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Understanding importance of cultural differences in outsourcing agreements

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Underestimating Importance of Cultural Differences in Outsourcing Agreements is a peer-reviewed journal article authored by Kvedaraviciene & Boguslauskas, published in the year 2010 by Engineering Economics. According to UNESCO culture is defined as “the set of distinctive, spiritual, material, intellectual and emotional features of society or a social group, and that it encompasses, in addition to art and literature, lifestyles, ways of living together, value systems, traditions and beliefs ( UNESCO, 2001). The article on“Understanding Importance of Cultural differences in Outsourcing Agreements” throws light on the failure or partial completion of outsourcing deals due to cultural differences. Cultural differences not marked as one of the top features to be considered and this is one of the key reasons for which an outsourcing deals fails ( Kvedaraviciene & Boguslauskas, 2010, p.189 ). Culture differences exist despite globalization and the world becoming a flat place.

The advancements in technology have decreased the costs due to technical failures but not the costs due to cultural differences. My knowledge levels have improved after reading the journal as I understood that the cost due to cultural differences cost in terms of the amount of time and money spent on meetings, telephones and video-conferencing due to negotiations involved because of cultural differences. There were also costs like time wasted on conflict resolution, revised decisions, service complaints, gold plating due to increased scope, reduced quality, missed deadlines, low morale among employees and reduced savings.

It is to curtail these losses because of lost deals that my organization has introduced a training program for managers on international business etiquette. The program has trainers who have worked in multi-cultural environments and taught us etiquettes apart from a visit to offices in different countries to get exposure to various cultures. In outsourcing deals culture was the biggest challenge. The article enhanced my knowledge on conflict that huge losses were reported due to issues because of cultural differences, (Kvedaraviciene & Boguslauskas, 2010, p.191). Cultural ideas and beliefs have to be taught to vendors just like they are taught to new employees in an organization.

References .
UNESCO Universal Declaration on Cultural Diversity. (2001). General format. Retrieved from http://portal.unesco.org/en/ev.php-URL_ID=13179&URL_DO=DO_TOPIC&URL_SECTION=201.html Kvedaraviciene, G., & Boguslauskas, V. (2010). Underestimated Importance of Cultural Differences in Outsourcing Arrangements. Engineering Economics, 21(2), 187-196.

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