Losing the war for talent: Why offshore providers come up short onshore

There is an exclusive club developing in the Western World… “onshore” people who have experienced working for an offshore-centric provider, where all roads lead to Mumbai, or Delhi, or Chennai, or Bangalore… These folks quickly realized that this execu-life is an acquired taste – and either adapted or quickly bailed… or got fired.  I personally know a multitude of executives now on their second, third, or even fourth (yes, fourth) offshore-centric firm.

What’s abundantly clear is the need to hire and develop quality onshore account management and delivery personnel is becoming the crucial differentiator in today’s ever-tightening outsourcing marketplace.  Those that can win this talent war will be the ones who can truly move beyond yesterday’s flagging outsourcing model.

So who better than Deborah Kops, the doyenne of disruptive dialog herself, to expand on this topic in a way that, quite frankly, noone has dared put into print before…

Why offshore providers come up short onshore

Over the last few weeks, I must have had at least 10 calls from outsourcing talent currently looking –or being recruited for new positions–many of them by offshore providers. And that’s not counting the calls from search consultants, desperate to locate that buried diamond of a sales-accounts-or-solutions guy who can be persuaded to jump ship.

Deborah Kops, Research Fellow at HfS (click for bio)

Comparing their stories with my own recruitment experiences, it struck me that I’d been listening to a broken record. The tales were so very similar—even across a number of providers—that perhaps it’s time that someone called attention to the fact that in a war for onshore talent, offshore providers can unwittingly come up short. And that’s not good for the provider, for the talent, and certainly not for clients who increasingly demand that their providers become more globally and culturally adept.

Last week, yet another resume showed up in my email. Now, convinced that you can’t know too many smart people, I spent a few minutes with Mr. X, going over a very impressive list of qualifications: both buy-and-sell-side experience; a real track record in sales and operations;  good communication skills and a great educational pedigree. When the conversation got to the stage where I was convinced that any number of providers would love to have him as part of the team, I started my usual ‘what about x? Or y?’ And then I got an emphatic “I won’t work for an offshore-legacy firm.” “Why,” I asked. “You’ve never worked for one. How do you know you can’t have a great career?”  “Deborah,” he said, “Why would I work for a firm where the power structure is all overseas and doesn’t include me?  And every time I’ve been recruited by an offshore firm, it’s been a waste of my time. They don’t seem to know how to run a good process. I am underwhelmed, and since recruitment is seduction, I’m not falling into bed with a firm that doesn’t know how to sell me on working with them.”

Offshore providers, please take note. With fewer and fewer good onshore sales/account management/solutions/operations guys and gals willing to switch horses, putting your best foot forward in the recruiting cycle is no different than courting a client. In fact, without the ability to attract the right onshore talent, it’s arguably impossible to grow and prosper.

What parts of the plot are offshore providers seemingly missing when they attempt to recruit onshore talent? 

  • Onshore outsourcing talent is not fungible. Unlike talent pools in offshore locations, there may not be more than one or two really good candidates onshore, especially if that talent has an enviable track record in sales or solutions.  And, as the market contracts, good talent has  become more concerned about the quality of the brands they represent, paying more attention to crafting a career progression that underwrites their market worth by working for what the market sees as the “right” organizations.  After all, names like Accenture and IBM on a resume act as career validation. Ask the search consultants; few candidates are calling them hankering after an introduction to an offshore player.
  • Onshore talent no longer sees the same risk/reward equation; the heady early days of get-in-on-the-ground-floor –and-make –a-few –million-bucks-at-IPO are over. With no new market entrants into entrenched process offerings such as finance and accounting, and more closely held offshore ownership in digital and analytics start-ups, the opportunity to make big bucks no longer justifies the perceived risk of working for an offshore provider that, quite simply, is less likely to trade career satisfaction for money.  Talent now is more sensitive to finding—and staying with—the right employer, especially in light of economic uncertainty. Call it a flight to safety.
  • Onshore talent does not have the same linkages or ties to their employers as offshore talent Offshore providers that are not culturally savvy often forget that there is no one-size-fits-all approach when it comes to managing global human resources.  The employee/employer relationship that underpins offshore personnel relationships simply does not translate onshore. For example, onshore employees tend to manage their careers more independently, and do not have the same sense of family…or indebtedness…when it comes to staying with their employers.  In other words, loyalty barely plays in career decisions.
  • The press doesn’t help In a market where seven degrees of separation is quickly reduced to two, the tales of working in a legacy offshore firm quickly become part of urban legend. Stories (rightly or wrongly) abound about cultural insensitivity: staff retreats held in India close to Christmas or on Easter weekend; cheap travel policies including coach travel at all times and sharing rooms with colleagues;  and being managed by buddies of the boss who have limited experience or skill. Potential candidates who are used to certain working conditions are scared off from seriously exploring a career with an offshore provider.

