Blame the mind. It is constantly restless and inventing new to do things. And in its quest to make companies more profitable and generate more wealth, it has inadvertently hurt and disrupted the equilibrium of jobs in the developed world.
The two currents that ran across the globe during the past decade were the information revolution and the spread of market economies and they both happened after the fall of Communism. That coincidence opened up a spectacular opportunity for all of us. We saw minds obsessed with developing faster chips at lower prices and cannibalizing their own products gleefully—perpetually bringing new advances to the fore. Unknowingly, such dynamism triggered the ripples for change of business models.
The faster development in computer chips and satellite technology shrunk the world gradually into mere points of convenience connected by invisible high-speed lines. At the click of a mouse, two distant places across the globe could be linked in a minute. Many saw a business opportunity. The majority of the jobs that required data compilation and data processing skills could be executed in countries like India, far from the actual location of the business—and at a cheaper cost. Who doesn’t want to rake in more profits by exporting jobs, or if one prefers to repeat the most quoted and misquoted word today, outsourcing?
Outsourcing of work thus became an unwritten strategy for most of the US multinationals to improve their profitability and beat the Wall Street predictions. But, sadly the marginal loss of jobs of the local population through outsourcing made more noise than the benefits the same population would reap in the long run.
After all, it makes good economic sense to import a service at a low price than to produce the same back home at a higher one. US President George Bush's chief economic adviser, Gregory Mankiw, asserted this point, quoting the two-centuries-old David Ricardo’s law of comparative advantage that has proved this facet time and again.
With globalization taking its roots deeply, it’s natural that companies all over the world would tap places where goods could be produced or services procured at a cheaper price. As a result, the comparative advantage too would shift in the future from one country to the other.
The fact is that the American services are more expensive in the US than Indian ones in far away India for the same job. But the way technology is trickling down from the developed to the developing world, driven by market economy, Indians could become more expensive in the near future than say the neighboring Bangladeshis. Would Indian companies then not outsource from Bangladesh?
It’s not an outlandish hypothesis. The globalization and technology revolutions are real and irreversible. The spread of the Internet could make the residents of developing countries as competitive as those living in the developed part of the globe. Already, some of the good universities are offering distance learning courses through the Internet for upgrading knowledge and skills. This in turn can enable those in poorer nations to avail of the knowledge from these respected, but costly universities and technical institutions. At least, technology is finally proving the basic premise of human intelligence: intelligence isn’t linked to economic well being and acquiring skills is not alien to basic human nature. A bit of fire in the belly can make one fit for global outsourcing work. In addition, there’s no dearth of management consultancy firms or strategic management gurus to advocate this proposition. So it’s not unrealistic to expect Bangladesh or any other developing Third World country to replace India as the hub of outsourcing work.
Your turn tomorrow
The threat or the opportunity, depending on where you are, is global. It might be your employer’s turn tomorrow to outsource to a better destination and for you—to lose your job. Some one sitting in a far-flung location could get your role. The serial has just begun and is virtually unstoppable. It would be prudent for politicians in developed countries to encourage their people to learn new skills and acquire more knowledge and expertise to move up the value chain, than to cry themselves hoarse about jobs that will be outsourced dirt cheap to developing nations. Reinvention, therefore, is imperative for every one—and not just for corporations. How best governments can help their people in this direction is an issue that policy-makers must ponder over.
New nerve centers
The two-way traffic of importing workers and exporting jobs has led to the emergence of new nerve centers of business and opportunity. Bangalore has become the hub of software development. Interestingly, after the technology meltdown in Silicon Valley, many American companies found it profitable to relocate some of their employees, American citizens, to work for the company from Bangalore. In fact, many non-Indians have joined the flock of Indians working in companies in India that are doing outsourcing work for companies operating in the US and Europe. Therefore in the future, some people in the US and other developed countries might prefer to come to India for jobs, which have been transferred there. They may also prefer to work in India because moving up the value chain in their own country may not be what they want. It may be harsh, but this kind of workforce movement is not unusual within a country. What’s new is that this movement is now across the globe—from one country to the other in search of a job, which matches the skills one possesses.
Brain drain helps
Individual aspirations follow nature’s pattern. In almost every society the workforce moves from low potential areas of opportunity to high potential ones. The migration begins from village to towns to cities. Nurses from India’s southern state Kerala move to the Northern cities and then overseas, driven by a desire to earn more and enjoy higher standards of living. Many in the medical fraternity know that this kind of migration has been happening from India for almost the past 50 years. But with the dwindling of a working population in the West, the requirement for Indian nurses has probably gone up several times. Or perhaps, this got noticed in a more pronounced manner only recently, thanks to the media.
It is true that the flight of trained nurses causes a temporary shortage back home. However, they serve as brand ambassadors for India’s healthcare industry through the quality of service they impart in their new workplaces. In the long-run, many overseas patients will fly down to India to avail of high quality medical care and services at costs much lower than those in their own countries. This wealth creation through overseas patients could well compensate for the brain drain of doctors and nurses to developed countries.
The same logic could be stretched for the brain drain of scientists and engineers too. Whatever they develop, be it in medicine or electronics, the products eventually reach the developing countries, benefiting tens of hundreds of millions. The generation of wealth and transfer of expertise happens in software services as well. Take the usual scenario in Silicon Valley. Many Indian engineers, after reaching 40 years or so, find themselves unemployable there. That compels them to set up a company there and a development centre in India employing Indian engineers. Apart from making profits, this kind of entrepreneurial model brings to India global standards, technology and business practices—and the necessary confidence among the teeming engineering community in India to replicate the model. Therefore importing of workers from developing countries would benefit these countries as well in the long-run.
New order
Today, the challenge is economic. The concern every where is the same: Create wealth and then think of equitable distribution. Perhaps, the Americans will find it less difficult to accept outsourcing if India helps generate more American jobs by supporting trade liberalization under the WTO stipulation and further opening its markets to US goods. Indians in their 20s working in companies that handle outsourced jobs have a significant disposable income and form a major chunk of the working population. They could be the best target consumers for American goods.
Whichever way you look at it, the change is inevitable. The free flow of information liberalizes markets and vibrant markets, in turn, propel greater leaps in technology. Consequently, skills rather than borders will determine our global futures. It’s already visible in many places. The best part is that this realignment makes people cosmopolitan and less inclined to fanatic nationalism. Co-existence and inter-dependence would gain further ground. The conflicts arising from geographical boundaries would take a back seat.
However, there is an area of grave concern arising from the fact that no society, even in a developed country, is a pool of only rich and high performer geniuses. What will happen to the ordinary? As skill-driven markets realign the globe, the gap between the haves and have-nots will widen. But doesn’t such disparity fuel human evolution and prepare the brain for further marvels? After all, every generation attempts to surpass the work of its previous generation and to weed inefficiencies out. Can we stop the mind from thinking? Obviously not. What then should we do? Dinosaurs in their very extinction taught us a valuable lesson. Adapt and evolve, or perish.
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Out of 5 “chilies”, our editorial team gave this article...
Out of 5 “chilies”, our editorial team gave this article...
—About our writer:
Debasis is a seasoned business journalist with varied interests ranging from photography to contemplating on probability. He is the founder and editor & publisher of a comprehensive retail emagazine.
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