A Case Study – With Practical Lessons
Introduction – the Scope of the Challenge
In my career, I have worked with clients and service providers in many off-shore locations – on every continent except Antarctica. Countries where I’ve done business include:
· Dubai – United Arab Emirates
· People’s Republic of China
· United Kingdom
· South Africa
In addition, I literally “grew up” in the world of foreign commerce. My late father owned and operated a company that connected European and American construction-supply manufacturers with overseas clients. He represented European firms such as Sweden’s Dynamit Nobel in bringing innovative roofing solutions to American architects and construction firms – while at the same time, he sought out unique-to-America products, representing the products and their manufacturers to European architects and construction firms.
Cooperative international trade was part of my growing-up daily dinner-table discussions.
Later, in one of my first jobs after college graduation, I worked for a state agency – a division of the South Carolina governor’s office – that maintained off-shore offices in Western Europe and East Asia. There, we aggressively recruited European and Asian companies, encouraging them to set up production facilities in South Carolina, such as the $4 billion dollar Michelin Tire production facility.
Beyond those experiences, I have taught business and marketing at several major universities, including Middle Tennessee State and the University of Nevada Las Vegas. In these, I have both taught about conducting cross-border business and I have taught students from many countries, who added their own unique perspectives to classroom discussions.
In several of my published business books, I have also addressed some of the benefits and challenges of working across borders with both clients and service providers. Finally, in addition to working with off-shore companies, I have provided guidance to other off-shore companies through universities in India and Colombia, as well as through a professional society of marketers in Nigeria.
As a result, over a period of more than 40 years, and having worked directly with many overseas clients and more than a few off-shore service providers, I’ve learned a fair number of business lessons about dealing with companies on six continents. This case study is infused with that experience and those lessons.
With the increase in globalization we see today, a steadily increasing number of American businesses are now doing – or are considering doing – business with off-shore clients and service providers. Many of them are just now discovering both the benefits of, and the problems with, this kind of commerce. These are the same challenges and benefits I’ve had to deal with for more than four decades.
The lessons illustrated in this case study are intended to assist American firms to more successfully do business overseas – with a specific focus on working with off-shore service providers.
This Case Study: The purpose of this case study – with lessons – is to help American companies, as well as American business executives and entrepreneurs to do business with off-shore service providers. Specifically, I want to help them be more aware of the challenges – as well as the benefits – they are likely to face. At the end of this case study are a series of lessons that can be applied to any off-shore business agreement.
After an overview of the benefits and risk of working with off-shore service providers, this case study focuses on a single, specific off-shore agreement. This was an agreement where nearly everything that could go wrong, did go wrong. As such, this failed relationship makes an excellent case study illustration of the challenges faced by American businesses looking for specific services – or lower prices – when dealing with a service provider in another country.
The American firm featured in this case study agreed to participate on the condition that they not be identified. “This is not about us – or even about the company with whom we had so much trouble. Rather, this is about our willingness to help others American businesses to learn from our example,” according to that company’s COO, a partner in the firm. This firm did provide access to the initial contractual agreement and to a representative sample of email and other communications between the two firms.
However, the other firm in question did not agree to participate in the case study – in fact, when the case study was mentioned, they got defensive, confrontational and even threatening. This company – Screaming Eagle Productions (http://screamingeagle.co.uk/), located in Bristol, England – is named, because, in my opinion, they are a company that American firms – based on one American company’s challenging experience – should think twice about before doing business with Screaming Eagle Productions.
Keep in mind that this case study is very close to a “worst case scenario.” Not all overseas engagements are fraught with problems. In fact, many of them are very successful, with few – if any – problems. My own 40-plus year experience working with off-shore clients and service providers represents a more balanced experience. My two really problematic engagements were with a client that was an arm of the People’s Republic of China, and with an IT service provider firm in Cebu City in the Philippines. However, even there, in both cases, we were able to work through those problems and reach positive resolutions.
