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The World is Flat - Download Now PowerPoint

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									The World is Flat
Thomas L. Friedman

3 eras of Globalization
• 1492 - 1800 Columbus and the new world 1.0 • 1800 – 2000 world shrank from medium to small 2.0 • 2000 - ? Small to tiny…. 3.0

 Flat world, convergence of PC, fiber optics,

and work flow software  Occurred around 2000  3.0 differs from earlier eras

1.0, 2.0 driven by European, US individuals and business 3.0 non-western, non-white, diverse group MphasiS Indian accountants able to do outsourced accounting work from any US state and govt. CPA firms send work 2003 - 25,000 US tax returns 2004 – 100,000 2005 – 400,000 done in India! Virtual Tax Room software developed

What will stay in US? “the accountant who wants to stay in business will be the one who focuses on creative, complex strategies, like tax avoidance or tax sheltering, managing customer relationships” 70,000 accounting grads starting at $100/month In 10 years Indians will be doing a lot of what is now done in the US

Advances in compression technology, CAT scans transmitted to India using Internet Some medium hospitals in US radiologists outsource reading CAT scans to doctors in India and Australia Reuters has 2300 journalists, 197 bureaus provides breaking news (earnings etc) hired 6 reporters in Bangalore, for flash headlines, tables They have technical and financial skills

A company releases its earnings to Reuters, Dow Jones, Bloomberg; race to be first Wages and rents in Bangalore less than 1/5th Western capitals 2004 Reuters 300 employees; goal: 1500 Analyst in Bangalore earns $15,000 $80,000 in NY, London

1960‟s in New London (CT), parents worked at Electric Boat, Navy Yard, Coast Guard Skills went out of use; region changed; mill towns saw mills close Change is hard; but change is natural Current hot debate about off-shoring similar to debate at Electric Boat 50 years ago Work goes where it can be done effectively and efficiently

24/7 Call Center in Bangalore
– 2500 work phones selling credit cards,etc – Tracing lost luggage – Computer help desks – Calls transferred by satellite, fiber optic – Dell, Microsoft as customers

Children starting salaries higher than parents retiring income Employees keep US time 245,000 Indians answering phones

24/7: 4000 employees in S. India
– $200/month for 6 months – $300-400 after that + transportation, meals, life insurance, medical coverage for family – Total cost closer to $600 – 700/month

Employees are trained to sound American, learn local shows and weather etc… 24/7 runs MS Windows, on PCs with Intel chips, phones from Lucent, A/C by Carrier, and bottled water from Coca-Cola. 90% 24/7 shares owned by US investors US lost some jobs, exports TO India from 2.5 to 5 billion in 2003

225 Texas Instruments US patents to Indian operation Bangalore is developing high speed broadband wireless technology Because of time difference, while US sleeps, they work, ready in the morning

Japan outsourcing low-end jobs to Chinese (who speak Japanese) Japan once colonized China China is focused on leading the world, and will take all the work the Japanese outsource Dalian is the locus of outsourcing Japanese hire 3 Chinese software engineers for one Japanese 2800 Japanese Cos in China

Dalian has 22 Universities, 200,000 students > 50% engineering or science grads They spend a year studying Japanese or English Japan moved R&D, software development here, US Cos also exploring Dalian Their English not as good as India, but they pick from a larger pool

Neeleman, Jetblue CEO started „homesourcing‟ 400 reservations agents working from home 2004, Friedman in Baghdad – Soldier monitoring images from a laptop – US Drone over Iraqi village feeding images to laptop – Drone flown by expert in Las Vegas – Images viewed by: marines, US Command (Tampa), Central Command HQ (Qatar), Pentagon, and CIA – Technology flattened the hierarchy; battlefield leveled

Forrester Research projecting over 3 million service and professional jobs would move out of the US by 2015 Interstate Highway 55 in Cape Girardeau, MO
– drive through lane of a McDonald‟s taking orders, is not even in the restaurant or even in this state – The order taker is in a call center Colorado Springs, 900 miles away

McD‟s Mo: software cuts order time by > 30 seconds, to one minute 5 seconds, less than half of the average two minutes and 36 sec for all McD This Drive-through now handles 260 cars per hour

More Changes
Namitha in Cochin, India, starts her day before 4:30 a.m.
– 7000 miles away near Chicago, 14 year-old John sits at his computer ready for his hourlong geometry lesson - E-tutoring – Namitha works for Growing Stars – 1000s of Indian teachers coach US. students in math, science or English for about $20/hour instead of $400 in the U S

Friedman considers changes as fundamental as Gutenberg‟s Printing Press

How the World became Flat
1. Flattener 1. 11/9/89 Berlin Wall 2. 8/9/95 – connectivity; web, Netscape 3. Work flow software 4. Uploading 5. Outsourcing 6. Off-shoring 7. Supply chaining 8. Insourcing 9. In-forming 10. The steroids

The triple convergence

Flattener 1: The Wall comes down
Communism makes people equally poor, Capitalism makes people unequally rich Berlin wall collapse ripple effect reaches India 1991 India out of hard currency, PM opened economy Trade controls abolished, 3 % growth 1994 7 % growth World appears more seamless

Flattener 1
Amartya Sen (Nobel Economist): “Berlin wall not only kept people inside East Germany, it prevented a global view of the future… we could not think of the world as a whole.” “Women‟s freedom, which promotes literacy, tends to reduce fertility, child mortality, increase employment opportunities for women, …”

Flattener 1
Wall collapse allowed adoption of common standards Common standards create flatter, more level playing field Paved way for European Union, Euro Cause of collapse not clear
– Information revolution began in 1980s – Totalitarian systems had monopoly on information and force – Ordinary people could access computing – Rise in Windows, Apples, fall of Wall, set flattening in motion

Flattener 1
PCs made content in digital form One person with a typewriter vs with a PC Gave individuals power to create/disseminate information Windows translated into 38 languages; PC in their own language Emails through ISPs No way to stop digital representation of everything – and a global exchange

Flattener 1
“Breakthrough constrained by architectural limits… missing infrastructure” Mundie, MS Exec Internet not yet emerged Bin Laden, Reagan saw Soviets as “evil empire” Bin Laden saw US as evil too; his alternative to market capitalism – political Islam Many in Muslim lands thought they brought the Wall down through religious zeal

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