Over the weekend and after a great Thanksgiving I found myself at Barnes and Noble browsing Bait and Switch by Barbara Ehrenreich last night. Morning searches on the Internet revealed that Barbara has her blog and the book seems to be timely for my course on Global Outsourcing. In the book Barbara makes the point that those in middle America who did the right thing i.e. went to college,worked hard and suffered "boring" majors like Management and Finance suddenly find themselves made redundant (as they become expensive) no sooner than when their salaries start taking off. It is precisely this question that my students in the MBA class are trying to answer in their "personal career plan" a graded assignment for the class. Do I have an answer yet ? – no- but I do hope to have some pointers when I see what my students write based on the extensive reading, brilliant guest speakers and the constant mulling over that they have been doing the entire term. Indeed, the question is : What do mid-career professionals exactly do to compete in the "Flat World?"
Avian Flu and “Fire Blanket”
The Meet the Press discussion on NBC today on the Avian Flu in South East Asia set me thinking about globalization in a different sort of way. Apparently we are 3-5 years from building a vaccine manufacturing capacity. After we do so – the 300 million US population will be able to be vaccinated in six months. A pre-emptive action suggested by the WHO is to have very close feedback from Asian countries so that a "fire blanket" or "quarantine" is placed around the regions to contain and manage the virus at its source. Having been a rural manger in a democratic but traditional country like India for many years I can imagine few in rural Asia admitting that they have the "Avian" flu particularly as the disease seems to progress with identical symptoms as the influenza. No matter how sophisticated the goods or services appear to be from Asia , the level of societal tradition and unnecessary "face saving" are too difficult to imagine sitting in Western Europe or USA. Just as Asians talk less about AIDS than Africans so they are likely to do with Avian Flu.The information will just take too long to put out a quarantine "fire blanket" – let us hope the vaccine and "Tamiflu" treatment side picks up fast in the globalized world.
Good Legal Advice for Providers
I was still in my "legal" mind frame when I noticed a great article by John Gliedman in Computer World. Obviously John knows what he’s talking about and I think the points he makes are really interesting. In fact I have academic papers on some of these points. For example, issue 4 about who owns the Intellectual Property is a question I have tried to rephrase in my research and also in my MBA class. I am saying that IP needs to be managed in the relationship and in a way John says the same- basically do not leave this question unaddressed at the contracting stage. Take issue 5, about hiring employees. An Engineering Industry speaker in my class mentioned that they identify top talent and then hire them, but my sense is that they have a clear understanding with the provider and the provider is on board with this arrangement. What blew me away was the importance the article attaches to "transition" management (Issue 6) – Why are both outsourcers and providers missing this one??
Legal Process Outsourcing-LPO
You can hire a very smart lawyer in India for about 700$ a month compared to the 350$ per hour you need to pay for a similar lawyer in the US. The tasks are myriad that can be done from overseas and these are called "LPO". Tasks could include, patent searches, research into history of judgments on any field whether corporate,marriage or family law. Talking to a really smart lawyer friend over the weekend- I understand that the constraint to complete delivery of legal services is the authority of a lawyer to practice law in a particular state as per the State Bar Association. Just like doctors must pass the State medical exam, lawyers must pass exams in the State to practice law in that State. However, given that LPO is growing rapidly there seems to be an interesting split between the components and tasks in onshore and offshore legal work.
More IT Jobs with Outsourcing ?
Contrary to popular opinion in the US a study commissioned by the Information Technology Association of America and conducted by Global Insight suggests that IT outsourcing has added 257,042 U.S. jobs this year. The executive summary of the Global Insight report makes interesting reading. Particularly one recommendation of teaching multiple skills to current tertiary students seems to make sense. More than multiple skills, I guess it is more important to pick up "learning to learn" skills which we educators have traditionally called "lifelong learning" skills. A more zesty modification would be "learning to learn very short half life skills". Particularly in IT the half life for every skill has gotten shorter and shorter and yet the more agile IT folks are coping. Going by the Global Insight report I now know why my IT friends assure me that there are plenty of jobs at www.dice.com.