So, instead of being warned off from dealing with off-shore service providers, look to the lessons here, then plan ahead to avoid or overcome these kinds of challenges.
Benefits: Let’s say it up-front: there are a significant number of sound reasons for working with off-shore service providers. Some off-shore providers offer unique services not readily available in the US. Others offer more standardized services, but at significantly lower rates, which is why cost is one of the primary reasons for working offshore. For instance, there are remarkably well-trained and talented programmers and IT tech service providers in South Asia, many of which offer quality services for pennies on the American dollar.
However, there are also serious down-sides in working with off-shore service providers.
Challenges: These down-sides go beyond the challenges of working with someone in a radically-different time zone, though that can also be a frustrating and unsolvable problem. There can be cultural and language barriers as well, even when all parties speak English.
For instance, we’ve all fallen victim to overseas call centers and telemarketers where the “English-speaking” operators speak a very different, often incomprehensible language, one that has little to do with American English.
However, there are other, more serious problems that all boil down to the “guarantee.”
Vetting Service Providers – When dealing with American-based service providers, it is SOP to review their records with their local Better Business Bureau. Many firms also quiz their local Chamber of Commerce. It has also become routine to search online for reviews and testimonials, their D&B rating – and even to check on current and former legal actions that may have been brought against the firm.
However, when dealing with prospective off-shore service providers, many of these routine ways of vetting them are unavailable – or at least unknown – to American companies and their execs.
Just as important, many execs prefer to have face-to-face meetings with those potential vendors prior to signing the contract. It is even possible to meet with the service providers’ current or former clients. For many business executives, there is no substitute for pressing the flesh and meeting eye-to-eye. Savvy business decision-makers must – as part of what makes them successful – have well-honed skills when it comes to “reading people.”
However, this reading of character can be far more difficult when all you have is an email, or a very-long-distance phone call. Even Skype is no substitute for meeting face-to-face before signing a contract.
Along with this, it is harder to vet an off-shore service provider by checking with their current and former clients. Generally, the bulk of those clients are continents away, in radically different time zones. Some local-to-them current and former clients will prove to be uncomfortable sharing negative information about a fellow “local” company, especially to foreigners from America. Being able to engage these reference clients in productive and candid discussions about the service provider’s strengths and weaknesses can prove to be difficult, if not impossible.
When Communications Break Down: When those normal business-to-business problem resolution solutions are either exhausted or fail to provide relief, a major challenge – as one American firm learned – was that the contractor can just unilaterally break all forms of contact. It’s hard to demand resolution when your calls go unanswered and your emails ignored.
Enforcing Agreements – When dealing with off-shore service providers – especially those who are in default on their agreements – there is no reasonably-priced, practical and standardized way to go about enforcing those agreements.
It can be done, and in specific countries there are established avenues to help resolve such issues – but when there are national boundaries to cross, these apparent solutions can too often prove ephemeral. This is addressed more fully in the conclusion to this case study.
The Issues: The issues involved in doing business with off-shore service providers – especially when it comes to a guarantee of service – revolve around:
· Timeliness – does the project complete on time? If not, and if you’re not the reason why it’s late, what recourse is available?
· Coordination – is the time zone difference going to present a real communications problem? Is the vendor under consideration clearly willing to work very late or come in very early to be available to their American client during American working hours?
· Quality – is the end-result product going to be professionally executed? More important, will it also “work” across the boundaries of cultural and linguistic differences?
· “Cultural Map” – different cultures have different standards which are often subtle, but they are nonetheless very real. This can pose real complications when doing business off-shore, and it doesn’t just apply to audio tracks. Visual images are also reflective of cultural biases.
For example, in an off-shore video production aimed at US-based internet usage, cultural differences can be critical. Houses and buildings can look different. Technical equipment definitely looks different. Even people – based on their clothing and hair styles – look different. Words don’t always mean the same thing, and common word-choices in an overseas country can be truly “foreign” to an American audience. For instance, the term “bloody” has very different meanings in the US and the UK.
