17 October 2009

The impact of Globalization & Offshoring

About Hugo Messer

Hugo Messer is a Dutch entrepreneur, distributed agile team specialist, and author. He is the founder and owner of Bridge Global, a software services provider, and ekipa.co., an agile coaching agency. He has been building and managing teams around the world for the past several years. His passion is to enable people that are spread across cultures, geography and time zones to cooperate. Whether it’s offshoring or nearshoring, he knows what it takes to make global cooperation work.

9 thoughts on “The impact of Globalization & Offshoring
  1. What I think is my personal thinking and not represent any mass or group.Though global outsourcing is best thing in for job provider and service provider but due to increased number of service provider and their intention to get the job at any cost has dropped the attraction by earning through off source business.These days you can find thousands of service provider at very low hourly rate or flat rate.

    Now a service provider is ready to work at almost free cost and due to availability of large number of service provider job provider has also dropped their moral and the work which is of 1000’s bucks they just needed to get it done at low cost with quality.

  2. I made a copy paste from Wikipedia of the Law of the handicap of a head start, because China and India are perfect examples.

    Dialectics of progress or The Law of the handicap of a head start (original Dutch: “Wet van de remmende voorsprong”) describes a phenomenon that is applicable in numerous settings. The term was coined by Jan Romein, a Dutch journalist and historian, in 1937 in his essay “The dialectics of progress” (in Dutch: “De dialectiek van de vooruitgang”), part of the series “The unfinished past” (in Dutch: “Het onvoltooid verleden”). The law posits that progress in a particular domain often creates circumstances in which clear stimuli are lacking to strive for further progress. This results in being overtaken by others. In the terminology of the law, the head start, initially an advantage, subsequently becomes a handicap. When a society dedicates itself to certain standards and those standards change, it is harder to adapt. A society that hasn’t committed itself yet will not have this problem. Thus, a society that at one point has a head start over other societies, may at a later time be stuck with obsolete technology that gets in the way of further progress. The result is that what is considered to be the state of the art in a certain field can be seen as “jumping” from place to place. A common example of this is 19th century England, which was at the forefront of the industrial revolution; the technology and infrastructure installed at the time later became a hindrance to further modernization. Conversely, countries like Japan or the Soviet Union, being industrial latecomers, were able to adopt the latest industrial technologies with little disruption from and to extant infrastructure. More contemporary examples are those pertaining to Internet infrastructure, like the adoption of IPv6.

    More in general, societies, companies and individuals are often confronted with the decision to either invest now and get a fast return or put off the investment until a new technology has emerged and possibly make a bigger profit then.

    A well known problem for individuals is the decision when to buy a (new) computer. Computer speed develops at a steady pace, so if you put off the investment for one year, you may have to do with a slower (or no) computer for the first year, but after that (at the same price) you’ll have a faster one. But usually the technological development is not so predictable.

    “Dialectics of progress” is a translation of the title of the essay Jan Romein first published in 1937 where he described this phenomenon, although his term for it would literally translate as “the law of the braking lead”, or “the law of the handicap of a head start”, which is the Dutch term for it.

  3. Like the first seafarers who opened up new trading routes and discovered new markets the practice of “globalisation” has been evolving ever since the human species discovered traveling. The pace is somewhat faster today, and distances traveled significantly longer. Of more importance to the final outcome will be who is the owner of the requisite raw materials and space to generate power and food. Without these resources every nation no matter how dominant in a commercial sense will have to broker a deal, and lets face it the human species doesn’t have a great record of international co-operation in the last 100 years, so I wouldn’t predict things like any one of the emerging economies becoming the new powerhouse. My interpretation of what has happened in the last 30 years is that the Asia pacific regions have been well placed to benefit from a variety of things no least of which is the explosion in the materialistic “must have it” society of the West combined with a huge disparity in wages. As the wages rise and the differential shrinks this will require a alternative business model if they wish to continue to evolve. Since the financial melt down of 2008 the world demand for a whole host of things has dropped dramatically, resulting in mass redundancies and factory closures across the Far East, which in turn dramatically reduce their ability to buy goods and services. This exposed the fine balance of power around the world, which in truth was based on the falling value of bonds and shares. So how would the world cope with a energy or food shortage, or worse a disease pandemic? Having worked in both India and China in the last three years I would say that either of the afore mentioned would produce huge national disasters that neither country is equipped to deal with. For fear of sounding like a profit of doom, it is essential that we maintain a balanced perspective on “globalisation and outsourcing, as they are nothing more than “modern seafarers” exploring the world on the continual journey of human progress; hopefully not at the expense of the planet as a whole! On a final note, pushing change faster than it can be absorbed will only result in indigestion.

  4. The problem with outsourcing or globalization is that, while business has completely embraced it, government and laws (worker health and safety, environmental, commerce regulation, etc) are still geographically limited and implemented.

  5. Offshoring in conceptual sense might fade, however globalization is here to stay. The marginal cost of labor has always been a driving force for growth, be it in farm, industrial products or services. It only that in 21st century it is services and the underlying infrastructure is Information technology. And this going to be a global phenomena.

    Very true, economic value is the foundation of today’s world geography and politics. And for the case of domination of nations, well that is to be seen. History points out that when there is a scramble for natural resource….who is to get..and who is to miss…and that is the law of the jungle…those that are strong and tough has the chance of surviving.

  6. We can’t fight what we created. As technology developed and communications shrunk the planet; America as a world leader in technology attracted entrepreneurs from other countries to its shores. Even our industry as it bred from proprietary self contained imaging systems to the open architecture, all powerful Content Managers, claimed as one of its most compelling attributes the access of information at anytime from anywhere. We took the information that was protected by its analog confinement (paper) gave it digital life and distributed it to the world. Thinking that such sweet nectar was reserved exclusively for the ECM Consultant gods (which is us guys) denotes lack of understanding of the technology we promote.

    Of course off shoring and globalization would impact our industry. A catalyst in a chemical reaction is not isolated from the final result. We wanted lower costs in capture applications to lower overall cost in ECM projects with large back file conversions. Where did we go?, to India’s low cost service bureaus; soon followed by new companies entering the ECM arena, who went to China, India, Central and South America searching for high quality professional programmers, willing to work for lower wages and the possibility of living the American dream.

    Now the question is, does off shoring and globalization impact our industry positively or negatively? I have always believed that the greatness of our nation comes from our ability to absorb a diversity of cultures. We have seen American ingenuity take us to the Moon; thanks to the 1945 Secret operation ordered by President Truman called Paperclip (no pun intended towards our colleagues at PaperClip Inc.) that brought to America a Wernher von Braun and Arthur Rudolph , German Nazi engineers, creators of the infamous V2 rockets, who later developed the Saturn V rocket that took us there.

    Off shoring back file conversions and professional services allowed companies to implement ECM solutions that would have otherwise been smaller or impossible projects due to financial constraints. Globalization opened new markets and opportunities and by the same token will bring new talents that will contribute to the development of our industry and our free market, pillar of our capitalist economy. Competition will nurture ingenuity a propellant for innovative technologies.

  7. I love what you guys are usually up too. This sort of clever work and coverage! Keep up the terrific works guys I’ve incorporated you guys to blogroll.

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