Zero-Tolerance Globalization

 International sourcing has come to mean a lot more than cost savings.
 
 By Atul Vashistha
 
Successful globalizers understand that services globalization has come a long way from offshore outsourcing and continues to evolve. That means opportunity. The reality, as Applied Materials GVP and CIO Ron Kifer sees it, is that a company can embrace, leverage, and join globalization—or it becomes its victim.
 
“It’s greatly important that global organizations understand that we’re moving to a globalized economy and understand that they have to have the flexibility to be able to do the work wherever the work is more cost-effectively done and wherever the work is high-touch to the customer. That’s why we’re pushing globalization as a key strategic initiative in our organization because we want to be on the leading edge of that,” Kifer explains.
So the first secret of successful globalizers: Embrace globalization. Welcome services globalization into your organizations with open arms; allow yourself to be constantly learning, constantly open to the new opportunities and challenges that the evolution of services globalization presents. That means looking at the big picture, considering every corner of the world as a potential sourcing destination, and gauging the unique offerings of each location.
 
Embracing globalization is also a vital stepping-stone in the development of a services globalization strategy.
 
Model for Embracing Globalization
Embracing globalization includes four basic components:
1) Embrace globalization across the business.
2) Ask whether your processes could be performed better elsewhere.
3) Mandate globalization of those processes.
4) Keep an eye on the future.
 
When the offshore outsourcing trend first caught hold of U.S. businesses, most firms saw it as an opportunity to reduce costs. But as the movement has evolved—as offshore outsourcing has become services globalization—companies have looked past cost considerations. In fact, flexibility is even more important than cost now. “If cost was your primary consideration, I think that you’re going to fall short of meeting the real objectives,” Kifer says.
 
“The real objective of a sound globalization strategy is to have a flexible workforce and global model and to realize that the markets, customers, and competitive environment are going to change, which will require a company to maintain competitiveness to be able to do work in a different model in a different place over time,” he adds. And that’s why successful globalizers embrace it across business.
 
Bill Gates, co-founder of Microsoft, once said, “If we are not realistic about what we’re good at, then there is a chance of going backwards in the face of further competition.” In asking why each process cannot be done elsewhere, be realistic about which processes are a) core competencies, and b) performed most efficiently in-house.
 
There’s no room for egoism in this process: To survive, a business must be willing to strip itself  down to true core competencies. Every business function should be on the table for globalization until it’s taken off, and only because it can be performed most efficiently in-house domestically.
 
Mandating globalization of identified processes is crucial to stripping an organization bare. Effective change management must secure top-level buy-in and tolerate no resistance. Companies must be constantly vigilant, ready to scrap the old way of doing business to take advantage of new opportunities. This sort of flexibility used to mark company leaders. Today it is a business imperative.
 
GE, Aviva, Texas Instruments, Google, and Proctor & Gamble, have all found large pools of productive labor  offshore. But they have found something more in offshore employees as well: top engineering talent, attention to detail and quality, sophisticated mid-level and senior-level management, and even a level of brand identity and loyalty that rivals that of their domestic employees.
 
Vision is also vital. Steve Bandrowczak, former Lenovo CIO, says that trying to succeed in globalization without visionary leaders is like trying to bake a cake with stale ingredients. “I don’t care how you mix it,” he explains, “you’re going to come out with a bad cake.”
 
Visionary globalizers saw the big picture as it emerged: how the playing field expanded from the U.S. and Europe to India, the Philippines, China, Ireland, Poland, Brazil, Russia, South Africa, and more. These visionary leaders understood early that global sourcing would become a key competitive advantage. They saw that it not only could reduce costs, but also allow faster growth, cut time to market, and improve efficiency and raise quality levels.
 
Embracing globalization is the first secret of successful globalizers, not because it is necessarily the most important, but because it lays the foundation for the six secrets that follow. (See future columns.) Embracing globalization is about seeing the big picture. It’s about looking beyond a single destination or a particular set of processes. It’s about an attitude change—about bringing the principles of services globalization into the business and embracing them in every decision that’s made.
 
 
Atul Vashistha is founder and chairman of Neo Advisory (formerly neoIT), a management consultancy focused on offshore and global sourcing. He can be reached atul@neogroup.com.