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Opinion: Global services' level playing-field

Eleven trends you must understand...
Written by Mark Kobayashi-Hillary, Contributor

Eleven trends you must understand...

The global services landscape is maturing fast, as a new book by regular silicon.com contributors Mark Kobayashi-Hillary and Dr Richard Sykes makes clear. Here, Kobayashi-Hillary highlights several key trends.

The world became used to globalisation in manufacturing a long time ago. Container ships and airfreight planes shift products all across the world everyday, from factory to customer in a complex dance of logistics that spans the world.

Take Apple. When you open the box on that beautiful new Apple computer the first words emblazoned on the wrapping paper are 'Designed by Apple in California', yet hidden away on the bottom of the box is the innocuous statement 'Assembled in China'. Apple can't hope to compete with other technology equipment manufacturers with a production line in the developed West.

Yet the Apple product is highly differentiated. It is a niche product. Most people still buy a PC that operates using Microsoft Windows - most corporate environments still function on the PC platform. Perhaps the Apple could be assembled locally? So why is Dell now opening a new production line in India? After all, Dell has a reputation for writing the book on production-line efficiency.

The answer is that a product would need to be manufactured on an extremely small scale for it to not be worth considering an offshore manufacturing plant. Countries such as India and China have abundant skilled labour and experience. The quality is as good as anywhere in the world and the price is lower than highly developed regions. It doesn't make commercial sense to manufacture products at any scale without considering the offshore option.

Now, as we are used to this global manufacturing scenario, our attention turns to services. Our new book has taken Thomas Friedman's notion of the 'flat world' and moved a step further, identifying how the information technology industry now underpins an enormous potential for services to be delivered remotely. We focused on several key themes, summarised as:

Millennium: This changed the game for global services enabled by information technology. This immovable deadline and the immense task of checking every single computer system throughout the world to ensure they could cope with the 'millennium bug' created an enormous opportunity for the offshore service providers - particularly in India.

Business services: Look beyond the typical IT industry to those who might be classified as working within IT services and you are looking at one in seven UK jobs with half of the UK job growth over the past two decades. Plus the sector is in trade surplus - as a nation we sell a lot more of these services than we buy in through outsourcing deals.

Web 2.0: The really important feature of web 2.0 is that service offerings are increasingly two-way in the fullest sense, with users contributing actively, rather than just consuming a service. Availability of services on the web enables full customer interaction with them and is now possible with an internet framework that can function as a robust platform for any business.

Knowledge process outsourcing: KPO is a continuation of business process outsourcing (BPO), though with rather more business complexity. The defining difference is that KPO is usually focused on knowledge-intensive business processes that require significant domain expertise.

Changing corporate structures: How should a company structure itself if every service can be outsourced? This is a question almost every organisation now needs to ask. Companies are considering new models that move beyond the historic command and control from head office to more flexible and collegiate forms.

Service pricing: Service companies are making genuine efforts to present themselves as partners, not low-cost offshore labour. One of the key ways in which this claim can be presented as genuine is in the flexibility of the company to price a service in a way that helps both parties - such as a project being delivered free but the service company sharing in the benefit of that project.

The real matrix: The consumerisation of the internet as an outlet for global services and products that have become accepted as equal in quality to offline services is a seminal moment in modern society. Think about the kids who are at university today. This generation of graduates are entering work without any knowledge of what life was like before everyone had a phone and all of human knowledge was easily available on the internet.

The virtualisation of technology: In our view technology itself is becoming less 'hard', visible, and inflexible and more virtual - allowing extreme flexibility that only encourages wider use and therefore more potential for delivery through the internet - software as a service. Virtualisation enables a new design paradigm of loosely coupled processes - allowing the flexibilities required to deliver both agility and asset productivity.

Specialisation: Technology companies will eventually need to focus on technology services and non-tech service providers will come to the fore with their expertise. It's not rocket science but it's almost heresy within the outsourcing community to declare that IT companies shouldn't be offering every service under the sun. Do you buy your lunch from the company that delivers your electricity?

The changing career: Clearly the change to the career is central to the global services debate. We are not only considering a change to the life and career of those within the IT industry but those with any industry skills. The career is now a rather different concept. Possibly it no longer exists, because whatever skills one had at 21 are highly unlikely to be of much value at 61.

The global delivery model: While global players have already adopted a co-ordinated approach to global resource and delivery it is interesting to note that the major Indian service companies, such as Infosys, TCS and Wipro, are all keen to present themselves as global operators - less Indian and more international.

Richard and I have spent a long time working on this book and we feel that it gives the first in-depth overview of how IT supports the 'flat world'. This is about a lot more than just offshoring or a race to the cheapest location. There are many more factors to acknowledge and if you get hold of a copy then I hope you find it useful.

Mark Kobayashi-Hillary is co-author (with Dr Richard Sykes) of the new British Computer Society book Global Services: Moving to a Level Playing Field.

You can buy the book by following this link.

www.markhillary.com

www.dr.richard-sykes.com
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