Nobody is “wrong” in a clash-of-cultures situation like that. However, those differences can nonetheless create insuperable barriers to business success. While a computer program may know no “cultural” issues, other business service products do. As it so often is when dealing with off-shore call centers, effective communications may not always be easy – or even possible. At issue when working with an off-shore company is whether their own cultural map will “bleed over” into the service they provide. Can they overcome this ingrained cultural bias and produce an “American” product?
Sadly, the answer is “not always.” There are solutions, but too few service providers avail themselves of those solutions.
Twenty years ago, I was contracted to create a massive four-color brochure to promote a business joint venture between a Texas-based American firm and a business that was owned by the government of Belarus, with headquarters in Kiev. This brochure had to “work” in English – which was why I’d been retained to create it – but it also had to work in both of the subtly different Belorussian and Russian languages, and I don’t speak either one of those languages. Fortunately I was able to hire a local college professor who was native to Kiev. He was able to ensure the correct translation – and transliteration, which helps to eliminate cultural bias in word choices, even in translations – into both of those two Slavic languages.
However, in my experience, off-shore service providers rarely retain the services of skilled American communicators who can help to ensure that their end products and services fit an American model.
· Guarantee – if you’re not satisfied with the work’s quality or timeliness, how can you be sure to get a make-good re-do or – at last resort – getting your money back from a provider doing business a continent or two away?
The following case study will examine a series of mis-steps between an American start-up company and an off-shore animated video production service provider based in Bristol, England.
The Case Study – Screaming Eagle Productions
All of these potential problems – and more – arose with an engagement by an American start-up firm with Screaming Eagle Productions (http://screamingeagle.co.uk/), an animation video producer located in Bristol, England. The American start-up operated as a medical tech-service firm located on the American west coast; the video was to help them reach out to potential patients with specific information about their one-of-a-kind medical service.
These two companies were located more than 5,000 miles apart, separated by eight time zones – from England’s GMT Time Zone to America’s Pacific Time Zone. This was further confused by the different countries’ differing use of Daylight Savings Time – just knowing what time it was 5,000 miles away often required an internet search.
A Short, Quick Video: In August of 2014, this west coast start-up company reached out to Screaming Eagle Productions, seeking the production of a three-to-four-minute animated video that would introduce the viewers to that firm’s core services. During negotiations, Screaming Eagle Productions claimed extensive experience in creating these short, sales-oriented instructional or informational videos for use in the US market.
Screaming Eagle Productions came recommended by a colleague of one of the American business’s four partners. Phone contact was made – and during the “courtship” phase of what came to be the agreement, there was no problem experienced across the eight time zones. The executives at Screaming Eagle Productions made themselves available, even on the weekend, at hours that suited the Americans’ business execs’ schedules. This 24/7 accessibility created an expectation on the Americans’ part that the time zone difference would not be a problem.
According to the Americans I interviewed for this case study, the Screaming Eagle Productions team was very effective during the sales process. They convincingly built a sense of confidence that they could indeed get the job done, despite their distance from the American west coast. Questions about cultural compatibility – their ability to produce a video that reflects American sensibilities – were also seemingly laid to rest. Negotiations lasted several months. However, this time between the opening of the negotiations and the closing of the agreement was more because the Americans had many other time-demand priorities that developed while starting their new business than because of any problems with the negotiations.
A Tight But Doable Deadline: In the initial negotiations, and based on a script draft the Americans had produced, they were promised a production turn-around of sixty to ninety days – certainly before the end of 2014. They were very specifically assured that the production would be “American” in its look and feel, and that the resultant introductory video would be useful in the company’s distinctively American target market.
“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.
Screaming Eagle Productions also guaranteed that the product would be delivered at the negotiated price and within the agreed-upon time frame. Finally, they also pledged that, based on their extensive experience with American client companies, working across eight time zones would not prove to be a problem.
This American firm’s assessment: Screaming Eagle Productions could do the job.
