Future is in globally distributed work, not offshoring

"Imagine there are no countries," sang John Lennon, the Beatles singer in 1971. Businesses of the 21st century are gradually becoming so.

From business process outsourcing to knowledge process outsourcing to intellectual property outsourcing, businesses are moving where the resources are cheap and markets exist, dissolving boundaries. This is leading industry to take up a new expression, "Globally Distributed Work" (GDW).

Explaining the relevance and emergence of GDW processes at an international conference on "Management of Globally Distributed Works", Kuldeep Kumar, chief co-ordinator and professor, Florida International University, said, "It is first important to understand what is the boundary of a firm."

For Germany, Budapest is nearshoring and India is offshoring and for the US, Mexico is nearshoring and Brazil is offshoring. This means offshoring is a relative term depending on the geography of the players. "So instead of using 'offshoring', we can use GDW," says Kumar.

Any work is globally distributed when it is sub-divided either into discrete or overlapping work components and is distributed across work locations or organisational units spanning global distances. "This global distribution has introduced the concept of gaps, distances and poly-contextuality," adds Kumar.

The evolution down this road is a long journey from companies from setting up resource centres in other countries to partnering businesses across the globe. The scene is gradually transforming from offshore development to innovation centre and business partnering.

Though lower costs and access to new markets were the initial drivers for work distribution, companies are increasingly realising that access to global talent pools, innovative and knowledge-rich work cultures and multicultural settings provide vast new opportunities for growth and competitive advantage.

However, globally distributed work arrangements involving space, time, organisational, infrastructure and cultural distances have posed significant problems in adapting management practices developed primarily in the context of co-located work.

With the curve of innovation chasing the curve of services upward and with educated human capital moving over wires, Kumar said we are seeing "the emergence of information and knowledge economies".

Contradicting Thomas Friedman, he said, "the world is spiky" with economic activity in some areas and innovation in others. Knowledge labour is increasing in India and other Asian countries and falling in Europe.

Stressing the importance of this, Bob Hoekstra, CEO, Philips Innovation Centre said, "The US might remain the farm for the world but Europe will become the museum of the world with China becoming the factory and India becoming the knowledge factory of the world." Labour shortage will determine the map of the knowledge economy.

Taking a cue from Richard Florida's book "The Flight of the Creative Class", Kumar asked, "Is India ready for the creative economy." Well, if TCS is working on the design formulation for Ferrari's Formula One, this means India is ready.

With the GartneroMeta Group report saying Indian companies have the best attitude towards their customers with a desire to help and a willingness to bend backward and good knowledge institutions like IITs and IIMs playing catalysts, India seems ready.

Substantiating this Kumar said, "About 40 per cent of the Silicon Valley is either Indian or Chinese, most of the Intel chip designs are by Indian engineers. The latest technological innovation iPod has software Hyderabad-based Impulse Softwares. This means India has the ability to become the innovation centre and gradually scale up to become the business partner."

Collaborative partnership and not back office data collection is the trend.

A Goldman Sachs study says that the biggest economies will be those with a large pool of relatively poor people with abundant labour. Hoekstra said that countries are way behind companies in being global and citizens of companies are more global than citizens of countries. Here, India has a major role to play.

The conditions required for such an environment is simply the full endorsement of capitalism and opening up the world, so that India could become a "melting pot".