Going Global With Your Services Operation

Regardless of the motivation or strategy behind the move abroad, services leaders need to do their homework and prepare before heading into foreign markets.

Language, Customs and Culture Considerations

If the desire to provide better support to a customer is the motivating factor behind your services globalization initiative, then you need to consider how that customer wants to do business. Will they accept an English-speaking consultant from North America, seconded for a period of months to an office overseas, or is there a demand for a local services professional familiar with the cultural nuances of the region and who can speak the native language when conducting business with the organization? Are there other cultural norms to be considered as you staff and support the customer?

For instance, there are still cultures abroad where the gender of the consultant—for religious or for personal safety reasons—is still an important consideration. You also need to investigate other political concerns that may impact the safety of your personnel, such as travel warnings or advisories.

If you can, tap into local, "on the ground" intelligence on the market—perhaps through a partner, or an existing sales office. I'd also recommend you speak to your HR team to see if they can advise you on best practices for conducting business within a new market.

Finally, on preparation for your team going global I would also strongly suggest that you consider investing in a professional services automation system with strong resource management capabilities to track your team's skill set, spoken and written language abilities, citizenship, VISAs, and even current inoculations. This will go a long way to helping you stay on top of global resource requirements and deploy the right resource with the right skills at the right time.

Financial Considerations

One the first stops I would recommend to any services leader considering moving operations abroad is to their finance department. It is important to partner with your finance team to understand how services offerings should be priced within the markets you plan to enter, how payroll and staffing to be handled, and to understand the country's specific billing and revenue recognition rules. If you are an embedded services organization within a large product company—as I am—you may need to establish fair market value for product and services (vendor specific objective evidence (VSOE), and get revenue stream running to provide sufficient vendor specific objective evidence (VSOE) in order to recognize revenue.

Local expenses may include higher taxes such as a value-added tax (VAT), payroll standards, and additional fees or assessments that are uncharacteristic of business overhead in the US. Many times these unaccounted-for expenses deplete the anticipated profit margins and can seriously derail the success of your expansion. It is critical to go into a venture abroad with eyes wide open, and understand the true costs of doing business locally, so you can steer past dangerous assumptions and unplanned costs.

Financial audit and transactional requirements can also vary widely and be vastly different between countries. In Asia, for instance, signed timesheets are typically always required in order to secure payment for work delivered. If you have a consultant working in Thailand who is less than thorough in keeping accurate time records, you may have a problem collecting on that invoice. There are other economies that continue to operate on a cash basis, a consideration that would need to be understood by your finance team, and reflected in terms associated to an invoice. Your finance team may be able to help you model the cost efficiencies associated with staffing local, deploying a North American resource to the country, or working through a partner to deliver the necessary support. This analysis can help you protect your margins, ensuring your move abroad continues to be a profitable one for the organization.

Legal Considerations

My next visit on my journey to take my services organization abroad would be to the legal team, to understand the impact on the contracting process. Do you have the right terms and conditions in place to conduct business in a specific country? Are you clear on where disputes will beheard? Does the country have regulations that govern the way service offerings are marketed, sold and taxed?

If you plan to establish a local services office, or employ local consultants, are you familiar with the employment laws in the region? And if you will be moving people in and out of the country as part of the engagement, do they require specialized permits, VISAs and so forth – and if so what kind of lead times are you facing for this paperwork to be secured? In today's economy, there are no easy border crossings – even among friendly trading partners.

Operational Considerations

As we lightly touched upon in the discussion of legal considerations, staffing of your services venture abroad is a key operational consideration. One option—and a valid one if the goal is to support a customer overseas—is to simply staff the local delivery of the services by sending over a member of your established North American team. This allows you to take advantage of an established relationship with the customer, can provide a more repeatable delivery model, and there is no additional requirement for knowledge transfer to a new, local team member.

On the downside, this approach takes your people away from home for extended periods of time (sometimes months for complex engagements), which can lead to employee fatigue—even dissatisfaction—and on the customer side, a "rotation" of resources that can impact your ability to build strong, lasting relationships. Lower local rates and extended stay expenses can also put pressure on the financial arrangements making this a difficult sell.

