Is offshoring affecting US competitiveness?

October 24, 2011

With all the offshoring taking place, one concern is that US is losing its competitive edge.  A recent analysis in Information Week seems to suggest otherwise.  US is actually ranked number 1, and two big offshore providers India is ranked 34 and China 38.

If this study is to be believed, then off-shoring has no impact on competitiveness.  One can even argue the opposite.  US is focussed on innovation and taking advantage of global resources to produce what makes US competitive.


Labor Arbitrage Models Will Fail

July 18, 2010

I wrote a blog in the BPO network with the same title – but as I pondered it applies to the off-shore development market as well.  In the BPO blog I staretd with “BPO initially started with the need to focus on core services, but economic benefits were quickly realized as BPO providers gained economies of scale and scope. The prevalence of BPO quickly became one of labor arbitrage. Although many BPO providers are focusing on value and moving away from just cost advantages, a majority of them still rely on the labor differential. In my view, this approach will fail. Not just for the rising labor costs, but the way people are getting help is also changing.”

Upon reflection this is equally true for off-shore development.  Global providers have not only moved away from the one or two country source models to multi-country (IBM and Tata are great examples), but they have also moved up the food chain.  One project I helped in determining the best sourcing strategy was decided not on cost alone, but deep expertise in the CPG (Consumer Products Group) industry.

The key here is that service providers should be looking at the business model, their target markets and build systems and processes that can be readily adapted to different verticals. To achieve this, they must develop innovation groups and fund them internally. R & D is not just for product companies, services companies must have R & D groups completely distinct from operations and projects to help the firms stay competitive.

Social Networking: The Role of Meta-Networks

May 28, 2010

Facebook, Twitter, LinkedIn, you name it – we have it.  Each of these are gigantic social entities, we can create networks within these entities.  For lack of a better phrase I call these meta-networks. I am sure the pundits have a better term for these.

Meta-networks have led to creation of sub-networks.  For example, in LinkedIn any one can create groups and sub-groups within groups.  Groups are either temporal or permanent in nature.  I call temporary groups social linkages.  A classic example of a social linkage was evidenced by the events in Iran which could easily have been suppressed without these meta-networks.  The viral effect of sub-networks and social linkages is phenomenal.  From the simple photo libraries on Picasa to the video libraries on YouTube to the custom enterprise networks on Twitter and Facebook, these meta-networks have created the opportunity to create content at will.  Will these meta-networks survive and become the mega enterprises of tomorrow or will they be gobbled by the existing enterprises? Just imagine if IBM purchased LinkedIn!

The other side of outsourcing

May 5, 2010

In the book “Outsourcing America: The True Cost of Shipping Jobs Overseas and What Can Be Done About It”  (Published in 2008 by AMACOM, a division of American Management Association).  The authors  Hira brothers  argue that outsourcing jobs overseas is deleterious to the health of the American Economy.  To add salt to injury, a University of California study concludes that 14 million white-collar jobs are vulnerable to being outsourced offshore.  Given the high rate of unemployment, outsourcing jobs is getting bad press.  Lou Dobbs of CNN made a career just on this topic.

Enough gloom, let me narrate a real story about a real company based in California that manufactures a Green Technology product, one that converts radioactive waste to harmless reusable materials.  This company has a patented product and builds its machine in California.  Guess where the big markets are for this product?  No prizes awarded for guessing China and India.  The more China and India buy these products, the more jobs in California.  Admittedly this is one example, and you cannot extrapolate on a single datum.  However, the message is loud and clear.  The way for America to forge ahead is innovation.

Rethinking “Does IT Matter?”

March 30, 2010

When Nicholas Carr wrote that infamous article (“Does IT Matter?” by Nicholas G. Carr. Harvard Business School Press, May 2004), most refuted Mr. Carr vehemently.  In 2004, it was hard to imagine a world where the Data Center is in the cloud and applications are delivered as a service.  Nearly six years later, most firms are shifting to the cloud, collaboration and social computing, and SaaS technologies have become common place.  But the question is does IT matter now?  It still does, but we must credit Mr. Carr with one thing – we are beginning to think IT as both an utility and an enabler.  The value of IT is best realized when it becomes a business enabler.

The New Global Brain: Find & Direct Brainpower

January 22, 2010

In an article published in Newsweek, Work The New Digital Sweatshops, Jonathan Zittrain talks about how the Internet is revolutionizing tasking by aggregating global resources, termed “crowdsourcing”, similar to how aggregated computing power speeds the engines of technology companies ability to process millions of search requests every minute.

In the latter, the computers dont have emotions, rights, or shed a tear when called into action at 3AM after cranking out search results for the last 1,345 days.  The ethical dilemma, Zittain purports, is when you seemingly take advantage of a hungry resource halfway around the world to execute mundane tasks like deal with a drunk, hungry sports fan ordering a pizza at halftime.

Frankly, I see it as supreme supply chain optimization, a zero-waste global economy, that will eventually create a certain global “synchronicity” where we all continue to quickly evolve technology through global teamwork and collaboration.  The mundane task of pizza order-taking may quickly evolve into chip design for our next-generation zero emission vehicles.  There is always distribution of labor, now today we have global connectivity enabling a more perfect distribution to the right resources with the right skills at exactly the right moment.

Nothing in Life is Free

January 21, 2010

Recent announcements by Hulu and the NY Times, that their content will no longer be served up gratis to consumers, and that “new business revenue models will be ‘tested'” ( strengthens the notion that online business is still searching for the “holy grail” of revenue models, using the braille system.
Easy for large partnership enterprises like Hulu and NY Times to experiment, as they have the luxury of tweaking different business-revenue models until one eventually works.

But what about the SMB market that can’t afford to spend an exorbinant amount of time, money and resources, coming up with their ideal revenue business model?

It becomes more mission-critical than ever to minimize expenses dedicated towards IT initiatives, and the seemingly interminable changes, enhancements and scope creep elements associated with them.

Without the large IT budgets that are at the disposal of many big corporations, it’s imperative for SMB’s to root out the most cost effective, reliable, quality IT resources as efficiently as possible.
This is where the online outsourcing service provider networks will prove their weight in gold. The best, value-driven, content-rich networks that rise and prove to be the cream-of-the-crop, will surely command subscription fees, as true business-savvy consumers will gladly, albeit begrudgingly, put money into the tip jar to ensure providing themselves with the best possible IT solutions and resources….because after all, they know….nothing in life is free.