What can the offshore provider do to improve its talent value proposition?

It comes down to changing approaches to market and being realistic about what talent looks for when they consider new opportunities. It’s time to stop replicating very familiar offshore talent management constructs and approaches, and start to act like a local.  Let’s dig a little deeper here:

  • Bear in mind that the provider is the seller, and the recruit is the buyer In a market bereft of a real deep talent bench, good candidates are the sellers.  Unfortunately offshore providers forget that fact, sometimes approaching the candidate with a “you’re so lucky to be talking to me” attitude. In fact, sometime this is taken to the extreme; a recent urban legend has a partner in a global firm being offered a trial 90 day position which would convert to full employment if a real deal is identified during that period. The candidate approached the meeting with a high degree of interest, but walked out with a high level of disgust when the terms shifted from employment to trial.
  • Have an honest strategy to move to glocal management Onshore talent consistently complain about being managed  offshore and through offshore practices, resulting in what they see as lack of empowerment, disenfranchisement, cultural insensitivity and lack of trust. While moving to a true global talent management model won’t happen overnight, offshore organizations that make good faith efforts to devolve leadership and in country operations to those in the know onshore will ultimately reap a number of rewards: reputation as a provider with deep local contextual knowledge; a strong reputation as a good place to build a career for onshore talent; and a brand as a truly global player.
  • Adopt local HR practices What goes for best practices in India, or even the UK, does not fly in the US. HR practices must be contextual in order to be effective.  An offshore company may be able to compel someone in their home company to sign away certain rights, or work under certain conditions, or sell shares on their timetable, but it won’t work in the US or other onshore locations.
  • Be realistic about how the brand is viewed Despite the enormous success they’ve enjoyed in the outsourcing  market,  offshore players need to  recognize that  they’re starting with a of brand deficit when it comes to recruitment.   When it comes to attracting a strong team, providers who think they are on a level playing field with the industry dominants onshore are kidding themselves. Offshore companies do not yet have the same local draw that the big globals—or even some smaller local players– have. When a company’s future success depends on globalization of talent, understanding the shortcomings of its brand, and then doing something to mitigate its implications in the minds of highly desirable talent, is critical.
  • Acknowledge that the network influences talent attraction Whenever a recruiting process takes excessive time, or is a market outlier, or is downright disrespectful, trust me– everybody knows. In a market where one or two calls obtain the full skinny on any company, talent is already armed with strong opinions of what it’s like to be recruited by or work for any provider. Remember that any experience—good or bad—will quickly be reported on the tom toms, and act accordingly.
  • Be realistic; don’t require talent to do the impossible Some of the job descriptions churned out by offshore providers are unrealistic; if a candidate has the ability to walk on water and rope in $10million ACV deals at the same time, it still would not be sufficient for many providers. People with deep relationships with multi-national CEOs, Master Black Belts, a degree from Harvard with an MBA from Insead, enviable thought leadership, and viewed as all around good guy and gal willing to travel 80 percent of the time do not exist. A full complement of skills is rarely contained in one individual; unfortunately offshore providers often become parsimonious and won’t make the level of investments in the right combination of positions. Stop trying to locate one onshore savior to change the fortunes of the business, and start thinking realistically about hiring a talent ecosystem.
  • Run a respectful, timely, transparent process Onshore talent often complain about the lack of respect demonstrated in the hiring process. I’ve heard tales of processes that ended up taking a year because of constant cancellations, or at the last minute requiring everyone from the chairman of the board to the offshore delivery leader to weigh in on the candidate. Flying into a city to suddenly find that the first meeting is delegated to junior, non-decision making staff is offensive.  Or asking senior candidates to players to spend one or two cycles interviewing with a low level person, either in HR, recruitment or sales, before the actual  hiring manager is even introduced sends the wrong message.  Tell the candidate what the process and timeline is,  being fully mindful of the fact that, if s/he is any good, by the time the second interview is finally scheduled, he or she will have probably be off the market. Open ended processes without closure frustrate the candidate, and shut the door on future engagement..
  • Pay market A guy making a base of $200,000 plus a good bonus is rarely seduced by an offer of $100k plus stock…”someday.” And if he is interested, it’s either because he thinks the upside is a pretty sure thing, or he’s about to be terminated by his current employer.  Offshore providers that think that the opportunity to carry their card has a value beyond market compensation are sadly mistaken. Ensuring that compensation is competitive with the market is the first step in winning the talent game.  And share the wealth.  If Mr. X is so important to the growth of your business, make it worth his or her while with equity to make the switch.
  • Stop playing the tease Many talented folk have had calls from providers who are constantly testing the talent waters. Stories abound of offshore C-suite leaders calling onshore guys quarterly, thinking they can catch them at a weak moment by flattery. And when the candidate bites, there was no real opportunity. If there’s a real job, send the candidate the job description; don’t play the flirt. There are better ways to keep good talent warm.
  • Don’t make undue and unusual demands Recently I heard a story about a (reluctant) candidate being asked for his W-2s and references after an introductory recruitment meeting.  And about another candidate who was asked for a copy of his rolodex during the first contact. Net outcome? They ran for the hills, badmouthing the provider at every opportunity.   Onshore candidates share data when they see a viable opportunity, not before.
  • Look at the CV first, and in context of the position How many times have candidates walked into an interview to find that neither HR nor the business unit leader ever bothered to look at their bios? Or had any idea of the scope of the job? (True confession: I was once recruited by a provider who had not seen my CV, and thought I was a Black Belt continuous improvement type). Spend the time to evaluate the candidate’s credentials in advance and in light of business needs, not because you’re on a reconnaissance mission.

