I was interviewed on November 25 on the future of US-India relations. The interviewer was Michael Krasny and the program is Forum, broadcast by National Public Radio's San Francisco affiliate, KQED. Here is the link to the archived (fairly short, about 5 minutes) interview: http://www.kqed.org/radio/programs/forum/
Although it is on the front page as I write this, it will no doubt move somewhere else by tomorrow.
Welcome your comments
Wednesday, November 25, 2009
Monday, August 3, 2009
How to Manage an Offshore Relationship During a Recession
A Discussion with Rafiq Dossani, Senior Research Scholar at the Asia-Pacific Research Center, Stanford University: A Wipro Council for Industry Research Initiative
http://www.outsourcing-journal.com/jul2009-w-academic.html
Last month's Academic Thought Spot discussed how to manage an offshore relationship to reap the best possible rewards. There are four other managerial concerns during a recession, which significantly impact both the buyer and the service provider, according to Rafiq Dossani, senior research scholar at Stanford University's Asia-Pacific Research Center.
A Discussion with Rafiq Dossani, Senior Research Scholar at the Asia-Pacific Research Center, Stanford University: A Wipro Council for Industry Research Initiative
http://www.outsourcing-journal.com/jul2009-w-academic.html
Last month's Academic Thought Spot discussed how to manage an offshore relationship to reap the best possible rewards. There are four other managerial concerns during a recession, which significantly impact both the buyer and the service provider, according to Rafiq Dossani, senior research scholar at Stanford University's Asia-Pacific Research Center.
| These managerial concerns include:
|
Dossani says the original reason to outsource included cost savings. But other considerations may have been equally important or even paramount. For example, some buyers may have needed help achieving scale that they couldn't do on their own. Or they needed assistance improving processes, making them as seamless as possible. Maybe they needed business analytics to get clearer insight into the actual inner workings of their business.
Now all that has changed given the world economy.
Managing the changing relationship
Once a recession arrives, cost-cutting efforts change how managers think and operate. For example, layoffs may have cut the number of people at either the supplier or the governance team at home. Now, how does the manager get the job done as well with fewer people?
Dossani notes that all managers must build working relationships with their employees, whether they sit in a pen outside their offices or are eight time zones away. In good times, managers have the luxury of building these relationships slowly. They get to know their counterparts and learn how they make decisions.
In recessions, "there's pressure to do this more quickly," says Dossani.
In recessions "managers are less certain about the process." He says it becomes more difficult for managers to determine how to divide up the work and choose what to send overseas.
"Managers have to be more careful to ensure they don't lose control," says the Stanford researcher. One way to shoulder this added burden is to "be informative about the work." In good times buyers just share with their outsourcers what they need to know. "Now you have to tell them more to build trust. Building trust with a supplier," he adds, "is a manager's strategic duty."
Offshore suppliers can help their recession-weary buyers by assigning managers "of very high quality," says Dossani. If the offshore manager is clearly superior to the in-house employee the manager is used to working with, "it becomes easier for the manager to trust his overseas counterpart." Dossani says this means offshore suppliers have to invest in top talent more than they did during good times.
Having top offshore employees has another benefit to the supplier, according to the Stanford researcher. "Their buyers appreciate the quality because they now don't have the funds to pay for that kind of talent," he says.
In good times managers may only send work offshore as employees leave the retained organization. Offshoring through attrition rarely causes a ripple. "In a recession that luxury disappears," says Dossani. Now offshoring becomes "demotivating for the employees that remain because they constantly worry about losing their jobs."
Innovation
Dossani points out innovation is a "complex process that requires considerable face-to-face interaction and an understanding of local markets." During recessions buyers typically ask suppliers to take on more of the pieces that make up innovation.
The Stanford researcher says this change is beneficial for the supplier. "Now the buyer is inviting them to do work they would not have considered appropriate before," he observes. However, these assignments are challenging because the offshore supplier has no real knowledge of the marketplace and has had no face-to-face interaction with company employees.
