The business world is being disrupted by the combined effects of growing emerging economies, shifts in global demographics, ubiquity of technology and accountability regulation. Infosys believes that to compete in the flat world, businesses must shift their operational priorities.

« July 2006 | Main | September 2006 »

August 30, 2006

China, India and IT Outsourcing

by Richa Govil

Infosys recently polled 237 IT and business professionals. The survey asked "Do you think China will overtake India as the next hub for IT outsourcing services by 2020?"

Results
35%: Yes
14%: Maybe
50%: No
(the usual disclaimer about rounded numbers not adding up to 100% applies)

I'm sure if China puts its mind (and muscle) to it, it can make anything happen. But at the same time I am not convinced that China will overtake India by 2020. 

There is more to building expertise in a field than throwing $$s and people at it. There is a reason why Silicon Valley continues to be the hotbed of entrepreneurial activity in tech-oriented businesses. There is a reason why despite horrible traffic Bangalore employs the highest number of IT professionals in India. Experts in any field do not thrive in isolation -- they require a whole ecosystem to support them.

I'm not saying it can't be done. The Japanese automotive industry is a great counterexample.  But if I had to choose between China and India, I'd pick India. Of course, I don't have to choose -- after all, Infosys is building up an IT development center in China.

August 19, 2006

Global Footprint does not make a Flat World Company

by Richa Govil

Many people confuse companies having a global footprint with flat world companies. If global footprint made a company succeed in flat world, all Oil & Gas companies would automatically qualify.

Flat World companies are able to integrate talent seamlessly across continents instead of creating islands of operations around the globe. Simply establishing "offshore" IT centers in India and call centers in Philippines is not enough. Very few companies around the world have a reached a stage of global operations maturity to have truly integrated global teams as the norm, rather than an exception.

Consider this:  In my group, we have many teams where a person may be based out of, say, London, whose direct report is in the US and manager is in Bangalore. This is a common scenario in Infosys -– only the permutation of continents changes. And these people do not work in isolation of each other, but on a single project.

If you think scheduling time for meetings with colleagues is difficult, try doing it across three continent time zones!

August 16, 2006

The Flat World Goes Both Ways

by Richa Govil

Yesterday I read that AT&T is now trying to re-enter the Indian long distance phone service market.  This got me thinking about how larger and larger percentage of global companies' revenues now come from emerging economies.  In some cases these countries account for the majority of the companies' revenue growth. 

On the flip side, leading companies from China and India are also increasing their hiring targets from the US and Europe.

Recently ICICI Onesource (Indian BPO company) announced that it is setting up a contact center in Ireland, creating 1000 local jobs.

Infosys has already hired 126 software engineering graduates in the US and plans to more than double the number by the end of the fiscal year.

There are plenty of such examples of companies seeing increasing revenue from emerging countries and creating jobs in developed countries.  As traditional barriers to business break down, companies are beginning to realize the ideal end-state of global operations: employing talent where it offers best value, source where most cost effective, and sell where most profitable.

It is no longer a question of whether this will happen; it is only a matter of how quickly can companies achieve this. 

August 11, 2006

How my World became Flat in the last 25 years - Part 3

by George Eby Mathew, Head of Infosys Solutions Consulting, Canada


Flatness is not about outsourcing and off shoring to India or any place under the sun, it is about access, crumbling of boundaries, ensuring that anyone in the world can build products and services any part of the world and sell it in any part of the world where he/she can get maximum value. For example, my friend’s South African neighbor who lives in Bangalore has set up a company that cleans the windows of India’s emerging high rises. He’s the best I have heard of because he is a trained mountaineer, a skill rare in India and so he has a flourishing business.

The heights to which one can take the flattening story is this one describing the making of the Airbus A380. The 555 seat, double deck Airbus A380 is the most ambitious civil aircraft program ever. Key design included modifications of existing airport infrastructure, direct operating costs per seat 15-20% less than competition, 49% more floor space, 35% more seating 10-15% more range than competition. It achieves lower fuel burn, emissions, and less noise using the most advanced technologies. It is one of the finest examples of the use of composite materials. By revolutionizing long haul flights, the Airbus A380 has brought in an inflexion point in the airline business challenging hub-and-spoke system. 

Guess how was it achieved?  The 10-year, $13 billion A380 project involved financial, political, legal, industrial and technical collaboration of over 50 countries and 6000 people across the world.   The A380 was built with the help of industrial partners in Australia, Austria, Belgium, Finland, Italy, Japan, South Korea, Malaysia, Netherlands, Sweden, Switzerland, United States for the final assembly in Toulouse, France, with interior fitment in Hamburg, Germany. 

So what do you think? I see my world flattening.  I feel it every day.  And I guess it will become inevitable part of my everyday life.


 

August 10, 2006

How my World became Flat in the last 25 years - Part 2

by George Eby Mathew, Head of Infosys Solutions Consulting, Canada

In the early 90s, communication and connectivity were dampeners too. My father who eventually settled in India waited for 8 years to hear his first dial tone on a phone that he owned. Today, it takes roughly an hour for me to get a permanent communication line.

