Global Themes

On Globalization & Venture Capital

Haunted by Globalization…

One of the things that I enjoy about blogging and my travels is it gives me a wonderful opportunity to pick up data points that otherwise would be lost in the noise of daily routine…the best moment of all is when one discerns a pattern amidst the din of news and the burden of information overload.

One such moment happened recently…starting with this story in the International Herald Tribune on Tuesday (3rd April): “India outsourcing moves to front office”.

Anand Giridharadas wrote in the report how “quietly, but steadily” the received wisdom about the non-offshorability (for want of a better word) of “high-end careers requiring graduate degrees and commanding six-figure salaries” was being challenged by recent developments in India.

Amongst other things, he noted how “The pool of jobs once thought to be impossible to outsource is gradually evaporating” and how “investment banks like Morgan Stanley are hiring Indians to analyze U.S. stocks, a job that can pay $200,000 a year or more on Wall Street.”

And more:

“There is no job that is done in Cisco that a guy in India can’t do,” said Samu Devarajan, a Cisco managing director in Bangalore. “If this theater becomes successful and grows the way we want it to grow, I see no reason why the CEO of Cisco couldn’t sit in India.”

By December, Accenture will have more employees in India than in the United States.

“India is at the epicenter of the flat world,” said Michael Cannon-Brookes, the vice president for business development in India and China at IBM, which has shrunk its American work force by 31,000 since 1992 as its Indian staff mushroomed to 52,000 from zero.

Alan Blinder, a former vice chairman of the U.S. Federal Reserve Board and former economic adviser to President Bill Clinton, recently described outsourcing as a “third Industrial Revolution” that, by his estimate, threatens the jobs of 28 million to 42 million workers in the United States alone.

“We have so far barely seen the tip of the offshoring iceberg, the eventual dimensions of which may be staggering,” he wrote in the March/April edition of Foreign Affairs.

Infosys…devotes $65 of every $1,000 in revenue to training. IBM, its U.S. rival, spends $6.56, according to a 2006 proxy statement.

In Boeing’s forthcoming 787 Dreamliner, two mission-critical systems – one to avert airborne collisions and another allowing landing in zero visibility – will be built largely by HCL Technologies, an outsourcing firm outside Delhi. “In theory, we could place the work anywhere,” said Ian Thomas, the president of Boeing India. “We’re here because we found a level of sophistication.”

Then, a few pages later, in the same edition of IHT, I stumbled upon “France: Whither globalization?” 

In her short news report, Katrin Bennhold, highlighted how amidst the current presidential campaign in France, “strikes and labor protests have mushroomed as union leaders vow to protect France’s welfare state from globalization”

The report quoted Nicolas Baverez, political commentator and author as saying, “The main issue facing France today is how we deal with globalization…Will we embrace globalization or will we keep pretending it doesn’t exist for another five years?”

The report mentioned how “The g-word is the elephant in the room in a campaign where all contenders claim to represent change but none is pressing for it” and how everyone from Sarkozy to Royal to Bayrou “have all pledged to protect Airbus workers from job cuts. They have all vowed to fight “speculative” capitalism and sending jobs out of the country”

Katrin noted how, “Fears of globalization in France go deeper than anywhere else in the European Union. Sixty-four percent of the French consider it “a threat for jobs” and highlighted the “received wisdom” that I talked about in the first few paragraphs:

“For the French, globalization equals outsourcing,” said Claude Bébéar, an influential French businessman and founder of insurer AXA.

Ironically, “A third of Europe’s biggest multinationals are French” and “more than one in seven employees in France work for a foreign-owned company”

Later that day, I came across a post on Shefaly’s new blog on this same subject: “Offshoring backlash: an ‘un-level’ playing field?”.

Shefaly noted the “growing backlash against off-shoring, something that might play well into the hands of politicians in the (US) Presidential race for 2008” and specifically this Wall Street Journal article (that) does not make pretty reading”

She suggested how (at least) “in the context of the role of Information and Communication Technologies in national competitiveness, the US probably needs a different strategy now, rather than the simplistic and reductionist framing of offshoring as the root of all evil.”

Her conclusion: “Closing one’s eyes and ears to the new power balance shaping up might not be wise, especially for the Presidential hopefuls, even if it means that the road to 1600 Pennsylvania Avenue looks certain by playing this card.”*

The next dot was a centre-photo in the Business Section of Times of India (which about two years ago became the world’s largest English-language daily) showing “Airbus employees demonstrating on the highway connecting Biagnac & Toulouse about the recent restructuring plan which will slash 10,00 jobs across Europe over the next four years”. 

Photo caption: “Can long march keep their jobs alive?”

And the final dot: a post (bookmarked by Ben Casanocha – thanks Ben) by Jeff Nolan, ex-VC with SAP, now an entrepreneur (“H-1B Insanity”) who wrote how new proposals to impose additional obligations on companies hiring overseas workers “would absolutely drive companies to go offshore rather than go through the H-1B process to hire foreigners to work in the U.S.”

Is there anything left to say?

April 6th, 2007 Posted by | Globalization, Immigration, India | 2 comments

2 Comments »

  1. Good post. I liked the compilation of links. Will keep track.

    Comment by Krishna | April 7, 2007

  2. Thanks Krishna.

    Comment by Shantanu | April 9, 2007

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