He suggests suppliers must be honest with their buyers and acknowledge doing innovative work is difficult for them to do for those two reasons. One of the ways to improve the success rate is to either send an offshore manager to the buyer to learn the market first hand or send an American to the offshore location to educate the supplier's employees. Plan on staying for months, he says.
Offshore suppliers have one additional challenge on the innovation side. "Innovation is not really required for typical offshore work, but innovation is really moving up the value chain," says Dossani. Once again, the supplier has to attract employees who are qualified to do this kind of work. His suggestion: replicate the buyer's innovation team.
Governance
Dossani says governance "is becoming an important issue" during this recession. He says relationships between buyers and sellers are usually metrics driven in good times, especially when the work involves routine back-office processes. "Buyers define the project and everybody gets to work," he explains. The buyer typically doesn't complete an in-depth due diligence of the supplier's capabilities because it assumes those skills are table stakes.
But in recessionary times "a crisis can arise" because the buyers are forced to send mission-critical work to the supplier, too. Now the question is: can the supplier really do the work? The buyer better find out beforehand. Now more detailed due diligence is a must, notes Dossani.
Finally, the researcher says large buyers have preferred to use as many as four different suppliers, mainly to defer the risk. But in a recession governance becomes more important. Today most buyers don't have the time to devote to governing a multitude of suppliers. "Companies are cutting the number of offshore suppliers they use in a recession," he reports.
Engagement duration
Before this recession, managers typically sent work offshore for a two- to three-year period. "They figured they would reevaluate thereafter," says Dossani. But capital costs become critical in a recession. "The U.S. manager is worried about investing in a new plant and equipment but needs new IT infrastructure or tools. He offshores that so the offshore supplier will share the cost. In the current environment he hopes the supplier will shoulder more of that burden," he explains.
In return, however, the supplier will now demand a longer timeframe because it now needs more time to recoup its investment.
Lessons from the Outsourcing Journal:
- During a recession, buyers don't have the luxury of time to build relationships with their offshore counterparts.
- Offshore suppliers will have to up their game and hire top managers to build trust quickly. This will also enable them to move up the value chain and do innovative work.
- Buyers may reduce the number of offshore suppliers they use when it is too difficult to govern them appropriately. This is especially true during a recession.
- If offshore suppliers share in capital costs, they will likely require more than a three-year engagement.
- Buyers must do more due-diligence work before they send more mission-critical work to their offshore suppliers.
Wipro set up the Council for Industry Research, comprised of domain and technology experts from the organization, to address the needs of customers. It specifically looks at innovative strategies that will help them gain competitive advantage in the market. The Council in collaboration with leading academic institutions and industry bodies studies market trends to equip organizations with insights that facilitate their IT and business strategies. For more information on the Research Council visit www.wipro.com/industryresearch or email industry.research@wipro.com.
Publish Date: July 2009
Does America Produce the World’s Best Engineers?
“Engineering”, in the words of a recent book, “has never mattered more.” Few would doubt the truth of this statement. Many who should know also believe that America is losing its competitive edge because it does not teach engineering well. The present administration’s Secretary of State, Hillary Clinton, admiringly points to India as the country with the best technical education in the world. President Obama’s policy goal is the establishment of an education system that can compete with China and India.
Has America lost the race to produce the best undergraduate engineers? Indeed, graduate engineering enrollment data from some prestigious schools like Stanford University show that a majority earned their undergraduate engineering degrees overseas, particularly from Asia.
By contrast, here are some comments from a 2009 conference at Stanford University on how Silicon Valley evaluates foreign education and experience:
"Good technical skills are available in many locations around the world so that, at this time, education is a ‘check-box’ item. The most successful engineers are those: (1) with deep technical knowledge rather than language or technology-specific skills, (2) who take ownership for their work, (3) who are flexible, work well in teams and have strong communication skills. In this context, American experience or experience of working with American teams is a plus."
"Indian (engineers) at the starting level are not suitable for Silicon Valley startups; however, once they have a few years of experience, they are suitably qualified when compared with American engineers."
"India can now do core development work, something not possible earlier. … However, the high-end concept and design, and embedded wireless programming still needs to be done in Silicon Valley."