The Agreement: Finally, the set-price contract was signed, one that provided for the production of a three-to-four minute animated video that would introduce the company’s new and innovative service product to the market.
The American business partners, based on these and other promises, executed that contract. With the contract, they provided Screaming Eagle Productions with an up-front down payment – 50% of the agreed-upon total fee. The contract called for the video to be completed before the end of 2014.
“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 one of the partners, who also serves as the chief operating officer for the start-up business. “Having been born in Europe myself, I had no qualms about dealing with an off-shore company,” he explained.
To date (it’s now mid-September, 2015), all the Americans have seen are several rough video drafts that included – in its latest version – only the first 90 seconds of the script’s three-to-four-minute video.
The Americans’ overall experience – once the contract was signed and the half-of-fee down payment delivered – fell very short of what they had expected. Screaming Eagle Productions seemed to lose that “do anything to make this work for you” commitment that had been so evident during negotiations.
Repeatedly, the Americans found themselves up against barriers that were far more difficult to overcome for the simple reason that the service provider was located 5,138 air miles away. These were problems that, if the service provider had been an American firm – headquartered locally, or at least in a nearby time zone – would have been far easier to resolve.
“Some problems are best resolved face to face,” the American firm’s COO said, “but this wasn’t possible with Screaming Eagle Productions.”
Among the problems this American healthcare service-related start-up experienced:
· Delays A project contracted to take just a few months has already taken a year – and after that year, the project is still not even half-way completed. Now, there is apparently no chance that it will ever be completed
· Suitability: A project that was intended for an American market was loaded with the production company’s own subtle – but very real – cultural map, especially in terms of phrasing and images. The end product, as seen in the rough drafts we received, would be, at best, confusing to our clients – but more likely, the final product would prove to be unusable
· Communications difficulties: When playwright and philosopher George Bernard Shaw said that “the United States and Great Britain are two countries separated by a common language,” he knew exactly what he was talking about.
There were times when the partners thought they’d achieved a common understanding. However, all too often, that assumption ultimately proved to not be the case. Finally, the challenge of working across eight time zones proved nearly insuperable.
· Guarantee: A request for either delivery of a finished product or – at the last resort – a refund of the up-front payment has been ignored. There is no apparently easy and cost-effective way of enforcing demand of repayment. If Screaming Eagle Productions won’t take responsibility for breach of contract – and to date, they have not – it will continue to prove difficult to secure a positive resolution.
“I have done business all over the world,” the partner and CEO of the American company explained. In fact, he has created several successful businesses, each of which conducted business on three continents – he was no stranger to doing business with off-shore service providers.
“However, nothing in my experience prepared me for the difficult challenges we faced in trying to bring this video from concept to broadcast,” he said.
“Our relationship with Screaming Eagle Productions finally proved to be a “perfect storm” – virtually all of the things that could possibly go wrong with a two-continent business transaction, did go wrong.”
The CEO was quick to point out that these problems aren’t about his company – and they are not really about Screaming Eagle Productions. Rather, this business deal gone sour is an illustrative example of all the many things that can go wrong when working with an off-shore service provider.
“I hope other business execs can learn from the challenges we faced, and the problems we are still facing,” he told me. “There are many valid reasons for doing business with companies located throughout the world, but there are always risks involved as well, including some that, frankly, we hadn’t expected.
“Certainly, these were all problems that were much more difficult to overcome because we were dealing with a business 5,000 miles and eight time zones away,” he explained. “If the same problems had cropped up with a local company, or even one located anywhere in the United States, they would have been solved more quickly, and more satisfactorily,” he said.
Over a period of months – often with six weeks or more between drafts – several other revisions of the video were presented by Screaming Eagle Productions to the client. With a few exceptions, each of these succeeding rounds of rough drafts did not include many of the requested revisions and updates based on previous input offered concerning earlier drafts. A few edits were included – including some major ones – but most of the edits were being left for the production of the final draft, at least according to Screaming Eagle Productions.
