On the quantification of global team performance and profitability

Abstract

Globalization helps international companies create distinct competitive and operational advantages over centrally managed counterparts. Such advantages come from increased business opportunity and high profitability through outsourcing. To achieve the benefits of outsourcing, in this paper we describe a general model that characterizes globalized project productivity. We examine several factors related to global team performance including: 1) time zone differences, 2) language difference, 3) working time alignment (such as vacations and holidays), and 4) turnover rates among skilled workers in expanding economies. We then show how the models can be used to analyze project profitability through team performance, and how to address the combined impact of multiple globalization factors. Beyond this, we also provide suggestions on how to overcome those challenges. The key contribution of this paper is the development of models that quantify the impact of several global factors. In two cases, we show that the right organizational structure is required to achieve benefits of lower labor costs. In another case, due to the smaller difference in labor costs and the high complexity of the project, we show that the combined effects of the factors could lead to reduced profitability. It is these cases that reveal there is an opportunity to improve global delivery. Our objective is to show how to maximize the benefits of globalization and how an effective management approach can avoid some of the potential risks by deeply understanding the effects of global factors.