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Case Studies

Introducing Western Organizational Cultural Norms to a Developing Country Organization (India)

A US company realized nearly half a million dollars in savings after improving communication between the US staff and their overseas contractors and training the overseas staff in process excellence methods.

The Client:
One of the largest Tax, Accounting and Consultancy firms had developed an off-shore captive operation in Hyderabad, India to recognize the potential labor savings over 3 years ago. Back then, the processes selected to be shipped overseas were ones that had been already “centralized” to a US geographic area with lower labor costs. However, there was a lot of resistance by the US workers to relinquish tasks to the Indian operation.

To force the transition, Senior Management made it an edict, but for all intents and purposes, the processes, tools and resident technologies were not reviewed when they were shipped off to India . The entire program was a “lift and shift” effort. The Indian management team did not object to this strategy.

The Challenge:
Although moving activities to India originally reduced the labor costs in the first 2 years, operational error rates went through the roof, and more US management staff had to be hired to “manage” the Off-shore staff.  In addition, there was a continuous “us” versus “them” reference by the US staff. Caught between decreasing productivity in the US, and continuous process defects leaking into client interactions, Senior Management promising to increase the Indian staff from 1,000 to 5,000 FTE over the next 2 years. However, with the attrition rate in Hyderabad at +75% per annum, something had to be done to improve the situation. The business case for the initiative was in jeopardy.

Solution:
On the US side—the Client had just started to implement a Six Sigma culture for Process Excellence. As most processes crossed back and forth between India and the US, it was clear that a dedicated effort to train the Off-shore team in Six Sigma was warranted.

It initially started as a training exercise. 50 (2.5%) high performance employees were chosen to attend Green Belt class—and bring with them a “suggested” process to improve to augment the classroom learning. Once word got out that Six Sigma training was offered, hundreds of employees requested an opportunity to attend.

In addition, Black belts, trained by other companies prior to their hire at the client, were used as a support team for the newly created Green Belts. An entire cultural framework was created to develop project discipline, intellectual rigor, and management by fact. The Indian outsourced team embraced these concepts immediately and were eager to improve performance. A Six Sigma culture started to take root at the individual level, providing to the US and Indian management of its validity.

Concurrently the US employees were less than eager to improve productivity. Once the off-shore teams started to deploy metrics that demonstrated poor quality work originating from the US, did the US begin to improve productivity. Process constraints due to inefficient load leveling was removed to eliminate backlogs.

Results:
Improvements were quickly implemented. Savings on the US side of $450+K were realized in the first year. Realization that “centralized” activities had not really been “standardized” and there was still a gross level of variation that the Indian team had not been prepared for.

In addition, most of the processes had not been investigated for efficiency. There were a lot of process defects that had been understood by the US team but had not been communicated to the Indian team.

Indian employees recognized the value of a Six Sigma credential for future employment. However, they had to sign a contract for continued employment to be part of the program. A 2 year commitment was necessary to gain a Green Belt certification.

Learning:

  • While there was a US ex-pat and Senior Indian management at the helm of the captive operation, the results came directly from the lowest level employee, who observed the inefficiencies in process perpetrated by the US. The Six Sigma program gave these individuals a forum for suggestion for improvement.
    While the Indian team was anxious to learn they often used the methodology to prove points that were not valid. The methodology, used correctly, supported the intellectual rigor, but you needed objective perspective to challenge foregone conclusions.
  • Nothing was measured at the start—but metrics leveled the playing field between the US operations and the Indian team. Conversations moved from personal blame to fact-based decisions by month 3.
  • Senior leadership wanted a top-down program with more control over the outcome. What materialized was a “bottom up” groundswell of productivity and enthusiasm. The leadership was, in some cases, just asked to get out of the way. For “command and control” management, this was contrary to their expectations and they were uncomfortable with the change for 4 months until the results started to come in.
  • A US trained Black Belt was stationed in Hyderabad, India to continue the momentum. There were times that the Indian team started to veer of course, or became dis-empowered by their management. An objective party was required to challenge the inertia.

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