Global fluency clients seek starts with hiring the right team locally. But when providers are unable to start by hiring the right onshore team, the dial does not move very far.  To paraphrase a recent bestselling business book—“change the recruitment process, change the game.”  Growth depends on it.

Thanks for all the tales of woe I’ve heard from candidates and search consultants alike. Hope springs eternal that change is inevitable.

Deborah Kops (pictured above) is Research Fellow and HfS Research (click here for bio)

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20 Comments

  1. Posted November 13, 2012 at 12:42 pm | Permalink

    Wow, this is common sense, which, as the saying goes, ain’t too common. There surely are several unique issues for offshore providers hiring onshore, but haven’t we experienced almost all of the situations in the article, sadly as both an applicant and hiring manager?
    Except for the off shore strategic meetings around the holidays. LOL or COL (cry out loud), not sure which.

  2. Posted November 13, 2012 at 1:30 pm | Permalink

    Fascinating post that seems to cover the key angles.
    The demand-and-supply drivers will continue to be skewed in favor of onsite hires:
    • Visa restrictions in western markets: transplanting talent from offshore is getting to be harder, though not impossible
    • Cultural/racial angle to hiring strategy: fronting a native on a consulting team is a BIG plus on consulting engagements. More than a few adverts by sourcing firms seem to explicitly ask for “native German” “native French” candidates. Notice the adverts are not merely asking for those eligible to work in EU countries since they probably want to exclude naturalized/immigrants from the pool.

