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From Culture's Consequences to "Project Match" - IBM needs to add home country fixed costs

IBM has come up with a rather controversial "Project Match" offer for laid off employees to work in "growth" markets in India, Nigeria, Eastern Europe etc. IBM is telling its laid off employees to look at opportunities in the IBM subsidiaries where the local market is growing. The catch is that you get paid the local salary which might be just 20% of the current home salary.

If your job is outsourced then the logic seems to be to  move you to the "source".

While IBM's idea seems blasphemous to a high cost country employee- it tells us something about the full circle that globalization has come to. In the 1980's IBM was perplexed as to why various subsidiaries understood and implemented "central commands" so differently. So the now famous Geert Hofstede was commissioned to figure out why this was so. Hofstede came up with culture's consequences and changed the way we look at national culture and its impact on work at subsidiaries of an MNC.

Today, what would a laid off IBM-US employee do with his/her kids college expenses and 401K and mortgage  if they took a job at 20% salary ? IBM and other multinationals need to look at the possibility of covering some of these "fixed" costs if the idea is to work.

But if you have an expat offer (which takes care of these costs) and have not yet been laid off - this is the time to take it up!

Dubai and Caterpillar- learning from an India business and Chinese New Year of the Ox

It was during my recent India trip that I went in to meet several businesses in software,
infrastructure, engineering,food and chemicals.  What struck me was the enormous number of young people employed and the vibrancy of 7% growth that India is reporting. Lower than the 9%  growth that India was experiencing but not bad.It sure felt different - the secret is that most of the demand is internal to the country and conservative central banking practices have largely insulated India from the financial sector problems. You simply don't get a loan if you don't have the margin money and if you and your neighbor cannot prove that you have a job or viable income to pay back. The stodgy ways of Indian systems seem to have paid off for once.

Indians travel around a lot globally these days and a favorite transit is Dubai and I was shocked to learn that all construction is stopped in Dubai. This topic came up in casual conversation at a major coal supplier's office who had recently been in Dubai. Why was this - I asked and apparently this is because of the global slowdown,decline in oil prices and general slowdown in trade which is Dubai's forte.

Caterpillar , very involved with construction and infrastructure,was at the back of my mind and sure enough it is in the news today reporting a 18% workforce cut in the US. Clearly this recession is global and particularly hard for countries where internal demand is generally at low growth levels. India and China might still save the day and let's hope that the Chinese New Year of the Ox brings better luck in 2009.

Mumbai Terror and Upstream Risk

The Mumbai Terror attacks have been constantly in the news for the last few days. Now its time for Mumbai and India to recover. This time political leadership concerned with homeland security have been forced to resign. Next it'll be the turn of bureaucrats who slept through early, very specific, warnings received from the Indian federal intelligence agencies. What if the Maharashtra state ( Mumbai earlier Bombay belongs to this state and police is a state subject) apparatus had reacted to the specific information about both the sea attacks and the hotel names? These questions will be investigated in depth for long ... as everyone comes to grips with an avoidable and immense tragedy.

Although somewhat unsettling for busineeses that buy from and sell to India, I was pleased to see no let up to travel to India (and Mumbai)  yesterday at the Newark Airport.

The events of the past week  brings to sharp focus of fixing problems upstream in supply chains and also for management in general. Generally, for services there is this whole "redundancy" thing that allows for delivery from alternative locations in case of  sudden disruption. Explicit  planning for contingencies ahead of time, right at the contractual stage, is a good idea. Disrupted operations or liquidated damages  don't  really solve business problems.

Change in ancient cultures- "The White Tiger" by Aravind Adiga

 

Aravind Adiga has won the Man Booker Prize for his very first novel. Curious, I had placed a hold on the book at my town library and sure enough the book is in big demand and is on a strict 15 day turn-around.

