Dragon Claws and Tiger Paws: The Hackers of Globalization

What’s all the fuss about globalization being either good or bad, manageable or inevitable? Globalization is but a fuzzy measure of how globally connected, integrated, and dependent you are on others in terms of economic, technological, political, cultural, social, and not the least ecological interchange. Last time you ever poked fun at that goofy Icelander for believing in his wights, elves, and huldufólk (“hidden people”), for he’ll come right back at ya, by closing his country’s banks – turning a whole bunch of UK depositors into such huldufólk – and shutting down your airspace for weeks on end (and all you can do is sue Thor for spewing volcanic ash and other forms of Icelandic ectoplasm, including Björk, over your Fatherland). (Though on that note, the brave pilots of Deutsche Lufthansa must be congratulated for being the first to face the pulverized magma, proudly living their corporate motto that the “Hansa is flying even when the birds are walking.”)

No, globalization would be a simple and straightforward matter if we just called it global trade (and indeed, if it was just that: worldwide import/export), and if it wasn’t for such complicating factors as the vast inequalities accentuated but perhaps not caused by putting us all on an economic Mercator projection, an equal free-trade footing. In the good old days, it used to be fair and equitable: you’d send a nutter like Marco Polo off on his Silk Road to scam the Kublai Khan with some cheap Venetian costume jewelry, and the fool would come home with spaghetti – home being Italy, mind you! Let’s call this one “Bucket A”: arguments for or against the notion that the world’s haves and have-nots will benefit very differently from the effects of globalization. If the upper left-hand corner of your paycheck says “The World Bank Group,” you’ll likely be a naysayer, arguing that global inequality has risen as a function of increased globalization for a number of factual reasons that are measured in something called the “Gini coefficient,” and the explication thereof would stretch the scope of this blog as much an A-Rod-professed monogamy. Know that your blogger – like most civilized people – categorically condemns the exploitation of impoverished workers and joins with militant fervor in the persecution of all exploiters of child labor (if you can, check out our friend David Arkless’s and his company Manpower’s support of http://www.notforsalecampaign.org/ – a rather worthwhile cause!).

Some of the other, softer, and more academic arguments brought forth by the anti-Davos crowd (rash boarders, by and large, who eschew après-ski and raclette with Angelina Jolie) have to do mainly with agriculture subsidies in rich countries (thereby lowering the market price for poor farmers’ crops), the non-existence or at best weakened state of labor unions in destitute regions, and – oh behold, the Bugaboo! – the rapid growth of offshore outsourcing. In “Bucket B” we shall lump all arguments either in favor of or opposed to the notion that globalization will revert all “things” back to their normal mean. And all these things are purportedly economic, technological, political, cultural, social, and perhaps even ecological in nature (you can appreciate how complicated a well-rounded treatment of globalization can get – and most of them alas are as cohesive as Destiny’s Child). Think of it as the global equilibrium point, where say a big media company in the States is outsourcing all of its IT development to India, where the Indian IT developers – because of these two interlocking economic trends called global wage arbitrage and purchase price parity – are making a respectable middle-class living, allowing them in turn to tune into, as it so happens, their client’s satellite TV channel to watch the admittedly timeless episodes of Rachel and Friends, thus sending about $1.50 in revenues back to Burbank, California for each $1.00 spent on outsourcing. The labor savings and the incremental foreign revenues are strengthening the firm in the U.S. such that it can afford to hire more domestic workers. A spiraling win-win scenario, or so it would appear, were it not for the pesky competition all now filing into Bangalore, tilting the local supply-and-demand ratio towards ever inflating wages. Over time, as you would expect, the Bengaḷūrus will be able to command the same level of pay as the good folks back home in Burbank. That’s what “mean reversion” means in this case: everyone’s making the same rupees and watching the same TV shows (where the largest common denominator will, thank heavens, also be the lowest one – watch out Slumdog, here come Jessica Simpson’s hair extensions).

