Differing Viewpoints

Within the past week reports have been issued by two different publications with opposing projections.
Business Week.com ran a story about a Gartner report stating India's share of the offshoring market is expected to double between 2008 and 2010. "The increase is driven by demand for lower cost options during the global recession." However earlier this week a report issued by IT World reported just the opposite. "The growth rate of offshoring in India is expected to come down considerably, as new clients are increasingly including other countries in their evaluation, according to research firm Gartner." Do you have any thoughts on this? We'd like to hear what you have to say.

"Buy Amercian Does Not Come Free"

During his visit to India Bob was interviewed on the widely debated issue of offshoring of service activities and its profound impact on businesses and governments in both developed and developing countries. Pragati Verma caught up with Bob to understand the drivers and implications of the globalisation of service activities. The question and answer session is covered in full and can be reviewed by using the following link.

Media Blast -- India Addition

Have had a very busy few days in India.

First, lots of interactions with our MBA MAP teams.

• First team up is working in Noida, focusing on Drishtee's microenterprise lending strategy.
  
• Spend the weekend in Hyderabad working with a second team focusing on Acumen Fund's healthcare strategy.
  
• Next up is two days of Ross alumni events (Delhi then Mumbai/Bombay).
  
• Then back to Noida Wednesday Thursday for some work with the Perot Systems team, working on skills

The real news, however, is promoting the book. For those of you who've read it, you know that Perot and India play a large role. Anurag Jain, Perot's MD for Asia Pacific and Head of the firm's Business Process Solutions business, had his team organize an absolutely fantastic couple of days.

• I appeared on Power Lunch, the midday program on NDTV, India's version of CNBC to discuss the book and President Obama's comments re: offshoring (sorry, no video)
• Had one-on-one interviews with a series of financial publications (The Financial Express, The Economic Times, Global Services Magazine)
• Then a "Wine and Wisdom" event where Anurag and I spoke about offshoring with a group of Perot executives and another dozen or so journalists.
• In Hyderabad, three more interviews, with Business Line, The New India Express, and the Deccan Chronicle.

I was on cover of the Saturday Economic Times. The article was about Obama's offshoring comments in the town hall meeting and the quote from me were pretty minor. There was a huge picture of Obama on the front page, with a pull quote from me directly responding to him. Wish the book was already released here in India. You can't buy press like that.

--- --- ---
Interesting contrast with the US journalists I have been interacting with over the past few months. Not saying one is necessarily better than the other.

1. My experience is that most US journalists are focusing on the story of the day. They want provocative quotes and I have to push to get references to the book included in the writeups. Here, nearly all the dozen or journalists who interviewed me had spent time with the book. Many had read substantial portions. The focus was very much on the book -- why I wrote it, what was the target audience, engaging me on the key messages, etc.
2. I have the sense that the book will be huge here in India. Judging by the journalists, it seems to hit on a set of issues that are top of mind here. All wanted to stay in contact for future stories. They were happy to work with me and the PR firm on timing release to match the book launch (unfortunately, not for a couple more weeks here in India). Several forwarded requests from their editors about whether I could do guest, or regular columns in their publications. We're doing fairly well in the US, but this market feels ripe. We'll see.

All in all, a very productive few days on the book front. Several pieces coming out in the US next week as well. Look for something in Forbes.com, and a guest blog on Horses for Sources. Also have a piece accepted in Financial Executive Magazine that should be in the May edition.

Obama Town Hall: Partial Sanity on Offshoring

I'm still traveling in India (more on that in another post), so I'm running a bit behind.

An interesting development in President Obama's on-line townhall meeting. A woman named Harriet, from Georgia, asked the following question (all quotes from the NYT transcript ):

When can we expect that jobs that have been outsourced to other countries to come back and be made available to the unemployed workers here in the United States?

The president gave a surprisingly coherent response -- at least for a liberal democrat. Here it is:

Now, a lot of the outsourcing that was referred to in the question really has to do with the fact that our economy -- if it's dependent on low-wage, low-skill labor, it's very hard to hang on to those jobs because there's always a country out there that pays lower wages than the U.S. And so we've got to go after the high-skill, high-wage jobs of the future. That's why it's so important to train our folks more effectively and that's why it's so important for us to find new industries -- building solar panels or wind turbines or the new biofuel -- that involve these higher-value, higher-skill, higher-paying jobs.

So I guess the answer to the question is, not all of these jobs are going to come back. And it probably wouldn't be good for our economy for a bunch of these jobs to come back because, frankly, there's no way that people could be getting paid a living wage on some of these jobs -- at least in order to be competitive in an international setting.

So what we've got to do is create new jobs that can't be outsourced.

