents the chakra, or the wheel of law. The colors in the flag, which are orange, white, green and blue represent courage, peace, hope, and vigilance or loyalty, respectively.

The anthem of the country is also important to mention here, as it was written by Rabindra Nath Tagore, a national Indian poet who lived in the mid-1800's, until 1941.

The anthem roughly echoes India's history, and describes its countless rulers, as well as its geography, while encouraging India to pursue its future, its destiny and, finally, chanting three times "victory."

In its clothing and cuisine are also important elements of the Indian identity, and India is known world wide for its superior cuisine and colorful garb. The spices of the food and the color of the clothing, one can venture to say, is what truly makes India what its image portrays around the world, for they echo a richness not found anywhere else. Indian art is also quite ornate and elaborate, due to the centuries of freedom of expression, characterized even in the Taj Mahal, one of India's tourist symbols and historical wonders.

United States vs. India: A Cultural Comparison

With the aforementioned business-related and business protocol in mind, one must now examine similarities and differences between the United States and India, with respect to the way business is conducted in both countries. In the United States, business is very serious, as it is in India. However, in the U.S. many people can be informal and jocular in certain instances, especially if in an informal setting. As seen above, however, even when having dinner, one must follow a certain kind of protocol that is entrenched in the country's rich history. Therefore, culture becomes a very important aspect. There are, however, many similarities between doing business in India and the United States, and they are given in a list below:

Mutual understanding and respect is necessary

If a person loses his or her temper he will not be as respected

Delays are excusable, but not preferred

Dress attire is usually formal for both men and women, though this also depends on the weather often times

Titles are important, as are business cards, which must be presented at the first meeting

Even within this small list of similarities one can see familiar instances of similarity; however, in addition to differences seen throughout the Indian Culture section above, there are specific differences of which one must take note. For example:

In a negotiation, one must expect concessions for anything that is granted

One can never appear too focused on legal aspects (in Indian culture one's word is sufficient)

One should not disagree publicly with a team member

One must wait before utilizing someone's first name without a title

Negotiations will often be very slow, as quick decisions are almost never taken

Though this may seem like a "crash course," both in light of the short historical part, and of the cultural part presented above, it is important to take into consideration these cultural differences, especially prior to doing business in India. There are many websites which can point one in the right direction. For example, an Indian consultant gives a list of 19 sections that one must study prior to going to India and speaking about business, and these are rendered below in a short summary:

Introduction, geography, climate, and population

Demographic profile, government and political structure

Economy and entrance requirements

Making appointments India: Appointment Alert! - Part 2

More information on making appointments

Guidelines for business dress

General guidelines

Welcome topics of conversation

Topics to avoid in conversation

Addressing others with respect

Selecting and presenting an appropriate business gift

What you should know before you negotiate

Intermediaries, protocols, and the negotiating process

The negotiating process, continued

General tips, eating and drinking

Eating continued and business entertaining

Social entertaining

Acceptable public conduct

Though this list may seem overwhelming at first, it is important to note that such a list must be compiled and studied prior to going to any country for business purposes, and especially if opening a new business; furthermore, one must keep in mind that people in India may study the same way if coming to the U.S. This section has thus sought to address similarities and differences between the two cultures and has found a multitude of both, especially in light of the list provided, which mirrors previous sections' topics. However, one must note that these topics are very general, and if one truly wishes to open a new business in the country, a more in depth study must be performed.

Consideration for United States Businesses

All the aforementioned points must be taken into consideration if a business wishes to invest in the Indian marketplace, and further thought must certainly be given to studying the country much more, and in more depth. One issue that has not been presented above, but that was reflected in the first section, for example, and one which could come from such an in depth study as should be undertaken, would be the fact that often times, due to the median age in India, one may need to deal with younger workers, and one should be prepared to do so and respect these workers as one would respect elderly workers. Furthermore, such questions may arise as whether to greet a senior person (perhaps young), or an older person who may not be a senior person. Such questions should be taken into consideration for anyone wishing to invest in India.

Prior to investing in India, furthermore, a business must also be aware that a Business Process Management (BPM) strategy is necessary. According to one study, there are indicators that "the Indian cultural characteristics of high power distance, collectivism, low uncertainty avoidance and high context have resulted in highly informal BPM governance practices which might appear ambiguous and chaotic to persons who are unfamiliar with the cultural context."

The study further found that characteristics of American culture, such as individualism, do not necessarily facilitate the implementation of business projects, though it may facilitate the implementation of BPR projects.

In addition to cultural differences and the implementation of a BPM strategy, U.S. businesses must also be aware of the market, socio-economic and political differences in India prior to investment. For example, the political and regulatory system in India, though now free to foreign investors, is not completely without barriers, and often the political situation can upset this precarious structure. Many times, the Hindu nationalist party opposes the Congress Party's "openness" for example, and a business must take this into account when moving any of its practices to the country.

Another fact of which a company must be aware, according to a study on the topic, is that the Indian government has a reputation of inefficiency, corruption and poor budgetary management.

The study goes on to state,

"Protectionism or anti-competitive strategies are barriers established to protect a domestic industry from cheaper competitive goods and services […] Protectionist strategies in India are largely based on the notion that increased importing reduces the demand for low-wage and low-skilled labor […] the Indian government enforces extensive import restrictions and high tariffs […]The Indian economy, however, began to liberalize and globalize in earnest in 1991…"

Furthermore, a company must also be aware of the economic and social infrastructure of India. Prior to discussing this, it is important to mention that a great difficulty in the country is its inability to discipline itself fiscally. With a view towards the economic infrastructure, most of India consists of roads and railways for transport. Passenger traffic is subsidized by charges for various moving freight. However, railway safety has become a major problem, and the country's "energy provision is a major limitation to the country's economic infrastructure."

The social dimension of the country rests upon the previously discussed cultural principles. It is also important to reiterate that India "believes in collective group and team achievements," unlike the U.S., who believes in individual achievement. This is a clear difference between the two countries. Despite these differences, however, there is clear evidence that India is moving towards a more individualistic social dimension, especially in the cities of the country.

Conclusions

This paragraphs above have examined Indian society, with a specific outlook towards culture, both within personal and business spaces, with an outlook at history, and has also spoken about cultural differences and similarities between the United States and India, with an outlook towards recommending those areas at which a potential business investor should look, if he wishes to invest in India. Understanding Indian culture, especially business culture, is central to understanding the country and being successful within it. Though there are many differences between India and the United States, if one looks at India and studies it properly, he will see that there is both room for understanding and for profit, and will be successful.

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