Aforementioned Buckets A and B deal with resource re-distribution and societal re-shaping, respectively. It is perhaps intuitive that according to the KOF (ETH Zürich) Index of Globalization, Belgium, Austria, and Sweden rank first among the world’s most globalized nations (and that despite ABBA!), while Iran, Burundi, and North Korea are plotting away in impressive isolation. Cynics will contend that although the driving forces behind globalization are well understood, corporations (mostly again in rich countries) are in the driver’s seat, and thus it is hardly surprising that globalization will follow a corporate, and almost by definition, opaque agenda. Others point to the “avengers” of globalization, those that are part of a nation’s diaspora, the reverse exodus of Western-trained workers back to their country of origin (such as the legions of highly educated and very successful Indians in Silicon Valley, for example, returning home to start new businesses in India). And of course, there are those who watch Roy Rogers movies on TCM and eat lots of apple pie and claim that the United States will never fall behind, because we – and nobody else! – have the monopoly on innovation. (I’ve got something innovative for you, and it’s not the Xbox 360: here in the States we’ve got more massage therapists entering the workforce every year than computer scientists; and we’re now graduating more social workers from our colleges than engineers – of course, there’s absolutely nothing wrong with massage therapy or social work, quite the contrary, but you shouldn’t then wonder why someone moved your cheese all the way from Chennai, or why there are as many Indians on the list of the top-ten richest people in the world as there are Americans.)

I’ll close with a contention that may well be controversial: our conception of globalization is about as relevant today as Paul Bremer’s last lecture in the Sunni auditorium at Baghdad University on why “Democracy is not a spectator sport.” Globalization has been a decidedly Western concept ever since the Greco-Roman world established trade links with the Parthians and the Han. It’s pretty evident that the Chinese and the Indians – the only two countries with more than a billion people each which together make up nearly 40% of the world’s population – find our notions of global connectivity, integration, and interdependence about as quaint as a Quaker’s chuckle. Bucket A, Bucket B, pro or con, it really doesn’t matter. You might as well try to explain to an Indian “classical” musician the difference between Mozart and Miles Davis or insist to a Chinese that opera is all about stout white men crooning Verdi. Give it another 30 years, and China will produce 40% of the world GDP, with the U.S. (15%) and the EU (5%) lagging emphatically behind. With Chinese economic hegemony and supremacy in hardware, and India’s leadership in software and an unrelenting focus on scientific and technical education, and a potential coming together of two powerful allies at the purposeful exclusion of the United States, the economic, political, and social constructs of the West have lost their relevance as far as the Dragon and the Tiger are concerned (notwithstanding the tragic reality that both countries will still have to lift hundreds of millions out of abject poverty.)

Please feel free to contact me (christophe.kolb@talenttrust.com) should you or your company be thinking about establishing an offshore presence in either India or China. Our company Talent Trust (http://www.talenttrust.com/) has a ten-year history and successful track record of doing business in both countries and helping our clients successfully navigate some of the challenges of globalization.

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Don’t Cry for Me, Argentina

“Don’t cry for me, Argentina
The truth is I never left you
All through my wild days
My mad existence
I kept my promise, don’t keep your distance”
– Eva Perón in Evita by Andrew Lloyd Webber and lyrics by Tim Rice

In everyday life there are many successful husband-and-wife teams; I’ve personally encountered such domestic-cum-corporate duos thriving for example as restaurateurs, travel agents, certified public accountants, florists, vinotecarians, pre-Netflix vidéothèquers, European-car mechanics albeit with limited repair capabilities, temporary employment agencies, bagel store owners, expensive dry cleaners, and my favorite pedicurists whose marriage though, I sense, is a bit on a rough footing. Despite federal and state-issued labor regulations that must be prominently displayed in all work areas, including the bedroom, specifically warning of such workplace hazards as “spousal arousal,” the kinship of business and pleasure has obvious advantage (viz. merit and merriment) as well as disadvantage (for richer or poorer but never for lunch, as my wife, for one, would freely assert). (The analytically-minded will note that there are four possible outcomes when matrimonial and monetary matters conspire or collide, as the case may be: business success or failure paired with marital bliss or whatever the opposite, I dare not ponder – just compare / contrast the pairings of Cleopatra and Marcus Antonius, Annie Oakley and Frank Butler, Bonnie Parker and Clyde Barrow, and Siegfried and Roy.)