[He then went on to talk about "Green jobs" and having union workers building a smart grid, making $80,000-90,ooo. In the interest of space, I am leaving that out because it's very long and kind of wandering]

--- --- ---

I offer a few thoughts:

1. First, he didn't take the bait and make references to "our jobs" or "American jobs." That's progress.



2. He didn't roll out the "no tax breaks for companies that export jobs" line that nativists seem to like so much. There are no such tax breaks for "exporting jobs," and if the people who use such lines think they can take away other breaks for companies they don't like, they will run into the problem of identification and designing a program that actually works (discussed below Offshoring and Public Policy -- a Conundrum )



3. He seems to be somewhat mistaken about the nature of the work going offshore. From 10 to 5 years ago (as BPO gained steam) much of work was medium skilled -- things like call center jobs, accounting and finance, and claims processing.

What the president misses is that software jobs (in India, a bit more than half the total) are fairly high skill, certainly much more so than the union construction and electrical positions he talks about. Furthermore, the fastest growth today is in high skilled KPO (knowledge sector offshoring) work. Things like engineering services, business analytics, product design, teleradiology, and others.

My overall position is that, while disruptive in the short run, this is ultimately beneficial in the long run.

Bottom line: The president gets a B+. He didn't fall into the typical political trap of mischaracterizing the trade as win-lose (or zero sum). That puts him ahead of 75% of politicians, and 95% of democrats in Congress.

On the other hand, he doesn't understand (or at least communicate) the real nature of what's going on. It will be interesting to see what actions he takes going forward. One of the first tests will be how his administration treats the auto companies. Will they force them to cut back on software offshore outsourcing (GM does huge amounts of work offshore), or on back office stuff (Ford is ramping up its business analytics unit in India). Time will tell.

Off to India

Will be spending the next two weeks in London, Amsterdam, and (mostly) India. Conference in London for the EU launch of the Aspen Network of Development Entrepreneurs (ANDE). Interesting embership group that works to bring three groups together:

• Social investors -- such as The Gates Foundation, Lemelson Foundation, Omidyar Network, The Rockefeller Foundation, The Skoll Foundation, the Shell Foundation, and others.
• Intermediaries -- such as Acumen Fund, Agora Partners, Dahlberg, E&Co, Root Capital, SEAF, TechnoServe, WDI (of course), and a few others
  
• with small and medium size businesses in developing countries.
  

The idea is that SMEs can drive development more effectively than micro enterprises, and the group is looking to promote that.

From there, on to Delhi, Hyderabad, Mumbai (Bombay) and back to Delhi for some student work. We have a set of interesting MBA projects this year -- with Drishtee, Acumen Fund, and a skills development initiative by Perot Systems.

I will also be doing the song and dance routine for two Ross School alumni clubs -- in Delhi and Mumbai. Actually, these events are a lot of fun. Well connected people. Looking to engage with the school. And really excited about cutting edge work.

So, great trip coming up. The only downside is that I'll be staying in eight different hotels over the next 11 nights. Ugh!!

Blogging will continue, but will likely be at strange times (India is 9 1/2 hours ahead of the east coast). In the meatime, Lou will hold down the fort.

Thoughts on PR process

Have been doing quite a bit of PR. Lou has been posting the various links, so I won't recount them all.

Funny how it works. The book focuses on the trend toward global sourcing of services from developing countries. Most references are to India, the Philippines, China, South Africa, etc. I think I mention Ireland once or twice in passing.

So, a couple weeks ago, Dell announces it is closing its manufacturing operation in Limerick Ireland (about 1800 positions). Service jobs (about 2600 positions) will stay. The Guardian Newspaper from London reaches out to me for a comment. Most people seem to be saying "it's the end of the world. Ireland is doomed!!!"

My view is that this is predictable and actually a sign of Ireland's strength. Low-skill assembly work is a commodity. If those jobs didn't go to Lodz Poland, they would go to Romania or China. Ireland offers nothing special for low/medium skill manufacturing work and it's fruitless to try to hold on to that work.

On the other hand, the fact that most services positions (product marketing, service, accounting, etc) are staying in Ireland says something positive about the business and regulatory environment the country has created. My view is the Ireland is still well positioned to outperform most others in the EU as a hub for within-EU services.

Turns out this was a really unique view. It led to 3-4 more newspaper articles, and about 6 radio interviews. Apparently I'm a star in Ireland now, with lots of book pre-orders. One mention of Ireland gets a couple hundred book orders.

Things also look promising in India. Several of our research partners have agreed to help promote the book and we seem to be getting traction ahead of the March launch.

In the meantime, I'm working the highways and byways of the US publishing industry and things are moving slowly. Turns out, it's pretty difficult to scare up book reviews. Lots of interviews where I am quoted on offshoring/outsourcing topics. But it's a struggle to get them to mention the book.

Ideas appreciated.