GLOBALIZATION AND OFFSHORE OUTSOURCING OF SOFTWARE SERVICES

"Globalization" has undoubtedly changed the face of the world. Enabled by a massive surge in user-friendly communication and technological innovations, the process of "Globalization" has enabled many a things, which were, just a few years ago, considered impossible. It has indeed changed the means, the method and medium in which individuals, corporations and governments, the world over, communicate, contact and interact with each other.

One of the outcomes of Globalization has been the "outsourcing" of services, which has, in the recent past, become very politicized. Economic necessity and reciprocity of interest fuelled by intense competition and cost-effective alternatives enabled by a drastic reduction in the costs of transport and communication has helped many a corporations in focussing on the "bottom lines" and maximizing profits. This "bottom-line orientation", led to the outsourcing of many a services to "low-wage countries" such as India and China, thereby putting the issue of job losses to "low-wage countries" at the top of the political agenda.

A recent international study organized by the computing professional society ACM on Globalization and Offshore outsourcing of Soft ware Services, tries to elaborate on the enablers and economics of offshore outsourcing, the reasons why companies send work to other countries, globalization of research - associated security and intellectual property risks, educational and policy responses to address the issue of job losses to "low-wage countries". Alerted by the issue of "Job losses", the ACM job migration task force consisting of thirty members from UK, India, Germany, Sweden, Israel, Japan, China and India attempted to analyze and review literature on the Outsourcing of software services to "low-wage countries" and the consequent job losses within a time frame of eighteen months.

The executive consultant of the study, Prof. Willaim Aspray, Rudy Professor of Informatics at the Indiana University School of Informatics said that the study aims to look at the issues from an international perspective and has come out with conclusions more "as analysis and not as recommendations". It must be noted that no new research has been done and that most of the conclusions have been drawn from collating secondary sources, expert testimony and literature review. Moshe Vardi and Frank Mavada are the co-chairs, John White, CEO of ACM is the Ex-officio chair.

While the United States of America, United Kingdom, Germany, Japan, and Australia are countries, which outsource work, the principal destinations to which the work is outsourced remain India and China. Many Indian companies like WIPRO, INFOSYS, TCS, Satyam (to name a few) have been able to establish themselves as global players in the realm of Software services because of the immense outsourcing of software services to India.

The study reports that, in the recent past, several companies in India have been outsourcing work to china as the wage rates are going up in India. A new trend that has been indicated has been the "near sourcing" of work by Indian companies by setting up satellite centres in countries like Poland, Czech Republic etc. to capture western markets.

KEY DRIVERS OF OFF-SHORE OUTSOURCING

The study lists out the key drivers of off shore outsourcing. The drastic reduction of costs in the telecommunications sector has been one of the key driver's of Globalization and the offshore outsourcing of software services. The fact that the cost of international telephony has dropped by more than eighty percent and that world-class communication facilities can be available at reasonably good prices has boosted the process of offshore outsourcing of services.

Intense competition brought about by globalization, coupled with "bottom-line" orientation of companies has led many a corporations to focus on core operations. This has led to the "downsizing" or "restructuring" of corporations thereby outsourcing of back end services to "low wage countries."

The move away from customized software to standardized IT platforms, the pace of innovation, the directional influence of thought leaders like Jack welsh in the business community, the emphasis of the venture capitalist community to push offshore outsourcing of software services to India and China to reduce the burn rate in the capital investments, increased willingness to divide work process, dramatic increase in the number of graduates in India with a large pool of English speaking skilled workers, the role played by well educated immigrant students from India and China who remain as "go-betweens," and their entrepreneurial endeavour, English as the primary language of work process, the opening up of the markets in India and china, ageing population in the west are some of the factors that the study claims, have driven the process of off shore outsourcing of software services. In addition, outsourcing of software services has not only occurred due to the cost and capacity, language skills or due to cultural proximity, but also due to a high-end niche of specific countries for example outsourcing of software services to Israel for security software.

Outsourcing has become politically sensitive due to the vulnerability predictions that are being made. It is estimated that in the United States, about twelve to fourteen million jobs are vulnerable with a maximum loss of around 2-3% per year over a period of ten years. However, the study predicts that there would be 40% increase in jobs per year over a period of ten years. The situation in Europe is not a gloomy one. It is estimated that Europe, overall is not losing jobs. In fact, in every country in Europe, with the exception of Denmark, business service job creation has been larger than IT service job loss. The number of jobs lost in Europe is going to be fairly low compared to the United States.

While the economics of globalization dictate off shore outsourcing of software services, safety net for workers and communities like wage insurance, retraining etc. prove to be very expensive and not politically and economically palatable.

Although many seem to argue for offshore outsourcing of software services, it does indeed come with a package of negatives. In some cases where job processes cannot be done at a distance or job process cannot be routinized, outsourcing can prove to be an unworkable strategy. Many a times, lack of appropriate infrastructure in the vendor country can impact negatively on the client firms.