Not long ago I reminisce the times our family huddled around a telephone as we waited for a trunk call to speak to family barely 100 km away. The wait could be as long as an hour for what was called a “lightening call”. Today I get connected to my cousin in St. Louis in approximately 3 seconds. If I have the money to pay, I could make my dial tone follow me wherever I am on the planet because connectivity has become pervasive too.

Consider this: Much of this blog was written while on vacation in a tiny hamlet in southern India that does not even have a fax machine for public use but does have internet access and even blackberry access!  Affordability of technology, connectivity, access, and the pervasiveness of the interaction medium hastened the flattening process in my world.

Today, companies face similar situations like me not because they don’t have these opportunities. But they have complexity of the scale bigger than my world.

The curvature of the world is a good point to ponder on for companies too. Think of the curvature of the world as the bumps and kinks companies need to cross before they can reach customers, suppliers, partners, skills, and capital from any part of the world. Unlike me, companies face cultural, geo-political, and socio-economic dynamics that are far more complex than my world.

The heartening aspect of a zero curvature world is that the barriers are breaking along multiple lines. For example, Samsung’s teenage mobile phone customers in Taiwan almost mirror their counterparts in Mumbai or Mozambique because most of them (at least affluent of the lot) watch MTV music, drink Pepsi and eat a Big Mac Burger. But it is hard to predict what will flatten faster than others but one thing is clear that human interactions required for trade is becoming flatter and flatter.

August 9, 2006

How my World became Flat in the last 25 years - Part 1

by George Eby Mathew, Head of Infosys Solutions Consulting, Canada

A level playing field for everyone was a distant dream twenty five years ago.  Pictures of needing a license from the Indian government to switch on a 4 band transistor radio that my father brought from overseas in 1977 are still fresh. Unlike most other people on the planet, I needed a regulatory permit to access free information.

This was not true just for free information. Subscribing to a Time magazine or Nature in those days wasn’t easy because the central bank restricted rupee convertibility. It was certainly not a level playing field for those who lived in my part of the world.

Regulatory hurdles weren’t the only bumps on the road. Not many people will remember that in the pre-internet era, many radio stations tried to create their own communities called the DXing clubs (DX stood for distance unknown). DXers were supposed to be listening posts for radio broadcasters and were nurtured to give them feedback on programming, reception, language compatibility and so on. I was a DXer for Radio Deutsche Welle, Radio Netherlands and the Voice of America.  This model failed because there was a time lag between what listeners fed back to the broadcasters (usually by snail mail) and acknowledgement received from them. Often teenage DXers like me were disappointed because it took as much as three weeks to get acknowledged.

Today however, being part of an internet community is quite a different and fulfilling experience given its zero lag interactivity that creates a sense of belonging and camaraderie between people who share common interests but don’t eat the same food or even live in the same time zones.

Accessing information and being able to interact with anyone else on the planet was a big flattener in my world as it is in yours. Each individual would have at least a handful of examples to recount how his or her world flattened when access and interactivity became a leveler to one’s otherwise bumpy and walled worlds. 

 

Introducing George Mathew

Let me introduce George Mathew who will be sharing some thoughts on how the world has flattenend for him.

George describes himself as "a researcher by profession, engineer by training, writer by interest, and analyst by nature."

He is the editor of Infosys' R&D journal "SETLabs Briefings", and until recently was the head of IT Management Research Center for encouraging innovation, harnessing experiential insights, and capturing best practices from the company’s 50,000+ practitioners.  Currently he heads consulting practice for the Infosys Canada business unit. George is also a contributor to IT Toolbox blog 'Guruspeak'.

August 6, 2006

Transparency is the New Challenge

In her most recent report released on August 1, Stephanie Moore of Forrester Research says that clients expect efficiency and transparency when working with their IT service providers.

This is yet another sign of how customer expectations are increasing as they get used to having more visibility into pricing and other information.  It will be interesting to see how far this trend goes in services industries other than IT.

August 4, 2006

The Sky is Falling and the World is Flat

by Richa Govil 

I moved to India almost exactly two years ago, at a time when the US economy was still trying to find a path to growth. On landing in India, I saw growth all around me. New construction everywhere you look. Cellular network coverage even in remotest parts of rural India. 28 year olds putting down-payment on apartments…  

I was amused to find that I had joined a company where business units growing at 25% CAGR were the underperformers! A company which has generated so much respect and intrigue that it attracts to its campus not only friends and family of our employees, or our clients and prospects, but also heads of state from around the world.

If you look at all this from the perspective of someone with a predominantly US experience, you’ll agree that this is mind-boggling. 

I am no Thomas Friedman, and “The World is Mind-boggling” would probably not have sold two million copies. 

Well in any case, I am now at Infosys and I look forward to exploring with you some of the opportunities and challenges of business in a flat world. I would like to leave you with a thought: In your business, does “flat world” feel more like hype or reality?