Adiga has written a gripping tale and covers both India and China with the protoganist Munna  or "The White Tiger" writing from Bangalore as a now powerful taxi operator who provides taxi services to the call centers of big brand companies like Microsoft and so on. Munna is an "entreprenuer" writing to the Chinese Prime Minister (throughout the entire novel)  who is visiting Bangalore and wants to meet local Indian entrepreneurs to understand their story. The book is about Munna's evolution as an "entrepreneur" from abject  poverty based roots as a Rickshaw Puller's son.

The most fascinating thing about the book is the understanding that Adiga brings about the changing  ancient social structure in India. He does so in a sort of cynical manner highlighting rare betrayal by the servant of the master.  I rather prefer the lighter approach  of PG Wodehouse called the "feudal spirit"  where Jeeves is pretty much always loyal to Bertie Wooster. 

To Adiga's credit however, he does bring out continuity and change in the Indian social fabric as the economy booms and "catching up"  with China is on peoples' minds. Adiga's incredulous observation that dependable "servants" literally drive the economy is masterful. He mentions the diamond trade among others  where trustworthy assistants move around with millions in diamonds or cash with literally no "legal" controls and almost no problems. While "The White Tiger" or Munna is a deviant - you do get the feeling of continuity and stability in a  bizarre sort of way. Definitely worth a read.

US Senate approves India agreement for cooperation on peaceful uses of nuclear energy- a day before Gandhi's Birthday

I guess the bailout approval by the Senate eclipsed a very significant bill that was passed by the US Senate-A bill to approve the United States-India Agreement for Cooperation on Peaceful Uses of Nuclear Energy. Check out the official Senate announcement here - passed 50 minutes before the bailout bill. Interesting, I could not find any major US news report online on this very significant development, with all the other excitement surrounding the bailout and elections. I guess - the mainstream US media just has too many things going on.

In any case, the agreement will end India's 34 year  isolation from accessing the latest nuclear power technology and supplies. This is really special because as the Senators explained, although India is only one of the three countries that has not signed the Comprehensive Test Ban Treaty  the world's largest democracy India(with a great peace record)  and the world's oldest democracy - the USA would be able to make this agreement work.

The  co-operation between US nuclear suppliers and the booming electricity sector in India would provide business to US companies - at least 3 of the 8 initial nuclear reactors. This in turn would create  much needed jobs here - an estimated  250 000 US jobs , according to the US Chamber of Commerce.

A cause to celebrate the Mahatma's birthday today.The world seems to buy the idea that Gandhi 's India will remain peaceful and focussed on "green" nuclear energy development and not proliferate nuclear weapons.

Worldsourcing-made in this planet

Kudos to William J. Amelio  of Lenovo for coming up with, and promoting the concept of "worldsourcing". Today Business Week  carries a story and this earlier piece on BBC is also enlightening. Bill Amelio advocates lightening up on the "outsourcing" label and the superior attitude that prevails in the wealthier countries vis-a-vis the booming but earlier poorer countries,particularly of Asia. According to Amelio, thinking of the world as one market and therefore one sourcing point suddenly opens up great possibilities for both picking up innovative ideas and developing new markets with a global well oiled supply chain and distribution channel.

Jack Welch, in one of his books recalls how one of his senior managers in GE was disdainful of  his direct report Indian scientists for no other reason than their location as they operated out of the GE India facility. With "neutron" Jack, the manager off course, did not last long and GE went on to become a leader in what Bill Amelio calls "worldsourcing." Indeed, thinking of the world as one place and one opportunity suddenly changes the scene, not only for big business but for the smallest entrepreneur.Quite simply, some places in the world are booming as markets and excellent low cost suppliers are eager to serve your business from other parts of the world.More flexibility and openness is what is called for....
   

The Conceptual Age - reporting from ISM 93rd Conference St. Louis

Just returned from a wonderful conference - the ISM 93rd at St. Louis. St. Louis is a nice place and the conference center was great as was the metro train transportation which I used to check out a surprisingly great Indian Restaurant, Rasoi.

There were many great sessions throughout the conference and I will probably allude to them in future posts. However, Daniel Pink as the lunchtime speaker on Monday simply resonated with me and many other participants. Pink did not probably say something totally new but did manage to convey his message really well.

