Thursday, June 29, 2006

Globalization as a phenomena affecting social as well as cultural landscapes across the globe is taking new shapes and definitions. However, the views on this so far have been two faced and emanating from a single geography. That of the USA. The reasons for this could be Multiple, but one reason stands out as most obvious. That of fear, the most powerful motivator. Fear, that American jobs will be gone, fear that that skills developed painfully in the US, by select few will no longer be valid, and fear that globalization is the actual epidemic that will hit the US, more than any Bin Ladenish venture. I think the view point on globalization emanating from these fears is actually putting a blind eye on some of the more interesting paradigms. Unfortunately those paradigms validate the american fears rather than mitigate them. Firstly, the effects of globalization can be felt by examining key new business models that have emerged. For example, outsourcing of IT and business processes. What this has done is it has transferred the knowledge and the process execution capabilities associated with it, to a centralized location, in this case India. This centralization of knowledge and process execution capability in India has new dimensions. Today, an Indian IT person doing day to day execution of IT jobs for customers across the globe, is able to understand the IT operations, the business models, the cultures, and the needs of customers from various geos sitting at his own desk from his own hometown. This is an important dimension. The maturity coming from this sort of centralization would be priceless in the world skill dynamics. So its just not the skill of being able to perform an IT job. It is this skill that people are gaining, consciously or unconsciously that is vital. Not only that,Indian IT workers travel across the globe to different countries to co-ordinate onsite activities and manage the offshore-onsite interactions. Now all these people converge in a single place after their travels. Imagine the amount of knowledge and information on culture, business models that these people exchange among themselves. That skill will therefore be unique to one place, India. Now this is what should scare Americans than most other things they are worried about, if they already are not. Now one fact that is to be noted here, by companies trying to get themselves to be "globally integrated" as opposed to being just MNCs is the fact that the Indian companies, have already jumped on the wagon and have a centralized operating model, while work gets done in various countries and across various timezones. The knowledge capital, gained by these companies has taken them far across the "globally integrated" route. And the MNCs are still trying to adapt to that. Now, we all know that in business the early incumbecy factor, leads to faster maturity and therefore faster returns. Therefore these Indian companies, who got into the game via, cheaper labor, used the unrelenting investments made by American investors on Fibre Optic cable line capacities and transferred work to a centralized location have got a harmony, that will chug them along faster and smoother than any MNC on the "globally integrated route". That is a crucial factor which most American writers writing about globalization missed today. So next time you feel deprived, by an American colleague, because he/she believes you need more training, please have patience. Its only a matter of time when the intellectual seesaw will tilt your way. I am going to start a new series which I intend to turn into a book, called "Bottoms Up" where I intend to capture this phenomena, from the experience of people at the bottom, the developers, the project managers rather than what is there today, which is a top down view by visionaries and thinkers. Everyone who reads this, can help me, by sharing their experiences, and learning when they have travelled, due to them being in the epicenter of the new globalized world called India. I would like to document this phenomena that would be defining the IT world very soon. And for everyone who responds to this call of sharing your experience and knowledge with me, my sincere thanks.

2 Comments:

At 11:44 AM , Blogger GOUTAM KURUMELLA said...

Hi Pavan,

This is interesting - when you treat one nation(in this case India) as 'the focal point for some business to run' (as against de-centralized system) aren't you contradicting the very concept of globalization? Well it is not hard to understand why. Theories of economic growth converge on the fact that technology is the driving force of economic growth however in my opinion it is just one face of the coin. The downside of this, according me (as a 'consumer of game theory') will lead to protectionism. Fall-out of this will have serious consequences on economies of varying scale (country or a company). At least from your note above - it is not hard to pinpoint the source of the tension related to jobs between the US and India. Global Labor Arbitrage did shake up businesses in developed economies but a few who opted for a 'globally integrated model' did manage to maintain the same value or sometimes enhance the share price. However, caution must be exercised for those companies operating locally (say India) who souly relies on off shoring model. 'Too much is never too good'. Interesting pattern which I have noticed here is these companies are increasing their staff at an exponential growth, which will in itself reverse the trend in the coming years. I will not say that game theory will support Ricardian comparative advantage but common sense drives me to believe that finding a mutually acceptable polices and governance at government level and for businesses is critical... for 'profit and world peace' !!

Cheers,
Goutam

 
At 12:59 AM , Blogger Pavan K Malladi said...

Hi Gautam,
Thanks for the comments. While I agree that some arbitration or at least moderation is required from a govt policy level for things to stay under control, the point I was trying to make was that as a result of the governing dynamics, the convergence point for ideas, models to converge has incidentally become India.
While I dont intend to question the dynamics of globalization, what I am talking about the centralization of the knowledge as a result of globalization as opposed to providing a contradictory view point.
I agree with you on the fact that protectionism, or too much of a ramp up is bad without reason. However, currently, I think the ramp up at least in some companies is happenning with reason, while others are just playing the scale dynamics.
For example companies celebrating the fact that within a couple of years time they have grown in numbers from a couple of G's to 40-50 Gs. This is omnious. These types of companies are just tying to beat others who have done it with reason, just on scale. While that is a reactive strategy, I think it wont work and this is the precise point.
The intention is to bring to light the fact that, centralization of knowledge "can" lead to maturity and therefore innovation and so brings out the unique opportunity for India as a whole.
However, I might have mistaken myself in taking the liberties to "predict" which I will avoid consciously now, so as to get the reader's focus on the opportunity.

Thanks for your comments again, they are very useful. At least I will start reading a bit of "Game theory" now.

Regards,
Pavan Malladi

 

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