“This choice led to some serious confusion on our part,” the CEO explained. “We began to feel that they weren’t listening to us. I know they told us that all the changes would be made before the final draft – which has yet to be forthcoming. However, when they made some changes but not others, we were not only confused – we grew increasingly skeptical that they were paying attention to our requested changes,” he pointed out.
Three Month Project: From the first discussions in August, 2014, Screaming Eagle Productions maintained that they would be able to complete the three-to-four-minute video within no more than three months. Specifically, they promised to complete the video, by the end of November, 2014. Allowing for delays and production slippage, the Americans expected their final draft no later than the end of December, and planned to launch it on their website and YouTube immediately after the first of January, 2015
Yet, as I write this, Labor Day, 2015 has come and gone – the stores are already selling Halloween decorations. More than eight months after they’d planned to start using the video, the four partners have yet to see more than the first 90 seconds of the project, and the indifferent quality of those 90 seconds was not in any way acceptable.
More than nine months into the three-month project, they still have no clear idea of how the final product will look or sound.
Certainly, some of the project’s delays could have been caused by the Americans’ requested edits and changes. However, since many of those changes have yet to be implemented, it is difficult to see how those requested edits turned a three-month project into one that’s been in the works for more than nine months.
Further, in every video production, clients request changes – that should have been factored into their promised time-to-deliver.
The biggest part of the delay has been the weeks – and more typically – months that stretched between each time the Americans receive a new, updated in-progress draft.
A local service provider would be able to move this project ahead by virtue of regular in-progress meetings, and by the ease by which the Americans could pick up the phone and ask for a status update. However, once the courtship period ended, because of the eight-zone time difference, such calls were only possible by pre-arrangement.
Cultural Map: It became clear from a review of the various video drafts the Americans received, the video’s content suffered from its creators’ cultural map. Despite the strong cultural ties between the two English-speaking countries, the English have a subtly different from the American cultural map.
This factor was reflected in both word choice and visual images.
These choices seemed to put lie to Screaming Eagle Productions’ claim that they worked regularly with American companies, and could deliver an “American” product.
Visual Cultural Map: The visual image problems were pervasive, and – from my perspective when I reviewed them, and from the perspective of the clients – troubling. It turned out that, when Screaming Eagle Productions produces an “animated” client video, the firm uses pre-existing visual templates in the creation of their videos.
Naturally, these templates reflect their own cultural sensibilities. This was most obvious in their selection of buildings, furniture and medical equipment. For instance, the hospital bed and bedside life support equipment looked nothing like anything the American company’s prospective clients would recognize.
There were a myriad of other examples of visual images that weren’t quite right.
“The medical “characters” had an alien look that was nothing like the look of American medical personnel,” the CEO explained. “Their character-template choice was odd, to say the least.”
This problem extended to the look of building exteriors and interiors.
The COO finally wound up having to find and email images of American hospital equipment, American furniture and American hospital buildings, along with a host of other quintessentially “American” images.
“Screaming Eagle Productions’ up-front promise that they did much work for American companies seems increasingly less plausible as we worked through their succeeding drafts”
Other Problems: There were other, less obvious problems with the content. I reviewed these examples and agree with the Screaming Eagle Productions’ American client that these were problems that should have been caught and fixed before the production company shared their drafts with their client. Some of the visuals seemed odd, but others were truly problematic.
In an opening scene image, the prospective “patient” was holding a beer bottle in a position that was embarrassingly phallic.
Another example of this cultural disconnect was the visual use of name-brand electronic equipment. Logos were left on images of equipment, such as a Samsung TV set. To use that image without change, the Americans would first have had to secured permission from Samsung.
Time Zone Tag: It turned out that working across eight time zones did prove to be an almost insuperable problem. First, calls had to be scheduled in advance – the American client couldn’t just pick up the phone and call Bristol England, not with any hope of getting someone involved with the project.
