Save for the "by you or to you" line, Thomas Friedman’s column in today’s New York Times is especially good. It tells the story of TCS Iberoamerica, a young firm in Uruguay that supplies technical services to foreigners (mostly Americans working for companies such as Procter & Gamble and American Express):
How did this happen? One of the most interesting features of this
era of globalization is how any entrepreneur — with the right
imagination, Internet bandwidth and a small amount of capital — can
assemble a global company by matching workers and customers from
anywhere to do anything for anyone. Maybe the most important rule in
today’s increasingly flat world is this: Whatever can be done, will be
done — because so many people now have access to the tools of
innovation and connectivity. The only question is: Will it be done by you or to you?
Gabriel Rozman decided it was going to be done by
him. A retired partner from Ernst & Young who was raised in
Uruguay, he hatched the idea of partnering with Tata [an Indian firm supplying the same services] to make Montevideo
a global outsourcing hub. He did not have a single client or employee
when he approached Tata. He had just two things: a gut instinct that
Uruguay’s quality education system had produced plenty of good,
low-cost engineers and a gut desire to do something good for Uruguay —
the country that gave his Hungarian parents sanctuary from Hitler.
Four years later, TCS Iberoamerica can’t hire workers fast enough. When
I visited its head office, people were working on computers in hallways
and stairwells. (Mr. Rozman also oversees 1,300 employees in Brazil and
1,200 in Chile.) It turns out that many multinationals like the idea of
spreading out their risks and not having all their outsourcing done
from India — especially after one big U.S. bank nearly had to shut down
last year when a flood in Mumbai paralyzed its India data center the
same day a hurricane paralyzed its Florida operation. And there is no
risk of nuclear war with Pakistan here.
“When I first approached
this big U.S. bank to outsource some of its services to Montevideo,
instead of India,” recalled Mr. Rozman, “the guy I was speaking with
said, ‘I don’t even know where Montevideo is.’ So I said to him,
‘That’s the point!’ ”
Another factor, added Mr. Rozman, was
that multinationals that were depending on Indian firms alone to run
their backrooms 24 hours a day were getting the third team for eight
hours, since the best Indian engineers didn’t want to work the
late-night shift — the heart of America’s day. By creating an
outsourcing center in Montevideo, Tata could offer its clients its best
Indian engineers during India’s day (America’s night) and its best
Uruguayan engineers during America’s day (India’s night).
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{ 4 comments }
Umm, I still have no idea what "flat" has to do with connectedness, or globalization, or ready communications. I know Friednman thinks he has some great analogy going, but I just don't think it makes any sense. I mean the world IS still an oblate speroid, isn't it?
erdos: "I mean the world IS still an oblate speroid, isn't it?"
That depends upon your point of view. From a vehicle orbiting the earth, yes, the latter appears to be a spheroid.
The "flatness" of which the article speaks is in terms of communications. The difference between interlocutors in communication terms, whether they are physically located at 1 mile or thousands of miles from one another, is about two microseconds – the latency of a communication satellite. (A thought first propounded by Arthur C. Clarke, author of "2001: A Space Odyssey", on the back of an envelope in the late 1940s.)
Telecommunications permit that certain engineering services (including software programming) be dislocated quickly to lower cost countries extremely easily. Another example: Indian companies are teaching back-office "Hotline" workers to adopt American slang dialects such that a US clientele will feel more inclined to use the service.
The effect is both good and bad. Certainly, cheaper software development means cheaper costs of data processing in the US. But, it also means that programmers have lower salaries in the US since they are competing with people who are being paid comparatively MUCH lower in South America or India or, even, China.
So, what does this ultimately mean? This: America and Europe cannot sit on their laurels thinking that their education systems are producing the expertise that will be immediately adopted by its local businesses. The "kids" have to be taught new skills, some of which are only in development laboratories. The lead times are that short.
Economists are speaking about how the dropping of the Iron Curtain has doubled the global workforce. They note that this is mostly unskilled labor. Mostly, but not all. It has also significantly increased some skilled labor pools, notably in information technology.
The bottom line for Americans is that their real wages are falling and most families now need two wage earners just to keep their finances afloat. This cannot be compensated for by ever cheaper wal-mart goods. Even a steady flow of Mexicans willing to do anything for a buck will not save America now. Our decline will be steep. We have a long way to fall, but fall we will.
I started working for TCS as a Business Analyst for $ 435 (U.S Dollars a MONTH) that means ($104 U.S Dollars a week). Let me say, stuff here costs a lot of money, this(URUGUAY) is an expensive country to live in. Now after my first year in that company I make $615 a month.
..as a joke(and not so), let me say:
"Houston we have a problem!"