In a nutshell, Pink said that three things were changing our world, particularly in the developed West. These were Abundance, Asia and Automation.  His illustration of abundance was rather neat in that the rather new self storage industry is for the extra "stuff" we have gathered and the self storage industry exceeds 22 B $ and is larger than Hollywood. Asia  and the impact of China on manufacturing and India on services is well known as are the burgeoning markets and aspirations in these countries.  But it is automation that is the clincher of  the "conceptual age". If it can be codified and written down it will be either outsourced or automated, preferably automated. Interestingly, it is not Indian accountants that took over all the tax returns but the 29 $ software you can buy at Wal-Mart to file your taxes. Why would you pay 100+ $  to a tax preparer ??

This leads to Daniel Pink's thesis that it is necessary to have a prepared left brain that is analytical, sequential and is geared to doing well in the SAT. However, the left brain alone is not enough because by definition what the left brain can do, can be codified,written down and then outsourced and finally automated. So beyond the left brain is developing the "conceptual" skills of the right brain that 's about synthesis, modeling and innovation in your field of expertise no matter what your "left brained" expertise is. Very interesting and provoking and so thought many of the participants I talked to.

Tata Nano and now Tata Jaguar and Land Rover

Tata had announced the $2500 Nano Car (left with Chairman Ratan Tata)  to much applause. There are no dearth of buyers at this price point in Asia,Eastern Europe, Africa and Latin America . But have you ever heard of a company operating at both ends of the market ? In fact, the Tata's have created the entire possibility of a $2500 car and now they are buying the Jaguar and Land Rover. The Nano is for the "Bottom of the Pyramid" while the Jaguar starting at $50,000 ( or 100 times the Nano) is for the super-rich. Are they capable of operating at both ends of the the market? Yes, I think so having worked with Tatas' as customers for several years. They are  great employers  with a  history  of  caring for employees,customers,suppliers and stakeholders far ahead of their location (India) and  times. Luckily, the Jaguar and Land Rover Union does not have to worry about jobs as this report suggests. Also, if Ford can focus on its core brands and turn things around, the auto industry will see better times.

From a public phone booth in India

My winter break travels in India turned out to be great. Visited Delhi,Mumbai(Bombay),Goa and Kolkata (Calcutta)and got the distinct feel that the economy was on the move. Yes ITES ( Information Technology Enabled Services) are important and this sector feeds the notion of India as the global powerhouse of IT services. But what is more incredible is the booming growth of the local market and consumer demand. Consider the phone booth (right) where Devinder helped me set up my local India cell phone account and helped "refill" my phone balance several times.
    This phone booth is a temporary shack like structure and is actually owned by a blind relative of Devinder who has been awarded the space as part of India's efforts to help its disabled. There seemed to be about 10 people constantly on the counter , either making long distance phone calls or adding money to their cell phone accounts. So I asked - what's your sale per day? "About Rupees 5000 ( about $120 a day),"replied Devinder and I was skeptical because I was pretty certain that the guy had several hundred customers a day. "The customers buy small perhaps Rs. 20 ( 50 cents) of talk time by a cart puller or day laborer" explained Devinder. Incoming calls on India cell phones are free and the poorest are able to get on the mobile phone network by just arranging to receive "blank" calls that they don't pick up and understand when a pal or business associate is trying to reach out. Such communication turns out to be free- next best is the booming use of SMS via cell phones. SMS's are cheap and over 1 Billion ( yes billion) were exchanged when people wished each other Happy 2008 over the new year.
    Transactions at the phone booth are both paperless and computer less. You ask for a re-charge and the phone booth attendant has a cell phone agent's access to the phone company ( there are several companies) and the customer gets a SMS confirming the amount credited. Amazingly the poorest almost illiterate customers seem to be dealing with all this with aplomb and confidence.
    Seeing the continuing boom in India had left me wondering about the "bottom of the pyramid" and what was happening there. Close observation of these BoP folks at the phone booth assured me that the economic growth in India is far more deep rooted and fundamental than I had earlier thought!