Think about starting a technology firm with your spousal business partner? Doable indeed, as such notable Silicon Valley offspring as Cisco, Super Micro, VMware, Flickr, Bebo, and Six Apart prove. However, think about running a country together? Well, then you will have to keep up with the Kirchners. Meet Cristina and Néstor of Number One Quinta Presidencial de Olivos in Buenos Aires, Argentina. Néstor Kirchner, protean a politician, with his devil-may-care populism of near-Chávezian proportion, his on-again-off-again dislike for markets, and his fondness for decrees (having issued more than the Council of Trent), would have hated vacating the Presidential Villa at the end of his term (as anybody would), and was surely consoled by the seamless, subsequent installment of his wife, Cristina Fernández de Kirchner as President of Argentina. Cristina Kirchner, for her part, debacled into office with a creative multi-billion dollar debt retirement scheme that met the stark resistance of that marplot of her Central Bank President who opposed it and who was since decreed-over multiple times, Kirchner-style. With plummeting popularity ratings at home and the national press infuriated (and who cares about  international opinion?), she’s done well to focus on all-out capitalistic reforms (despite nationalizing the country’s private pension funds), taking it perhaps too far with a few dubious development deals of her own that would put even Donald Trump to shame (alongside a fashion decorum to make the Real Housewives of Orange County blush). Luckily for the Kirchners (and the country, of course), a vast amount of oil – estimated at some 60 billion barrels – has been discovered in Argentina’s inshore waters and is certain to now unleash another economic boom. With Argentina’s farm-commodity exports at an all-time high and inflation generally in check, the country under the Kirchners resembles a lush economical oasis in the financial isthmus of Latin America.

Our darling husband-and-wife team, credited with bringing Argentina back into the centerfold of world economic power through political stability, industrial growth, and rising prosperity is following in the footsteps, of course, of another ruling couple, Juan and Isabel Perón, whose style of government in the fifties known as Peronism, that farcical ideological wavering between socialism and capitalism, has for so long managed to hold back a country with just extraordinary potential (given immense natural resources, a highly developed economy and powerful middle class, strong historical ties to European culture, etc.). That Argentina is not yet a G10 or at least an economy the size of Italy’s ($558 billion GDP vs. $1.756 trillion) has famously perplexed V. S. Naipaul who calls it “one of the great mysteries of the twentieth century.” The hangover of Peronism perhaps? Yep, the Argies sure like their colorful husband-and-wife leaders, able as a country, however, to withstand and endure even a bad choice of leadership. Don’t cry for me, Argentina? (Here’s the answer to that one: towards the end of her mad existence, Eva Perón stipulated in her will that Liza Minnelli would be expressly barred from playing Evita, for the good people of Argentina had already suffered too much; she kept her promise; and the children of the Pampas never did shed a tear.)

Argentina is one of my favorite countries in the world. In his day job, your blogger has been working with Argentinean business partners for over ten years. With a demographically young and dynamic population of 40 million, a world-class educational system that’s produced more Nobel Prize winners in the sciences than all other South American countries put together, and a higher adult literacy rate than Greece, Argentina’s workforce can be reckoned with on an international scale. The country’s cultural roots are European and very much like the United States it is a nation formed by settlers and immigrants, affording both Europeans and Americans a great deal of cultural similarity and indeed familiarity. The vast majority of the contemporary workforce employed in science, engineering, and technology speaks English which is taught in school mandatorily as the primary foreign language. The people I’ve had the pleasure of working with over the years have not only excelled in their respective fields of specialization but have distinguished themselves as problem solvers, creative thinkers, and innovative contributors; I’ve witnessed entrepreneurship, hard work, and professional pride to degrees desirable for the even the best companies or institutions here in the States.

If you’re thinking about working with a remote IT team, one of Argentina’s most compelling advantages besides boasting a wealth of excellent technical talent at competitive offshore rates is the time zone overlap with both the U.S. and Europe. Just look at your world clock: 8:00 AM in Chicago, is 10:00 AM in Buenos Aires, is 1:00 PM in London, meaning that both Chicago and London will have their respective eight-hour day overlap with Buenos Aires in terms of regular business hours. In other words, Argentina is ideally situated to serve both the U.S. and Europe as “nearshore” destinations for real-time collaboration (think about just being able to Skype your remote colleague in say Buenos Aires in the middle of your day to catch up on a project’s status, as opposed to getting up at the crack of dawn or burning the midnight oil, getting caught up with resources sitting in say Bangalore, India).

