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Jul 06

Outsourcing and Cultural Affinity

When a US company chooses to outsource some portion of it´s business activitiies, there is an implicit interchange of trade activities between the two parties. The level of trade activity will reflect a variety of factors, including a hard to quantify cultural affinity. That is, the cultural distance or trust between the US and another country will be a factor in the level of trade activities. Given that companies rather than individuals determine the level of international trade, what factors influence this level of “cultural trust”? These would include: race, nationality, networks, recognized group associations, with attributes as reliability, good communications, references, etc. In many instances these are the result of cultural lore and personal experiences, that is, public perceptions and beliefs.

In a study of US public attitude of cultural affinity with other countries, factors that influence this (in declining importance) are: political, ethnic and religious similarity, per capita income and English as a language. The political axis ranges from most democratic (+10) to least democratic (-10) reflecting the openness and competitiveness of political participation and whether it is a Communist regime. Other factors that negatively influence the perception of cultural affinity and the corresponding the degree of business activity are both physical distance and genetic distance (correlate negatively).

What might be driving this? This might be attributed to greater trust and reduced assessment of risks and costs between the parties (company and outsourcer).

How does the cultural affinity fare for Nexus Teleservices as a provider of offshore call-center outsourcing services for a US company?

Nexus Teleservices is located in Nicaragua, Central America. Politically Nicaragua has been democratic since the early 1990´s with various issues related to stability and governability as to be expected in a new democracy. Ethnically its population is heavily Hispanic, with a large US and European influence due to population emigration in the 1980´s. This can be contrasted with the US as it increasingly has a greater Hispanic cultural footprint given the rapid growth in the Hispanic population. Nicaragua´s population is predominately Christian, similar to the US. Per capita income is much lower than US, with the labor cost differential allowing Nicaragua to offer competitive outsourcing services. Spanish is the dominant language in Nicaragua, with increased English usage due to growing emphasis in educational programs and influx of returning expats from the US. However, in Nexus Teleservices it is the reverse. More than 85% of Nexus employees have previously lived in the US, with English being their primary language. Since Nexus Teleservices offers a US nearshore location, the distance by air is roughly 2.5 hours from Miami, FL, shorter than a commute from Chicago to LA. And while electronic communication is now “instant” there is much to be said for communicating between business parties in the same US time zone (MST). Genetically Nicaragua is a mixture of races and cultures, very similar to the US Hispanic communities.

When all is considered, Nexus Teleservices demonstrates a high cultural affinity with the US and is well positioned to offer companies a successful outsourcing business strategy.

Nexus Teleservices

1 comment

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  1. Cathryn

    haha…. this is an awesome idea! 😉

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