Brian PrenticeYesterday I had the opportunity to hear an interesting presentation from Andrew Stevens, Managing Partner of IBM’s Global Business Service in Asia Pacific on the future of services in the IT industry.
One point that Stevens made was the the current challenge most IT services organizations face is how to globally integrate delivery. Inherent in that statement is powerful observation on the continuing globalization of our industry. The global re-distribution of IT skills, which started as an Indian phenomena, is spreading to places like China Vietnam, the Philippines, Eastern Europe and Latin America. But the market is not primarily evolving through a set of discrete national suppliers but rather as a set of global talent distributors whose core competency is built around the recruitment, retention and deployment of low relative cost skills into high cost markets. Integration of these disperse skills is critical to making the model work and is being hotly contested both by Indian companies like Wipro and TCS and organizations like IBM.
But Stevens also pointed that the future was ultimately about globally integrated capability. And inherent in that statement is an even more powerful observation on the globalization of the economy. An example he used was the automotive industry which itself is seeing a distribution of core competencies across the world – PLM in Toyko and Cairo, AISC in Stuttgart, MPS in Shangai and light vehicle MSS in Detroit and heavy vehicle MSS in Peoria. Global delivery integration, therefore, is really just a stepping stone that allows IT skills to be aligned to regional competencies while integrating across the globalized supply chains of these types of customers.
There was a certain serendipity in hearing this perspective the day after Paul Krugman one the Nobel prize for Economics. Krugman’s work looked at trade patterns and the location of economic activity. Here’s a snippet on his work:
“Traditional trade theory assumes that countries are different and explains why some countries export agricultural products whereas others export industrial goods. The new theory clarifies why worldwide trade is in fact dominated by countries which not only have similar conditions, but also trade in similar products – for instance, a country such as Sweden that both exports and imports cars. This kind of trade enables specialization and large-scale production, which result in lower prices and a greater diversity of commodities.”
As the world becomes more astute in understanding the dynamics of globalization it is only natural to expect that the IT industry will evolve to better reflect the impact of this trend on its own consumers. Globalization begets globalizaiton.
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