Why culture is a determining factor in internationalizing your IT company

Why culture is a determining factor in internationalizing your IT company

by Manuel Vilhena, 19 June, 2018

There are numerous failed examples of companies going abroad and failing to do so, not because they didn’t have a suitable business model or miscalculated the monetary costs involved in doing so, but because they failed to adapt their business processes to the new culture they found on the promised land.

 

When a company decides its time to create a business unit abroad, the first components it analyzes in order to make a decision are usually cost-related ones: price, infrastructure, available staff pool, political stability of host country, etc.

However, one component that is often overlooked or completely ignored is, in my opinion, the most important of all: the business culture of the host country, or rather, the adjustability of the 2 different cultures that are going to meet and clash in the new office.

There are numerous failed examples of companies going abroad and failing to do so, not because they didn’t have a suitable business model or miscalculated the monetary costs involved in doing so, but because they failed to adapt their business processes to the new culture they found on the promised land.

Reasons for these failures can be something so simple as language barriers to something as complex as hierarchy and respect.

When moving abroad, companies should establish a working framework for the new office and the new employees, one that respects the way they usually do business there, but that also allows them the space to adapt and grow into the new culture that will be created. Cultural sensitivity classes should be held for the employees that will move to the new country as well, so as to smoothen the transition and avoid simple, yet costly, misunderstandings and to manage expectations accordingly.

Internationalizing by building your IT development team abroad can be a daunting, frustrating process, especially if the company you work for is doing it based solely on cost-effectiveness arguments, without looking at the output quality the chosen country is able to produce.

In the end, the main factor you should be looking at is the business culture of the new country and how it will damage/improve your own products. It is here that Portugal diferentiates itself from other traditional nearshore destinations: while it may not have the same low cost appeal as them, it takes advantage of a western business culture (and the quality standards associated with it) coupled with a very talented pool of candidates.