Clyde Prestowitz, President, Economic Strategy Institute, keynoted at the Global Services Conference 2008 held at the Marriott Marquis, NYC on March 12 by giving his world view on the economics of globalization and its impact on business. Clyde’s view is that the world is tilted because of the many asymmetries in the way economic activity around the world is organized.

They live a mile apart but Clyde’s view of the world being tilted is quite incongruous to that of Thomas Friedman’s dictum of the world being flat. While both believe in globalization, they differ in the finer explanations of the phenomenon. Tom uses the concept of flatteners to give a scalar view of the globalized world whereas Clyde uses the concept of asymmetries to give a vector view borne out of the direction of international trade movements. Thus the U.S., U.K., and Australia have become the major importers, while many of the Asian countries have taken the role of exporters of goods and services to major consumer countries. Particularly, the U.S. with a trade deficit of $850 billion has been in a major consumption mode and borrowing heavily to keep up with the consumption. The trend has been on for a few years now but cannot continue forever. In summary, Clyde makes a telling statement when he says, “Half the world is organized to save and invest, and the other half to consume and borrow.”

Clyde’s keynote discussion was like an International Economics 101 class. But it took him some thought and time to answer a googly question hurled by one delegate from the audience, “What will happen if the dollar is devalued by 50 percent?” And Clyde’s answer was, “Most of the business arrangements around the world will change; the dollar would be replaced by some other as the world currency; oil trade would operate in a wholly different economics; and the Asian currencies would de-peg from the dollar and such like.” But Clyde seriously doubted the prospect of the dollar losing half its value because many other market and political mechanisms would work toward stabilizing the dollar. For us in the outsourcing and offshoring business, Clyde’s take on the impact of steadily falling value of the dollar would be that manufacturing would continue to get offshored but some part of the offshoring of services would be reversed — which means there could be the prospect of ‘insourcing’ coming back in the U.S.

Atul Vashistha, Chairman of neoIT, the outsourcing advisory firm spoke on some of the key trends in the global services business. “The customer behavior in the services business is changing and the provider has to learn to respond,” said Vashistha. Customers are looking at lesser number of service partners and doing more work in multiple offshore locations. In such a scenario, the buyer ha to learn to stitch together multiple service providers, while service providers need to learn to work with each other. “The quest for new locations should continue, companies should look beyond India,” he said. This is necessary not only because of the rise in costs in India and other locations but also due to the changing demographics. Vashistha exhorted service providers and customers alike to ask a key question — What is my geographic portfolio strategy? — in relation to every aspect of business especially sourcing, supply chain, and workforce. Countries specialize, so business leaders have to be on the lookout for the countries and their key competencies to be able to decide on a suitable geographic portfolio.
Vashistha also stressed on the need to professionalize the global services industry. Outsourcing has to be accorded the status of a specialized profession with its own body of knowledge and certifications. He said that the International Association of Outsourcing Professionals (IAOP) and its certification COP (Certified Outsourcing Professional) are examples of the attempts to professionalize the services industry.

The Global Services Conference 2008 was the third annual conference produced by Global Services and neoIT. With over 200 participants representing senior business leaders from customer organizations, service providers, consultants and academia, the conference had sessions on KPO, managed services, project governance and BPO amongst others. The Global Services 100 awards for the year were given away at the close of the conference.