It must also be said that you won’t like Argentina if: you are a member of the bovine family (yes, you will get eaten, as this is by a wide but gastroenterologically not-so-healthy margin the world’s biggest beef-eating nation); you are a Malbec grape (you’ll get squashed with Argentina now ranking as the fifth-leading producer of wine in the world); or you get dizzy dancing (Argentina, you’ve got the best dancers in the world – just bite me, Brazil!). Load up your iPod with Astor Piazzolla tangos to relive the magic of the Pampas or the romance of a sultry Buenos Aires evening from afar, and let me summarize why Argentina is possibly your best bet for a remote IT destination:

  • A politically stable nation with a fast-growing diversified economy, vast natural resources, strong at exporting and at the cusp of an energy-sector boom;
  • A large population, with a young demographic and a prevalent middle class;
  • A superb educational system that, with the government’s support, is fostering education and job training in science, engineering, and technology (where the U.S. educational system, in contrast, is desperately lacking);
  • Technical universities across the country produce a wealth of highly-skilled IT professionals;
  • A high penetration of advanced English as a foreign language, both spoken and written, especially among IT professionals;
  • An established and fast-growing IT services industry based on entrepreneurial spirit and technical excellence;
  • IT services exports are strongly encouraged by the government with various incentive programs to further propagate the benefits of a ‘knowledge economy’ (investing in people, non-polluting revenues, currency influx);
  • Cultural similarity with both Europe and North America greatly eases cross-cultural work collaboration;
  • High work ethic, pride in ownership, and innovative ‘out-of-the-box’ thinking are common characteristics;
  • Almost full-working-day time zone overlap with both the U.S. and Europe means you can work with people in Argentina in ‘real time’;
  • And perhaps, most significantly of all if you’re looking for “value for money”: given all the above benefits, Argentina outsourcing is still very much price-competitive compared to most other offshore locations, with savings that can range from 30-50% compared to the cost of domestic staff.

The World Is Not Flat, And Good Help Is Still Hard To Find (Apologies, Tom Friedman)

There is many a pearl of wisdom to be found in Berkshire Hathaway Inc.’s celebrated Shareholder Letter, where in its most recent installment, Warren E. Buffett, the great value investor, Sage of Omaha, and all-around good (and very rich) guy issues the following warning: “Don’t ask the barber if you need a haircut.” Something about wandering into Lloyd Blankfein’s office and wondering if you should be doing more M&A deals. Tougher Wall Street regulations? For the birds! Having Goldman Sachs traders worry about global risk management – like having Saddam Hussein watch over your nuclear weapons stockpile or the brothers at Delta Tau Chi curate your wine cellar. The point: don’t ask me whether you need a remote IT workforce …

Instead, ask any economist what would happen if a given commodity – such as oil or lithium, hey you, I’m-sitting-on-a-thousand-laptop-batteries Tesla-driver – became scarce, and you might just receive a textbook, two-part answer: firstly, make more efficient use of what you have (indeed the hybrid car comes to mind); and secondly, explore alternate sources towards the same end (think windmills and solar panels). And if consumption cannot be limited regardless, the price of that commodity will, of course, continue to rise.

Whether you’re filling up at the gas station, amping your Prius, or filling positions for IT professionals as your company’s hiring manager, you’ll encounter much of the same problem: IT talent – as a local market commodity – has become preciously scarce and hence expensive and difficult to procure. And just like discussions around our Nation’s dependency on (mostly foreign) oil and other precious goods, it is impossible today not to consider the local-global context behind the demand for and supply of IT talent. Given the post-recession blues that surround us, it may come as a counter-intuitive shocker that government estimates put the shortfall in talent still this year at 10 million individuals – which it measures as the number of domestic workers required in order to just keep up with the nation’s productivity levels. (On that very point, however, on how we did manage through a jobless recovery, increasing productivity with fewer workers, I’ve just witnessed a most Dilbert-esque exchange in our Silicon Valley office, with folks now associating being no longer stuck in traffic for hours on their morning commute along the nightmarish Highway 101 as “great for me but unhealthy for the economy.”)