Thus, the comments from the field challenge one of the policymakers’ conclusions. A second implication of policymakers’ statements is that the inadequate quality is because America has not adequately reformed its engineering education system.
Even this is challenged by evidence. Compared to other countries, a ferment of reform is evidenced. The latest wave of reform began in 1996, when the Accreditation Board for Engineering and Technology (ABET) adopted a new set of standards, called Engineering Criteria 2000 (EC2000).
EC2000 shifted the basis for accreditation from inputs, such as what is taught, to outputs – what is learned. For example, the earlier guidelines specified what mathematical skills the graduate should possess. EC2000 changed that to a guideline that graduates must have an ability to apply knowledge of mathematics. Instead of, as earlier, asking colleges to include a capstone design course, it required graduates to have the ability to “design a system, component or process to meet desired needs”.
In practice, however, studies show that few programs reduced their emphasis on the foundational topics in mathematics, basic science and engineering science. Instead, schools increased content on other aspects, such as engineering design and use of tools.
On method, even less was changed. Engineering education still offers at its core, as the single largest component, a lecture sequence in order to provide analytical tools. Surrounding this and, mostly not well-sequenced or networked, are the lab and design courses. Even more remote are courses on the standards of professionalism and ethics.
It may be that reforms were not needed; or, that they are needed, but the United States is so far ahead that we can manage for several years without reform. The positive industry responses suggest that the system still works.
“Engineering”, in the words of a recent book, “has never mattered more.” Few would doubt the truth of this statement. Many who should know also believe that America is losing its competitive edge because it does not teach engineering well. The present administration’s Secretary of State, Hillary Clinton, admiringly points to India as the country with the best technical education in the world. President Obama’s policy goal is the establishment of an education system that can compete with China and India.
Has America lost the race to produce the best undergraduate engineers? Indeed, graduate engineering enrollment data from some prestigious schools like Stanford University show that a majority earned their undergraduate engineering degrees overseas, particularly from Asia.
By contrast, here are some comments from a 2009 conference at Stanford University on how Silicon Valley evaluates foreign education and experience:
"Good technical skills are available in many locations around the world so that, at this time, education is a ‘check-box’ item. The most successful engineers are those: (1) with deep technical knowledge rather than language or technology-specific skills, (2) who take ownership for their work, (3) who are flexible, work well in teams and have strong communication skills. In this context, American experience or experience of working with American teams is a plus."
"Indian (engineers) at the starting level are not suitable for Silicon Valley startups; however, once they have a few years of experience, they are suitably qualified when compared with American engineers."
"India can now do core development work, something not possible earlier. … However, the high-end concept and design, and embedded wireless programming still needs to be done in Silicon Valley."
Thus, the comments from the field challenge one of the policymakers’ conclusions. A second implication of policymakers’ statements is that the inadequate quality is because America has not adequately reformed its engineering education system.
Even this is challenged by evidence. Compared to other countries, a ferment of reform is evidenced. The latest wave of reform began in 1996, when the Accreditation Board for Engineering and Technology (ABET) adopted a new set of standards, called Engineering Criteria 2000 (EC2000).
EC2000 shifted the basis for accreditation from inputs, such as what is taught, to outputs – what is learned. For example, the earlier guidelines specified what mathematical skills the graduate should possess. EC2000 changed that to a guideline that graduates must have an ability to apply knowledge of mathematics. Instead of, as earlier, asking colleges to include a capstone design course, it required graduates to have the ability to “design a system, component or process to meet desired needs”.
In practice, however, studies show that few programs reduced their emphasis on the foundational topics in mathematics, basic science and engineering science. Instead, schools increased content on other aspects, such as engineering design and use of tools.
On method, even less was changed. Engineering education still offers at its core, as the single largest component, a lecture sequence in order to provide analytical tools. Surrounding this and, mostly not well-sequenced or networked, are the lab and design courses. Even more remote are courses on the standards of professionalism and ethics.
It may be that reforms were not needed; or, that they are needed, but the United States is so far ahead that we can manage for several years without reform. The positive industry responses suggest that the system still works.
Subscribe to:
Posts (Atom)