It is very possible that is not financially feasible, or profitable, or even desirable on part of the customer to staff a project abroad from North America. In this case, one alternative is to hire locally, or arrange for a local partner to deliver the required services on your behalf. Both have their own benefits and pitfalls. Hiring local is certainly a strategy to consider if having permanent staff on board is in line with the long-term strategy for the region, and if there are sympathetic and manageable employment laws within the country.

That said, your staff in these remote locations now need support from you, and you must find ways to effectively manage these individuals and build strong teams across great distances and time zones. As a manager with staff located in Latin America, Europe, Asia and Australia I am all too familiar with the challenges of managing remote teams. I call this important but difficult responsibility my "nine to midnight" job. You need to be constantly communicating and assessing your communication strategy with your team members, determining when, where and how often you will meet face-to-face, and an approach for staying in touch in between.

Every year—part of our goal setting for the year—my team and I revisit our communication plan looking at how meetings take place, the frequency of which we meet, and to explore other tools such as a newsletter and social media to keep information and feedback flowing.

While it is often best to "own your resources" for your first foray into a new market I would absolutely consider the partner route. There are often very capable and highly effective boutique firms on the ground that can be trained up to deliver services on your behalf. This approach removes many of the barriers to entry you will experience with the other two operational (staff from NA, staff locally).

The local partner will be on the ground, available to relationship build, is accustomed to the cultural nuances, and will be able to conduct business in the native language of the customer. The trick with this strategy is finding a compatible and reliable business partner, and you still have to put in place a sound enablement plan to ensure the partner's effectiveness—but in my opinion, this approach presents a lower risk option over the alternatives.

Think through all of the factors and tools of the trade that surround your ability to sell and deliver services in the country. Will the service products that work well in one country play well in another? Do you need to translate your marketing materials in order to sell effectively? Do your customers follow specific methodologies and require you and your team to be familiar with them? For instance a customer in the UK may inquire about your project manager's PRINCE2 certification. You'll need to ensure you are fully conversant with the professional "lingua franca" of the customer, industry and country. I would recommend establishing a knowledge base where critical service product information and customer details are stored. This will allow for knowledge sharing and transfer between team members and partners.

Finally, remember always to measure your performance against objective. Establish key success factors for your globalization strategy and constantly monitor these metrics. This will help you determine if you need to adjust plans, programs, pricing or any other factor as your plan plays out.

In Wrap Up

The decision to go global is rarely driven by the services team. It is often a necessity of the business, driven by a need to best serve and drive value to the customer. That said, services teams need to enter into the global marketplace with their house in order and their eyes wide open. The important legwork you will do leading up to your first full engagement abroad will allow to build a sound base of operation that will allow you to support and serve your customers with confidence, while mitigating risk for your team and the overall business.

A Checklist—Before You Begin

1. Consider your reasons for globalization. Are you going into a market to support a customer? Is there a long term opportunity for business expansion? This strategy will drive every decision you make.
2. What is the best staffing model for your organization. If it works today, will it work tomorrow?
3. What are the revenue recognition rules specific to the countries you are entering?
4. Do you have a solid understanding of your staff's skills, language abilities,
5. Have you examined any potential risks or cultural issues related to the country you are entering?
6. Have you looked into the cost and time frame required for securing VISA entry?
7. Will you be translating your materials? If so at what frequency?
8. What is your communications plan for engaging road warriors, remote team members and partners working in different languages and time zones.

Linda Ungaro is Worldwide Practice Director for Compuware Changepoint  and an accomplished services professional with more than 20 years of combined experience in technology management, business systems consulting, operational and project management. In her current role as the worldwide Director of Professional Services for Compuware Changepoint, Linda is directly responsible for managing global service offerings and methodologies, customer implementations, resource management, financial performance and customer satisfaction. She leads a global team of 70 consultants working in North America, Europe, Asia, Australia and Latin America. If you are interested in learning more about this topic, Linda can be reached at changepoints@compuware.com