My CAPM Workshop
On October 25th I presented the workshop on "Global Outsourcing of knowledge based services" at CAPM. The presentation was further developed from the earlier ISM presentation (see outsourcer section of www.stratoserve.com) for the older slides. I needed to develop my talk further for this very special audience of CAPM who like the entire ISM/NAPM community seem to be really interested in learning and sharing ideas. Moreover, October 25th had very bad weather with Wilma blowing her way through Connecticut and I really felt obliged to provide a new valuable career idea to supply managers who had showed up. Thus, I brought in the idea that indirect spend is non-core and direct spend is core for any company. Unless you were a supply chain professional wanting to be a provider specialized in indirect spend you needed to be in direct spend because direct spend can create value and innovation while indirect spend is all about reducing spend. Indirect spend is 50% of spend so it’s important in its own right.There was spirited discussion and some managers felt that even direct spend management can be outsourced…food for my research thoughts!! Folks liked my workshop and that was gratifying.
Maintenance Outsourcing in Aerospace Industry
Come to think of it most folks take the car to the garage and let the mechanic handle it. In fact, as the auto parts aftermarket folk will tell you – the key influencer in the replacement market brand choice is the garage mechanic. The same seems to apply to the airlines business. Qantas the Australian carrier is planning to outsource its maintenance work to reduce cost and enable better scale of operations. It makes you wonder at the foresight of GE and it’s leaders who were getting into the aircraft engine servicing business in the nineties. Jack Welch has some fascinating stories about how GE was trying to consolidate the aerospace maintenance service business in the 1990’s. This discussion appears in the book "Straight from the Gut" one of my readings these days.
How Babe Ruth felt
The article on "People Issues" reminded me of how Babe Ruth must have felt when he was "sold" to the Yankees by the Boston Red Sox. The "Curse of the Bambino" lasted 86 years and there is a blog entirely devoted to the curse. To avoid being cursed by IT star employees who are "sold" to the provider Martin Fustes of Computer World provides some valuable tips to the Outsourcer firm. Communication,communication,communication is the message I got from this article. This would minimize the angst of the outsourced employee but still would leave us with Gartner’s estimates that half of IT projects will be in-sourced by 2008 due to things not working out. So there is more to successful outsourcing that helps your business and minimizes employee angst…
Now Airbus outsources
If Boeing gets parts of the work done overseas can Airbus be far behind? Well no, The St. Petersburg Times reports from Frankfurt that Airbus CEO Gustav Humbert plans to keep 30% of the "core competence" in-house while 70% of the work will be done by providers in Russia,China and India. In fact, outsourcing work has fueled the growth of Boeing with 10B$ orders from Japan where 7B of developmental work was actually financed by the Japanese Government. The Airbus Super Jumbo A380 is booked out till 2010. What is core and what is not core in this industry is strictly according to the "eyes of the beholder." The beholder in this case is the market. If the market thinks that Boeing or Airbus has a particular strength then these companies are likely to do that job in-house. Interestingly, all jobs in this industry are high tech,high skill and need high engineering smarts whether they are done in Europe,USA,China,Russia or India. Food for thought for Engineering Profs across the globe. What should you be teaching the college kids in Engineering School?
Electricity Trading and Distribution
While Econometricians have studied the distribution of electricity- marketing scholars seem to have been more comfortable in studying the distribution of soap,chips and soda. : "Soap is simply more glamorous than electricity" both my academic and practitioner friends in marketing affirm. Anyhow the importance of distributing electricity comes to sharp focus when electricity becomes uncertain particularly in difficult natural disaster conditions like Katrina. In the developing world Electricity and its distribution is really a big deal and distributing electricity and realizing payment, reducing distribution losses and power theft can be major challenges. Coupled with this if you have a shortage of electricity or a surplus you don’t want to deal with the electricity market to buy and sell power as needed. Electricity trading is just too "knowledge based" to try and do entirely in the Electricity company. Accordingly, North Carolina Municipal Power Agency Number One (NCMPA1) has extended its contract with ACES Power Marketing (APM) for "hourly wholesale power execution transaction services". Brian Beebe of APM is right when he says that each company is better off staying with its core competencies. With power generation and distribution improving on a global multi-country scale; electricity trading will be something to watch with interest.