Driven by such irreversible demographic macro-trends as declining birth rates and the coming vacuum left by the soon-to-retire Baby Boomer generation paired with steadily dropping enrollment rates for science graduates, the impending “Talent Shortage” will become one of our great economic challenges for decades to come (making assorted trading-floor shenanigans of recent memory look paltry). Already – and especially in the field of IT – it is taking hiring managers longer to find fewer qualified candidates at higher salary levels (even in a job market where anybody fit to as much as just fog a mirror is applying for Java developer roles). (And it is perhaps a troubling matter of fact that the U.S. produces more board-certified sports therapists than computer scientists; and in Germany, another fast-aging country, there are now more landscape architects than electrical engineers.)

The Talent Shortage – I predict – will bring out the textbook economist in all the rest of us: either we make our existing people more efficient, and/or we find alternate (non-domestic, speak global) sources of talent. (The former, an exercise in what is known as “talent management,” is about creating just the right match between work and worker as well as striking an optimal balance between full- / part-time workers and internal / external positions.) The latter, often referred to as “remote staff augmentation,” works on the principle that there is an asymmetric distribution between work and workers in high- and low-cost countries, respectively (for example: the U.S. or Germany vs. Brazil, Bulgaria, or India); and that it is more practical (in most cases and for all parties concerned) to move the work, and not the worker (see my previous blog).

There are some fundamental changes in the world of work that are re-shaping the nature of both the workplace and the workforce; changes brought about by technology and globalization that are calling into question the traditional proximity between the work and the worker. Most IT professionals today have experience with distributed development teams – either as part of a geographically dispersed organization across multiple office locations or during the course of working with an offshore services provider. The notion that IT (and other forms of knowledge-) work can be done remotely, in a virtual fashion, now seems hardly revolutionary.

Just a quick statistical account of ‘Remote Working / Teleworking’ here in the States and in Europe will help make the point:

  • “It is estimated that 100 million U.S. workers will telecommute by 2010.” (Kiplinger)
  • “In a survey of 178 U.S. businesses with between 20 and 99 employees, the Yankee Group found that 79% had mobile workers, with an average of 11 mobile workers per company and 54% had telecommuters, with an average of eight telecommuters per company.” (Yankee Group)
  • “15% of the EU workforce can be described as ‘mobile workers’ (spending more than 10 working hours per week away from home and their main place of work) and 4% as mobile teleworkers.” (Statistical Indicators Benchmarking the Information Society)

Through remote staff augmentation, employers can remotely deploy individuals (and teams of individuals) across geographic distances and time zones, managing them and collaborating with them (almost) just as effectively as if they were all in one physical location. This is typically accomplished through enabling processes and technologies – giving rise to something akin to a “Virtual Workplace,” a collaborative and often web-based environment for performing distributed work. By electronically moving the work, rather than physically placing the worker, employers can effectively augment their local staff with global talent that is situated off-site for tasks that can be performed remotely. And given the sheer population size and ample talent pools in many low-cost countries (my current “there-is-IT-services-export-beyond-India” favorites include: Philippines, Argentina, Ukraine, Egypt, Vietnam – but let us revisit again China next year), seemingly poised to do just the opposite from our high-cost countries in terms of high fertility rates and the wholesale graduation of IT workers, the long-term fundamentals behind global talent sourcing appear to be solid.

To be an effective strategy to address the Talent Shortage remote staff augmentation must be implemented (and its effectiveness continuously measured) along the following three success factors:

  • Access – give yourself the flexibility you need to meet all your skills requirements, as the likelihood of finding just one offshore partner that has the breadth, depth, and ready availability of all skills required is low (consider multi-vendor arrangements for reasons of both readiness and redundancy);
  • Quality – remember the adage “quality is not a function of size;” find suitably sized offshore partners that will commit quality resources, regardless of business volume (there are thousands of high-quality firms in India alone that may be successfully engaged on smaller or mid-sized projects – i.e., for business volumes generally too low for the top-tier Indian vendors);
  • Cost – follow a diversified country approach and be careful not to over-invest in one particular offshore location which may overheat due to popularity.

If indeed the world is flat (as it has been famously and convincingly argued), or at least, if the world is becoming bigger and smaller at the same time, the dual realities of a global workforce and a virtual workplace are forcing us to simply think differently about workers and their work. Remote staff augmentation is a key part of that new thinking, as the Talent Shortage combined with rising cost pressures and the fact that many of today’s IT jobs can be performed remotely, call for a more global and virtual view of talent acquisition and delivery.