There are inherent risks in "off shoring" of research due to globalization. The heightened risks due to data privacy, intellectual property and other trade secrets can have legal systems consequences, which may make the client companies and governments vulnerable.

The study has also come with policy alternatives for both the "High wage countries" and "low wage countries." Professor Aspray has acknowledged the fact that protectionist rules and tariffs have almost entirely failed inn the "high wage" countries, and has emphasized the need to encourage innovation, from foreign students, workers etc. by enhancing the educational system by funding research and development and promoting indigenous careers while providing safety nets for workers and communities. For the "Low wage" countries, he underlined the need for regulation for FDI trade, creating infrastructure, protecting Intellectual property, privacy and security

Globalization and the dynamics of such a technology-enabled change can be extremely unpredictable, fluctuating between the real, virtual and the ambiguous. The tacit yet perceptible nature of such a change and the incredible pace at which such change is occurring can pose epistemological limitations in understanding such politically sensitive phenomenon. Therefore, understanding trends in the dynamics of such interaction and the consequences of changes in the socio-cultural and political realms, both at the microcosmic individual and the macrocosmic societal levels, can prove to be very challenging.

DIGITAL REVOLUTION

“The Hindu”, India’s national news paper has written about the importance of blogging. (http://www.thehindu.com/mp/2006/03/18/stories/2006031803670400.htm.)

This article underlines the adaptive co-existence of new technologies with the old. Can the Internet – websites, blogging etc, completely phase out older, more traditional forms of media like Newspapers, Television and Radio ? I doubt it. On the emergence of every new technology, doomsayers and cynics habitually predict that the new will end the old. But such simplistic versions amuse me. As technology enables newer, cost effective platforms of communication, it is also creating a complex dynamic media environment in which the state of equilibrium is very short lived.

In the constant process of media evolution, the traditional and the new forms of media adapt and morphing themselves according to the demands of the time. They contradict and complement each other. A constant symphony of digital revolution destabilizes the ephemeral equilibrium. Digital revolution is changing the character of the globe. Wonder what the future will hold?

Girl Power - India ?

“Sarojini Naidu, the first woman President of the Indian National congress, was elected in 1925, fifty years earlier than the election of the first woman leader of major British political party (Margaret Thatcher in 1975). The second woman ahead of the Indian National Congress, Nellie Sengupta, was elected in 1933”

Whoever said women were a marginalized lot in India?

Organic Media?

Media and Communication technologies like Televison, Radio, Internet and Telecommunications are converging together and are fast becoming the utilitarian tool of the masses. They are making people more connected and bringing them closer. “The recent expansion of global access to voice-telephony has almost been violent. During the 1990’s, wireline phone access shot upward; while, increasing from a tiny base as recently as 1990, one billion mobile phones were in use by 2002” (McChesney and Schiller; 17) “The Internet is increasingly becoming a part of our media and telecommunication systems,The relatively recent phenomenon of blogging or Web Logging, (the process of maintaining a personal journal on the web, which can be accessed by any one any where in the world with an access to the internet or the world wide web), has been growing at a phenomenal pace too. A blog tracking real time search engine, which monitors what is going on in the world of web logs, called Technocrati, claims to be monitoring over 34.3 million sites and 2.3 billion links, with about 70,000 new blogs being created a day – that’s about one a second, 700,000 posts daily or about 29,100 blog updates an hour”. ‘Blog’ – What was till recently a typing error has now become an organic phenomenon, multiplying and proliferating across the globe at an unprecedented pace. But still does Global mean Universal?

DID YOU KNOW?

“The first ever printed book (or more exactly, the first ever printed book that is actually dated) was the Chinese translation of an Indian Sanskrit treatise (Vajracchedikaprajnaparamita), the so called ‘Diamond sutra’. This was translated into Chinese by Kumarajiva (a half-Indian, half Tirkish Buddhist)in 402 CE and this manuscript was printed in 868. The introductory note that went with the volume explicitly explained that it was made for ‘Universal Free Distribution”. Interesting fact noted by Amartya Sen in his incredibly interesting book The Argumentative Indian.

DECENTRALIZED COMMUNICATION AND THE DEVIL'S ADVOCATE

Victoria Carty, in her article, “Technology and Counter hegemonic movements,” argued that the “Internet plays a major role in enhancing and redefining political struggle by providing for a “cohesive organized resistance to corporate culture.” Although it would be hard to deny that “Globalization” and “Digitization” have unveiled a dynamic and striking phase, I wondered if these metaphorical “alternative”, “decentralized” modes of communication, lacking a clear incentive and structure, were indeed powerful, effective and sustainable in fighting the colossal structures of capitalism.