Next, those scheduled calls which did take place were almost always well after the end of the business day in Bristol. For this reason, typically, only one member of the creative / production team would stay after hours to take the call.
“This led to breakdowns in Screaming Eagle Productions’ internal communications, which impacted the result we were seeing,” the CEO said. “What one man heard, other men and women on the creative production team did not hear. Apparently – based on the work produced – what the creative team heard was, charitably, almost – but not quite – in the same ballpark with what we’d actually said.”
Almost. But not quite.
This poor internal communications at Screaming Eagle Productions could happen anywhere. However, it was made worse by the Americans’ inability to communicate directly with all the creative production team members. This continued to bedevil Screaming Eagle Productions’ efforts to create a usable video.
“We also had a kind of revolving door when it came to critiquing and editing early drafts of the video.”
“Specifically, Screaming Eagle Productions would send us a draft video,” the COO pointed out. “We’d take the time to have our entire team – including two of our partners and our entire marketing team – review the video and analyze each nuance. Then we would write up a detailed and exacting critique on a scene-by scene basis, pointing out errors, difficulties and challenges we felt the video had yet to overcome.
“Then we’d schedule a follow-up phone call with the creative production team at Screaming Eagle Productions. On these calls, our intent was to discuss these problems with our entire team and their entire team,” he said, “allowing us to brainstorm, and to reach a shared understanding of what was needed.
“However, these calls generally involved only one Screaming Eagle Productions team member – for us, these calls ultimately proved to be an exercise in both futility and frustration.”
“We always hoped to have the entire creative production team on the other end of the phone – our full team was always on the phone from our end – but with one sole exception, this would not be the case,” the clearly frustrated COO explained.
The Americans were unable to make sure that the people who’d actually do the work understood – and had the chance to ask questions about – the client’s expectations.
“That eight hour time difference really worked against us, not just once, but repeatedly.”
The frustration would only get worse when the next draft arrived.
“When we got the next draft, many of the earlier errors and problems remained,” the CEO explained. “We were told that this would all be fixed in the final draft, but their seeming inability to make requested changes created a real problem in communications, credibility and customer satisfaction. We frankly began to wonder if we’d ever get what we were looking for. As it turned out, apparently we never will.”
As the project approached its first anniversary, the Americans became increasingly concerned over their investment in time and money. Six times, the COO reached out to Screaming Eagle Productions by email, asking for status reports and plans to move forward.
“Six times over a period of two months we sent emails asking Screaming Eagle Productions to move forward – and six times we were ignored.”
Finally, the COO wrote them a put-up or pay-up email, demanding either the finished project or a full refund. That, too, was ignored.
For their apparently wasted effort, the partners wanted either a usable finished project within the immediate future, or they wanted a refund on their hard costs.
“If this were a local firm, we would have options that aren’t easily available to us in this situation,” the CEO said. “Still, we do plan to pursue our legal options, and are currently reviewing our next course of action.”
Communications – or the lack of communications – has been a barrier to resolution.
“It’s hard to discuss a problem with someone who ignores you. It was only after we advised them that, absent some immediate resolution, our company would participate in this case study, that Screaming Eagle Productions finally replied,” the COO explained.
“However, instead of trying to resolve our issues, their reply was hardly satisfactory. It was a combination of defensiveness, accusations and even threats of published retaliation.”
Having reviewed that correspondence myself, I am forced to agree with that characterization. The communications was filled with blame and finger-pointing, along with threats of unspecific retaliation should the company move forward in participating with this case study.
“At no time – once they resumed communicating with us – 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 CEO agreed.
“There’s no way we can get back the time my partners and I – and our marketing staff – have put into this failed project, but we had at least hoped to recoup the money we wasted on a firm that increasingly appears to have never intended to complete the project.”
“This opportunity cost – staff time that could have been more productively invested on other marketing efforts – was easily valued at several times the up-front investment that we made with Screaming Eagle Productions.”
