From time to time, my company looks at its strategic initiatives and asks the question: “where in the world should we locate the people for this work?” Every company does it (or should), so what follows should in no way be construed as being about my current employer.
But these internal conversations led me to reflect on how we still don’t seem to have the formula right in high tech. And perhaps by extension in other industries that can have globally distributed workforces.
It seems like every country in the universe of high tech choices is stereotyped and typecast. The USA is a place to export work from. India or Czech Republic are places to export work to. What about the inverse options? Or the distribution of work between two (stereotypically) low cost countries?
I hate to say it, but management consultants’ use of the term “value chain” is apropos. We need to get better at framing our choices and thinking about the integrated whole.
Let me suggest a simple scorecard. Maybe each element can be rated on a 5-point scale.
First is labor costs. For a given type of work, what’s the fully burdened cost in each locale? And what’s the rate of wage inflation that forecasts costs in 2-3 years? For example, I think a lot of people were disappointed in their near-term return on investment in India given the wage inflation, especially in high tech. Those who have taken a long-run view of costs in India have been rewarded with an ever-deepening talent pool.
Second is critical mass of the labor pool. Does the locale in question have an ecosystem to tap into? Such as large companies you can raid. Or lots of venture-based start-ups. Or strong universities. Bottom line: will there be enough people to choose from?
Third is critical mass of the team. Will the work being performed reach critical mass to form a team? When teams feel ownership over their assignment, they can accomplish great things together. Individuals working on teams located elsewhere perhaps not so much.
Fourth is distance from dependent resources. This could be the distance from key executives. Or peer departments. Or subordinate functions. It’s a hassle for people to stay late at work, or make calls from home at night, or get up really early, all to simply interact with the rest of a team. Hence the critical mass comment above.
But it’s also a huge tax on managers’ and executives’ time and energy to travel long distances to oversee a distant operation. After a few trips to a new site, the number of visits from “headquarters” starts to dwindle and the sites become divergent. I had the pleasure of working for a company that was truly committed to its global locations, and the executives traveled accordingly. I’m not sure this is the norm.
Last is infrastructure. What kind of communication infrastructure do you need to link these sites? This is not trivial if you want to maximize the flow of information, as you must. For example, Cisco’s 3-screen Telepresence is a wonderful product. But at $100,000 per site means most people will opt for something inferior.
I’ll sum it up. People need to feel that they belong. That they “own” the work they do. That they don’t have a target on their back because the company is unsure if they are good “value for money”. That they have easy access to others on whom they depend.
If we get this right, good things will surely happen.