SOURCE: Barnett Marketing Communications

Barnett Marketing Communications

September 28, 2015 08:59 ET

A New Barnett Marketing Communications "Bad Business Alert" Case Study Exposes the Risks of Doing Business With Off-Shore Service Providers

Control, Accountability and Recourse Remain Serious Issues for US Companies Working Within the Global Economy

LAS VEGAS, NV--(Marketwired - Sep 28, 2015) - A new hard-hitting case study highlights some of the critical business problems that arise when American-based businesses seek out the services of off-shore service providers. These range from clear communications to enforcing agreements. Guarantees are hard to reach -- and harder to enforce -- when companies are separated by eight to twelve time zones, different versions of the English language, and local laws that favor local vendors at the expense of American customers.

With the publication of the 20th in his series of "Bad Business Alerts," marketing expert -- and frequently-published Marketing Professor -- Ned Barnett has just released a detailed case study exploring some of the more critical risks of doing business with off-shore service providers. 

This new case study is The Risks and Challenges of Working with Overseas Service Providers ... A Case Study - With Practical Lessons.

Having worked with private and government-owned businesses in 15 countries on five continents, Barnett used this experience to examine one particular instance of an American firm doing business with an off-shore service provider.

"This was a 'perfect storm' of the problems that can occur when a US-based firm tries to do business with an off-shore service provider," Barnett explained. "Very nearly everything that could go wrong, did go wrong, leaving the American firm with a never-to-be-finished project that is unusable in its present form. They are also out of pocket for half the agreed-upon fee." 

"After reviewing the case -- which involved an American start-up attempting to work with the UK-based video production firm Screaming Eagle Productions -- I provide a series of practical business lessons that apply not only to working with off-shore service providers, but with domestic service providers as well," Barnett pointed out.

The American firm declined to be named in the case study. "This isn't about us -- or even about the other firm. Rather, this it is about a business deal gone sour because of avoidable problems that come from working with an off-shore service provider," the CEO of the American firm noted. However, this firm did open its files in the research phase of this case study, and made available all of its key executives for interviews about the opportunities -- and subsequent problems -- stemming from this failed business deal.

Screaming Eagle Productions chose to not participate in the study; however, all efforts were made to provide a balanced and informative case study -- including the lessons American businesses should follow when dealing with an off-shore, or even a domestic, service provider.

Problems highlighted in this case study include:

  • Vetting Service Providers
  • "Cultural Maps"
  • Communications Breakdowns
  • "Time Zone Tag"
  • Enforcing Agreements and Guarantees

Case Study: In mid-2014, start-up American healthcare service provider contracted with the UK-based video production firm Screaming Eagle Productions for the production of a three-to-four-minute animated video aimed at prospective clients. Before the agreement was finalized, the first-draft script was written and provided to Screaming Eagle Productions -- it was on this document, which did not change over the life of the project -- that was used as the foundation for the agreement.

During negotiations, the UK firm made themselves available for conference calls 24/7 -- weekdays and weekends -- and indicated that this same availability would be provided once the deal was consummated.

"We work with American companies all the time," Screaming Eagle Productions claimed, offering that "fact" as a guarantee that the product would be one the American start-up firm could use.

"Based on their representations, as well as the sample videos the showed us, along with on our initial and very cordial discussions, we had every confidence that we would get the product we contracted for, on time and on budget," according to the American start-up firm's chief operating officer. "Having been born in Europe myself, I had no qualms about dealing with an off-shore company," he explained.

The project was to take not more than three months, with a January, 2015 final delivery date promised. Also promised was a product that would have the "look and feel" of an American video, one targeting American audiences.

Issues that arose included:

Communications: In addition to the challenges of communicating over eight time zones and more than 5,000 miles, and by the service provider's choice of having one member of their team, rather than the entire team, on conference calls. Requests for changes and discussions of the look-and-feel of the video were given to one individual, who then had to translate it to other team members. Invariably, communications faltered.

Cultural Map: This was reflected in the visuals -- which were "at home" to the British producers but distinctively foreign-looking to the American client. This was also reflected in audio recordings of the script. Worse, it permeated the communications between the two companies -- each party thought they were understood, and thought they understood what the other party was saying -- but this did not, ultimately, prove to be the case.

Guarantees: Enforcing agreements across international boundaries becomes difficult when the service provider chooses to just walk away from the unfinished project, and also refuses a refund request when it became clear that the project was not going to be completed in acceptable form.

For example:

"It's hard to discuss a problem with someone who ignores you," the American firm's COO explained. "Instead of trying to resolve our issues, when we finally got their attention, their reply was hardly satisfactory. It was a combination of defensiveness, accusations and even threats of retaliation."

"At no time did Screaming Eagle Productions say they'd either complete the project to our specifications or refund the now-wasted money we have already invested in the project," the American firm's CEO agreed. 

The case study concludes with lessons American firms should follow when dealing with off-shore service providers -- and local service providers as well. These include:

  • Vet the service provider
  • Structure the Contract Payment Schedule with In-Process Incentives for good performance
  • Include a refund clause and non-performance penalties
  • Use a cloud-based project management system to enhance communications between parties
  • Schedule "all-hands" Team Calls to reduce communications breakdowns
  • Before signing, get a legal review to ensure both parties are adequately protected, and adequately incentivized to perform as agreed
  • Know in advance the local-to-the-provider avenues of recourse, which parallel US-based Chambers, Better Business Bureaus, arbitration and legal resolution options

Barnett concludes this case study by noting: "The bottom line is simple: by working with an off-shore service provider, you may find it difficult to enforce your contract. Make sure the signed agreement takes this into account -- the stronger the agreement, the more likely that the local courts, arbitrators and non-profit business organizations will find in your favor, and help you with ultimate resolution."

This case study can be viewed at:

http://badbusinessalert.blogspot.com/2015/09/the-risks-and-challenges-of-working.html

About Bad Business Alert

Bad Business Alert is a blog for business owners and operators -- as well as for interested consumers -- identifying problems that arise from doing business with specific vendors. With the publication of its 20th Bad Business Alert, the blog has been re-focused and re-named to include specific business lessons that can be drawn from Case Studies.

About Ned Barnett and Barnett Marketing Communications

For more than 40 years, Ned Barnett has been a pioneering innovator in the realms of media public relations, marketing strategy and tactics, issues management, charitable fund-raising and market research. In addition to providing excellent service to a group of innovative start-up and high-tech clients -- many of them either in the healthcare field or in the high-tech start-up field -- Barnett is an adjunct professor in PR and Marketing at two major universities -- MTSU outside of Nashville and UNLV in Southern Nevada.

He has written 10 published books on PR and marketing, and has been a long-time innovator in the use of the Internet to connect companies or causes with clients or constituents. He launched his first client website in 1994 -- just one year after the birth of the World Wide Web -- and won PRSA's coveted Silver Anvil in 2000 for innovative use of online market research on behalf of a billion-dollar company's repositioning from document management to content management.

For a dozen years Barnett was a grass-roots lobbyist in the healthcare field -- during that time, he testified twice before Congress on national healthcare reform issues. He has managed -- at the state level -- media relations and strategy for three presidential campaigns, and has worked as a senior strategist and speechwriter for dozens of state and local political campaigns.

In his spare time, Barnett is an historian with nine appearances on the History Channel -- and a novelist currently working on a historical novel of the air war in the Pacific, from Pearl Harbor through Guadalcanal. 

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