Conclusion: The funds the start-up company invested into this project were insignificant. “Our participation in this white paper is not about the money,” the American COO explained. “However, we are eager to share with other American companies our unsatisfactory experience with this video production company’s ‘bad business’ approach to doing business. We hope other small, start-up or high-tech businesses will find this to be a useful cautionary tale.”
This stark example makes the case for strong agreements, graduated payments and other client protections. These are addressed in further detail in the next and final section of this case study.
As this white paper “goes to press,” the American company is currently exploring its legal options to recover funds paid and damages incurred because of non-performance. While the money involved is not a real issue, “this has, for us, become a matter of principle,” the COO pointed out.
There are a number of salient lessons learned – lessons that any American firm can take to heart before contracting with an off-shore service provider.
Vet the Service Provider: Talk to at least three American clients, asking for their strengths and weaknesses. Make sure they are really capable of providing the services promised, on time and on budget, and to a quality expected of the three (or more) reference clients.
Contact the local-to-the-service-provider Chamber of Commerce, and ask if there are any local organizations that field and try to resolve complaints – the local equivalent to the Better Business Bureau. Contact this organization and ask for information on complaints and resolutions.
Search the Internet for praise or complaints – testimonials – of former clients. If a company has a pattern of bad corporate behavior, someone will have noted this on the Internet.
Structure the Contract – Payment Schedule: Instead of half-up-front and half-at-the-end, negotiate for a stair-step of payments, each based on achieving the next milestone on the path to completing the project. This will provide a stronger “motivation” for the service provider to live up to their promises.
Refund Clause: Also, structure in the agreement a refund clause to be executed on a material breach of contract. This kind of clause will help with any post-failure arbitration or adjudication.
Non-Performance Penalties: Also structure the agreement to include built-in penalties for broken schedules. Give them 30 days’ grace, but then start deducting 10 percent for each subsequent month’s delay in completing the project. If nothing else, this will result in a more realistic project timetable.
Project Management System: Set up a joint “cloud” project management system – several good ones are available commercially at very reasonable rates. Build into the contract that the service provider will log updates on all work being done, allowing the client to monitor progress. This can also be used for in-process communications, which will help avoid problems that waited until the next completed draft (or equivalent) to be completed.
Team Calls: Build into the contract a schedule of regular “all-hands” team-to-team calls. Ensure that the service provider’s entire team is on each call – this will help to eliminate confusion that comes naturally when one person tries to summarize an entire call for his or her colleagues.
Legal Review: Finally, have the agreement reviewed by an attorney who is experienced in cross-border contracts. This is not a common specialty, but such a legal review will help head off problems that are built into the contract.
If nothing else, these built-in metrics will provide an early warning that the vendor is – or is not – complying with the terms of the agreement. Early warning can help nip problems in the bud, before they get out of hand.
However, if it all goes south, be ready to take action to enforce your agreement.
For instance, include an arbitration requirement – this will help you avoid costly legal fees and the risks of a trial. There are international arbitration standards, and certified arbitrators. Specify the qualifications of the arbiter who will determine if – and how much – of a refund is appropriate.
Recourse: Identify local-to-the-vendor governmental and private sector organizations that might be able to help resolve any problems.
Reporting Bodies: Identify the local equivalent of the Better Business Bureau and the local Chamber of Commerce. They may be able to help resolve issues related to the non-delivery of paid-for services.
· Meetings: Arrange for regular “all-hands” meetings. These will have to be by phone or Skype (if the computer is being used to share images of the project, Skype may not be an option unless each side is working with two computers).
· Legal Notice: Identify options for arbitration and for having local attorneys write and deliver demand letters.
· Legal Resolution: File for a refund in American courts – small claims court if the amount is below their upward limit. You will find it difficult to enforce overseas, but such action might favorably influence arbitration.