  3. Posted November 13, 2012 at 8:19 pm | Permalink

    Michael and Mohan: thanks for comments.Agree Mohan about natives dealing with clients, but cultural context throughout the team is critical.

    And Mike, common sense is not a commodity very often!

  4. Chris Goodman
    Posted November 13, 2012 at 9:47 pm | Permalink

    Deborah,

    Great article. It’s no surprise that the most successful Indian supplier in recent years has been the one which has stationed its leadership in the US: Cognizant.

    Chris

  5. Stephen Cohen
    Posted November 14, 2012 at 8:03 am | Permalink

    It’s important to respect the national cultures of global companies and to expect all the benefits/drawbacks/eccentricities that go along with that company’s “nationality”, be it British, French, German, American or Indian. You offer excellent advice regarding how Indian firms can be more successful hiring and retaining US talent, but you can’t expect these Indian firms to become “American” overnight. The Indian culture brings with it many advantages, such as a work ethic, a focus on process and a meritocracy we often fail to see in a Western corporation. Personally, I would find it peculiar if we started seeing Accenture and IBM executives show up at the likes of Infosys and TCS – they wouldn’t fit with their cultures at all!

    In many cases, the Indian firms have already been burned by hiring costly onshore executives who took a lot of money and provided very little in return. Most of these onshore people willing to move jobs, unfortunately, tend to be those who want a comfortable life and do not want to take midnight conference calls, or be held accountable to aggressive sales targets.

    I think the bigger issue here is the lack of qualified talent with the work ethic and experience to be an effective onshore account manager for an Indian firm. As you rightly point out, there is a shortage of availability. My advice for them is to hire / develop less senior executives and train them to understand the outsourcing business effectively.

    Stephen Cohen

  6. Posted November 14, 2012 at 10:15 am | Permalink

    Chris., thanks for taking the time to comment. But I’d suggest that a US headquarters is not the silver bullet, although it may give the offshore provider a better understanding. There are a number of offshore providers with US headquarters.

  7. Posted November 14, 2012 at 10:25 am | Permalink

    Steven,how do you reconcile training someone to be a culturally adept problem solver when the need for such talent is now, not in several years. And I am a bit perplexed about the brush with which you paint are colleagues at IBM and Accenture; I have not seen those who moved to an offshore provider think it’s a cushy life. It comes down to hiring the right person; if offshore providers have been burned, it is probably because of at least some of the reasons illuminated in the article: poor hiring practices, unreasonable expectations…

  8. Posted November 14, 2012 at 10:58 am | Permalink

    Deborah -

    Right on target.

    The glocal talent issues highlight the need for a glocal teaming approach to integrate the local business development experience and global service delivery.

    As international business attorney representing many foreign companies from many different countries, and focused on global services markets, I see great interest for foreign-based solution providers to offer innovative incentive compensation plans that are more than just base pay plus commissions. This means stock option plans and pension plans that are tax-advantaged, easy to set up and administer, and real incentives to performance.

    Such approaches mean that foreign service providers need to localize their thinking and align with local BD’s to get the trust of local customers. Your tips on aligning management and sales are helpful to improving the dialogue and the results for both.

    Great insights.

  9. Posted November 14, 2012 at 11:27 am | Permalink

    Thanks, Bill, for taking the time to comment. It would be great to see new, and better aligned, compensation models in this industry.

  10. Resrpt
    Posted November 15, 2012 at 4:19 am | Permalink

    It seems the challenge MNCs have in managing their delivery offshore is similar to challenges offshore-centric folks have to manage their onshore sales/account management team. Both types of providers need to learn from each other. However, many times these issues are given more than deserved importance. Its the same thing as “industry expertise”, how much is sufficient enough? MNCs fooled their clients by hiring irrelevant experts that cost a bomb. Offshore providers called their bluff and clients saw it. At the end of the day they are delivering IT services, not a missile technology to have super talented expensive people. Its always easy to term shortcomings as “culture”. Calling waste and profligacy as “talent management” based on “US culture” and comparing it with stingy offshore HR policies is incorrect. However, offshore providers indeed have shortcomings in managing non-Indian talent, and if they believe managing them is important for the business, they should learn it fast. If they think it does not matter (like super deep domain expertise does not matter for them) they should continue with their work.