Implicit in the argument is the assumption that dissemination of information by itself would effect change. But given the fact that there is an information overload, information exchange through interconnected networks, runs the risk of becoming meaningless and disempowering. Especially in metaphorical democracies, where global structures of corporate capitalism ferment with traditional structures of feudalism, such mediation can pave the way for twisted interpretation and vested implementation, strengthening the linkages between corruption and power. Hence it is important to distinguish between dissemination of information and the ability to effectively resist things to effect change.

I am by no means suggesting that dissemination of information has not been helpful in enlightening people and shaping public opinion. It is and has been. But how many of us would agree that it has effected change or has achieved its desired goals? Let us consider the War in Iraq as an example. Information was disseminated through “alternative” modes of communication, millions of people marched against the war in Iraq. But the war was prosecuted; the occupation is in full stride. Intervention and activism through decentralized structures run the risk of being ephemeral.

In such an instance, multiple centers of decentralized modes of communication may create parallel layers of localized hierarchy by promoting “activists,” “public thinkers”, and other such self styled messiahs of social good, helping them to accumulate tacit power through the display of self-righteousness. After all, fame is a brand - created, nurtured and cultivated. It would be pertinent to mention that pristinely ideological didactic dogmas professing “perfection” can be lethal prescriptions and “non-conformism” can become a conformist trap without necessarily being useful in dismantling or resisting global structures of vested interests.

As a prisoner of mediated cognition, juxtaposing the apparently right and the apparently wrong, I struggle to find my place in this continuum of conflicting interests.

Shrenik.

ELUSIVE OBJECTIVITY

Volumes have been written about the much sought after notion of “Objectivity,” yet I find it elusive. I wonder if all that I grew up with and learnt, the tacit and the codified knowledge, can let me live up to that expected norm of being “objective.” How do I draw the line between the objective and the intuitive? Simplifying this complex notion is a formidable task that I would not attempt.

As a media practitioner, I am expected to be an “objective” observer and disseminator of information. But, I am often perplexed because I find it hard to function according to the textbook definitions of “objectivity”. Real life experience confronts me with different challenges, each with its own unique character. At times, I “get carried away” and at times, I am “in control.” But I wonder if I can “objectively observe an issue” and if I can ever “distance myself completely.”

I make many value judgements everyday - this is “shallow”, that is “deep”, this is “right”, that is “wrong,” yet I fancy myself to be a “non-judgemental,” person. I contradict myself. I wonder if the value judgements that I make are “misconstructed”, but I find it hard to define “misconstruction”.

Drawing on Henry David Thoreau, I feel, "the only obligation which I have a right to assume, is to do at anytime what I think right". Afterall, "to be right is to be more honourable than to be law-abiding". Having said that, I would be a hypocrite if I call myself “objective. But, I will not silence myself to conform to constructed notions of “objectivity. I will say what I think is right. I will SPEAK.

Shrenik

THE OTHERNESS OF THE OTHER

Germaine Greere in her book, The Female Eunuch, wrote ... “Even if he is crushed against his brother in the tube, the average Englishman pretends desperately that he is alone.” This statement Sounds true especially when I commute in the London Underground. At a first, I would have thought it was just the British reticence at work. But, as I think a little more about it, there seems to be more to this. I think it is not only the unidentifiable “Englishmman” travelling on the London Underground, but also with everyone else on the tube including myself. It’s a strange characteristic that every one who commutes on the London Underground shares.

Instinctively, I would think it has got to do with the strangities of living in a cosmopolitan city. To a certain extent, it is a reflection of how little we trust "others". The "Enforced Cosmopolitanism" of living in a city is often full of insecurities that arise out of our own perceptions of the others. This may be partly because of uncertainties of arising out of our own ignorance of the otherness of the other and Partly, because we fail to intuitively acknowledge such otherness as co-existent and harmonic with our own.

The “Others” bring with them, a sense of curiosity and a sense of intimidation, drawing a line between the “our” and the “other”. A drastic affirmation of "ourness" by the other can only increase a sense of intimidation to the preceptors of such an affirmation. In retrospect, the created perceptions of such divergent otherness of the other, has manifested itself in nasty ways. It has created unseen and unknown ideas of identity and unwanted structures of power, laid the foundations of war and led to the destruction of vast masses of humanity, yet "it is stupefying that society does not revolt as a unit against the very sound of the word "war."

Shrenik

CLASH OF CIVILIZATIONS?

The violent events that are unfolding all over the world are being dubbed as a prelude to the “clash of civilizations”. But I wonder if “civilizations,” which are based on the very foundations of civility can clash. As the former President of India Shri K.R.Narayanan articulated, “it is not civilisations that clash but barbarism. Civilizations give rise to dialogue, cross fertilisation of ideas and the confluence of different streams of mankind.”

