Chapter 9: Cross-cultural Communication Challenges - GSAs Between Japanese and Indian Firms

9.1 Background

The case studies discussed in this book thus far have concerned the work relationships of North American or European firms and Indian software companies. This chapter is different from the other case studies as it concerns relationships between firms from two Asian countries, Japan and India. The focus is also not on one particular relationship analysed over time. Instead a ˜snap-shot view is provided of a number of firms, in Japan and in India, that are engaged in or attempting to start GSAs. Since many of the relationships are not yet developed but in a stage of planning and projection, a large part of the analysis is based more on the managers expectations of what issues will develop in the GSA rather than on actual experience. However, understanding these expectations is crucial because they shape the attitudes and actions of the people involved in the GSA. Although the cross-sectional research design is guided by pragmatic considerations of access and the intention of identifying and exploring interesting relationships and issues, it also reflects the current state of the business environment where GSAs between Japanese and Indian firms for software development are still in their infancy. While the success of East Asian firms in a variety of domains, including consumer electronics and automobiles, is well known, they are feeling the pressure to become globally competitive by strengthening the software component of their products. To respond to this pressure and to deal with the challenges of economic recession , these firms have started to build GSAs with software houses in India and China. They have also set up their own development centres in these countries (Sony, LG, and Samsung, for example, all have software centres in India).

In the last 3 “4 years , some Indian firms have started to direct their attention to East Asia, especially Japan. While the Japanese software market is estimated at about $100 billion, the Indian share of it is only about $35 million. In 1998 “9, only about 4 per cent of overall software exports from the Indian software industry went to Japan, as compared to 80 per cent from the USA and Europe (NASSCOM 2000). Through our interviews we informally gathered that in 2000 about 30-odd Indian software companies had established offices in Japan. This contrasts markedly with the high traffic towards North America involving close to 1,000 Indian firms since the early 1990s. There have so far been few sustained outsourcing projects from Japan to India, even though many new relationships seem to be on the cards. While a few rather tentative attempts have been made by major companies like Sony, NEC, Toshiba and Mitsubishi, these pale in comparison with the scale or long- term commitment of North American firms (GE and Cisco), or European companies (Phillips, Siemens, SAP, British AeroSpace, British Gas). However, this situation of GSAs may soon change owing to the general downturn of the American IT industry which has put pressure on Indian firms to adopt a strategy of ˜not having all their eggs in one basket and geographically redistributing the risks arising from an over-dependence on North America. Even the Indian software giant, Infosys, decided to reorganize their strategic business focus around geographical areas rather than technology domains, with plans to increase the Japan component to some 10 per cent of their overall business.

During the final stages of our empirical work with the North American and UK “ Indian GSAs we became intrigued by the increasing discussion in the Indian firms, especially Comsoft, of the potential of developing alliances with Japanese firms. Managers and developers spoke positively and enthusiastically of the personal relationships that they had cultivated in the course of working with Japan, contrasted with the rather superficial and business-focused relationships with North America. India and Japan have similarities in religion and cultural values, such as respect for elders and the importance given to family. At first sight, it might be presumed that work relations between them would be easier to develop than with Western firms. Yet, as we began our investigations, we were struck by how thin the business relations actually were despite the inherent potential. To understand the underlying reasons for this, we conducted interviews in 2000 “2002 with managers and developers from Japanese, Korean and Indian firms who were engaged in either Indian “Korean or Indian “Japanese GSAs. These interviews took place in the offices of these firms in Bangalore, Seoul, Singapore and Tokyo. During the course of these interviews, the respondents repeatedly emphasized that cross-cultural communication issues were the most significant challenge facing the GSA management. In this chapter, we attempt to understand these cross-cultural issues in more depth, focusing in particular on understanding their nature, why they occur, and the implications they have for the GSA relationship.