If you’re in need of enforcing an off-shore agreement, try the following specific recommendations:
· Off-shore Chambers of Commerce – these may be found in the provider’s country. In some countries, there are also equivalents of Chambers of Commerce or Better Business Bureaus. However, their ability to enforce American contract claims against local Chamber members or local businesses may sometimes prove effective, but on many other occasions they are clearly not effective.
o Great Britain, for instance, has 52 chambers of commerce – but whether they will do anything to help an American firm in a dispute with a local company has yet to be established.
· That country’s embassy – they have a commercial department that might choose to advise you on organizations, such as local equivalents of the Better Business Bureau – or even local government organizations – that might be able to help you
· Internet search – you can use the Internet to search for local-to-the-vendor “Bad Business” websites where people can post positive or negative reviews – use this bad review as leverage to force a resolution.
o In many cases here in the states, I’ve posted to my own Bad Business blog – then told the vendor – and got resolution in exchange for removing the blog. One resolution was valued at nearly $2,500
· The Legal Option: In most countries, there are courts that can at least theoretically work with American firms to consider enforcing a signed service agreement with a local firm. However, the costs of seeking and securing local off-shore legal counsel can be expensive – and it’s chancy as well.
o Solicitors and barristers – “English” for attorneys – will, for a fee, represent an American company against a British one in their local courts. Yet that is an expensive roll-of-the-dice “solution” that could wind up costing far more than any settlement might be worth.
o In the worst case, those attorneys – who are themselves off-shore service providers with no direct accountability – offer no more easily-enforceable guarantees of quality service than do the service providers who have already let you down.
Conclusion: When dealing with off-shore service providers, you ultimately have to count on the integrity of those service providers to ensure that contracted services will be delivered, on time and on budget, and to the quality anticipated. To a lesser extent, that is true of any service provider, but the problems clearly become much more difficult to resolve across oceans and national borders.
Some service providers I have encountered – in my own business, as well as in my research for this white paper – seem to intentionally choose to do a poor job. Not expecting repeat business and unconcerned about the risks of the contract being enforced, they seem intent on securing up-front funds, cashing their checks, then failing to deliver anything, or at least anything useful.
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.
When dealing with off-shore service providers, once burnt, twice shy. Take steps in advance to help avoid being burnt.
Einstein defined insanity as doing the same thing over and over, yet expecting a different result – and we’d be crazy to use off-shore creative services in the future.
American service providers might cost more in terms of cash, but the ability to more easily either receive a usable product or receive a refund may prove to be more than worth the extra costs that might be involved. That decision is yours – but if you consider doing business with an offshore service provider:
· Conduct due diligence
· Build in all the protections that you can into the final agreement
· Make an informed, eyes-wide-open decision
One last observation: If the service provider balks at providing contractual guarantees of performance – with teeth for non-performance – this should be an early warning to expect trouble. Be prepared to walk away from even a “sweetheart deal” if you’ve got no good way of enforcing it.
Note: During the research and development of this case study, I was party to communications between the American client and Screaming Eagle Productions. These communications regarded the issues raised in this case study, and included notification that the case study was in process. However, instead of cooperation, the responses I saw were confrontational and defensive, and those comments were not cleared for print.
The following are sources in the United Kingdom that are available to help American firms with problems they encounter when doing business with vendors or service providers based in the UK.
These explain where you can complain to government and other
entities about a "limited company"
entities about a "limited company"
Firms can call the UK’s Citizens Advice helpline: 0345 04 05 06.
You also can ask the UK's Ombudsman Services – here’s what they recommend
You also can ask the UK's Ombudsman Services – here’s what they recommend
Also, there's "Which?" -- a kind of British Consumer Reports Magazine equivalent – this publication sometimes exposes rip-offs. Their Media Relations page is here:
There are 52 chapters of the BCC (British Chambers of Commerce)
Their contact information is here:
You can search local chapters’ websites for participation or non-participation by the service provider.
There are similar organizations in many of the more developed countries which are concerned about their commercial “good name;” however, the risk of irresolvable problems rises when dealing with firms in less-developed countries. Do a bit of research and identify appropriate local-to-the-vendor organizations before signing any agreement.