  11. Chris Goodman
    Posted November 15, 2012 at 10:07 am | Permalink

    Deborah

    The difference is whether the leadership team is actually based in the states, or simply has a token office for appearances sake,

    Chris

  12. Posted November 15, 2012 at 5:31 pm | Permalink

    Thanks for comments, Resrpt. You make a good point comparing delivery and sales. However, I disagree strongly about the point you make re overagonizing about culture. Sourcing is ultimately a people business, not a technology business, and the culture issue should never be underestimated.

  13. Posted November 15, 2012 at 5:52 pm | Permalink

    Chris, agree it’s always a plus when leadership is located onshore, it promotes better understanding. However when onshore recruitment policies and processes are dictated offshore practices, the location of top management does not always make much of a difference. There are a number of offshore providers with leadership located onshore, and their companies are generally lumped in with offshore providers in the minds of recruits.

  14. NMSBC
    Posted November 25, 2012 at 5:00 pm | Permalink

    Deborah – great article! You have hit on so many of the important issues facing Indian services firms today.

    The critical issue is understanding and managing to cross-cultural issues. Clearly, Indian firms have done an inadequate job of managing US personnel – as you mention. More importantly, their brand image across the globe has not been managed well. Most of these firms have allowed themselves to be equated to “low cost with lower quality than the alternative”.

    The lack of ability of Indian firms to position their services a premium offering is the Indian firms’ biggest failure. With it comes all of these US personnel hiring and client satisfaction issues.

  15. Posted November 26, 2012 at 10:38 am | Permalink

    NMSBC, i think you can apply the article to any offshore player, not just those out of India. And the same would be true for Americans abroad, i suspect.

  16. Anup Kumar
    Posted December 2, 2012 at 1:20 pm | Permalink

    Excellent article on hiring and managing onshore talent.

    Regards,

    Anup

  17. Larry Walker
    Posted January 16, 2013 at 1:37 pm | Permalink

    Deborah as I read what you had to say here I felt as if I were been redeemed. I’ve had three different recruitment experiences (two with the same firm) with Indian outsourcing firms. Each time I experienced exactly what you described here. The sad thing is that some of these firms have assembled impressive arsenals that could win important business. They are missing out on equally impressive opportunities.

  18. Ashish Paul
    Posted January 29, 2013 at 5:06 am | Permalink

    Deborah

    You brought out a prudent issue. One of the small observations that i also have is one should not induct a sales person into an account management role or vice versa. Both skills are very different. Customers want people who want to engage and learn their business, before being able to sell more. Getting the right skill set for the right job, will definately alluviate some of these concerns.

  19. Posted February 1, 2013 at 12:56 pm | Permalink

    Larry and Ashish, thanks for writing. both of you make good points

  20. John Dupond
    Posted March 19, 2013 at 9:22 am | Permalink

    Great article, covering all key challenges that many Indian Service Providers (ISP’s) are facing in the US but in other markets such as Europe. Your points are especially important as the traditional business of ISP’s based on simple labor cost arbitrage is eroding. Clients want more and more focus, expertise, fixed prices and even service catalogs.

    In this context, solution selling requiring senior salespeople is even more a key differentiator. The behavior you describe seriously undermines future business. I would add that the successfull ISP’s will become truly multinational companies with more decentralized decision making power, including in delivery. From a recruiting perspective, that means attracting onshore more senior managers.

    I disagree that the same points apply to multinational IT companies such as Accenture, Atos, Cap Gemini, CSC, IBM… They have their own challenges but a different market positioning, stronger brands, and a far longer experience in recruiting, managing, and cultivating local talents.

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