Having said that, it is important to take cognizance of the fact that “dissonance between creed and deed is the root of innumerable wrongs in our civilization… which gives institutions and men split personalities.” This requires correction and that can be achieved only through peaceful means and pasive resistance, by establishing a harmonic relationship between doctrine and deed.

Misconstructing and integrating barbaric acts of violence to certain cultures or civilizations only lays the foundation for pitting the “our” against the “other.” A discourse on such a constructed dichotomy and clash between the perceived otherness further deepens the chasm. This can have catastrophic consequences. Therefore, such an approach is misconstructed and it is important for us to take cognizance of this, as “it is imperative that, for a better tomorrow, interaction among nations be based on coexistence not conflict, co-operation not confrontation, concord not coercion”.

Shrenik

COMING TO AFRICA

I made a rough list of things that I needed to take. The list was just a random brainstorm of things that I might need. Placing the pencil in my ear, I looked at the list, which went something like this – Clothes, (five T-Shirts, five Trousers, five shirts, three suits, Ties, shorts, undies, pyjamas) two pairs of Shoes, flip flops, tooth paste, tooth brush, sun block, shades, basic medicines, face wash, body wash, shampoo, moisturizer, mosquito repellent. I felt I was missing something. After a bit of thought, I realized that I had not included something – Money and oh yes, I also forgot to add towels. Towels could be taken care of in a bit, so I had no worries on that front, I realized I should make an exact estimate of the money that I might need for me and my team.

In an effort to look up the currency details, I looked up the internet. My eyes popped out at what I had seen. It said One American dollar was equal to Zimbabwean $ 26,000. At first, I thought I had gotten it wrong and so I looked again. And YES, it was right. One American dollar was equal to twenty six thousand zim dollars! I was surprised but not so surprised. I knew that Zimbabwe had a soaring inflation rate due to which the value of the Zim dollar had gone down drastically.

So, the real question now was how much and how do I take the money? I realized that there was clearly a need for more research on that front. So, I looked up the comments posted by tourists who visited Zimbabwe before. Some suggested very strongly not to use credit cards for safety reasons saying that I would get “ripped off” and suggested that I use currency so that I could exchange it in the “parallel market” to get a better deal. It said that although the official rate for one American dollar was Zim $ 26,000, an American dollar can fetch something close to ninety thousand zim dollars in the “parallel market.”

Looking at the exchange rate, I wondered how much a loaf of bread would cost, about how much a pair of shoes would cost, about how much a bottle of orange juice or an ice cream would cost. I had loads and loads of other questions in my mind, that were much more than just the trivial orange juice or a pair of shoes. Questions that really mattered, questions that would help me communicate, Questions that I wanted to find answers for from my own first hand experience of the situation that was in “Africa’s paradise” - Zimbabwe.

Slowly, I realized that the initial excitement was sinking into my blood. I made a list of things to do with clear, practical goals. I was glad that I was making good practical progress at my first adventure to Africa despite my very strained personal circumstances. While drinking my glass of milk in the night, I closed my diary wondering about what it would bee like in Zimbabwe. I went to bed that night reminding myself of what my professor at the London School of Economics had once told me – “Do not limit yourself with what you know but rather what you do not know!”

Shrenik.

A LETTER FROM ZIMBABWE

I still cant figure out if it was pure co-incidence or a strange twist of destiny - I received a fax. Something very unusual and extraordinary - a letter granting me permission to film in Zimbabwe when I was watching Eddie Murphy’s Coming to America. I loved that film ever since I was a little boy and it has always made me curious about Africa. Its hard to explain how excited I was to see the letter just when I was watching a film, which has inspired me to go to Africa.

I couldn’t believe that I was going to Zimbabwe. I had a rush of adrenalin run through my blood stream. It took me a few minutes to control my excitement. I was very excited about the fact that I got the permission to film in one of the most controversial countries, which for years has not allowed access to the international media. I had read a great deal about its politicians – both good and bad. And I was looking forward to my first visit to Africa, despite protests from my worried mother.

I was excited about the prospect of visiting Victoria falls, about going on a lion safari, about Bungee jumping from the worlds highest falls. But, even more exciting was the prospect of questioning people who were at the helm of affairs in Zimbabwe and to communicate to the rest of the world about what it was really like there.

I put together a team of people – a production executive and a cameraman – chalked out a plan of action, got my tickets booked, looked at the other nitty-gritty of travel and was roaring to go. I was to leave on the 7th of October 2005, from Hyderabad, a South Indian city famous for new wealth from information technology enterprise and fat, vulgar, Telugu film stars. The Itenary given to me along with my tickets said – Hyderabad – Mumbai – Nairobi - Harare. It seemed like a long journey. But I was looking forward, really looking forward to exploring the unknown.

I was reminded at what a Professor of mine at the LSE has said - "Do not limit yourself with what you know but rather what you do not know"!

Shrenik