Addressing Visa Risk in the Global Services Industry

Writing in Forbes, veteran Forrester analyst Stephanie Moore recently wrote that “every offshore development team requires an onsite component, [and] that [the] onsite component could be provided by American citizens — who naturally have more contextual business understanding, thus satisfying one of clients’ most pressing needs today.” (True Global Outsourcing Should End The Visa Debate). Moore is right that American employees can and should staff more of the onsite roles in global IT outsourcing projects, but the reason they don’t is driven more by the difficulty of finding American employees who have the appropriate skills and interests than it is by costs.

Infrastructure Questions in Global Business Selling

Boston is getting back to business today, two days after a transformer fire that knocked out power to most of the Back Bay, affecting hundreds of homes, businesses, hotels, schools and colleges.  Two days!  That’s a lot of lost business.

Coincidentally, at the moment the transformer went out, I was speaking only a few blocks away about the differences in business infrastructure in India and the U.S.  Infrastructure in most emerging economies is really poor, and India is no exception.  My colleague, Matt Sullivan, and I talked about problems with electricity, roads, and clean water. But we also noted that every Indian software park has back-up power and at least two ways of connecting to the internet (if not three or four).  Because the country infrastructure is so poor, businesses have to provide their own infrastructure (an added cost), yet that means they can also keep going when the local or regional infrastructure fails (an added benefit).  I mentioned the example of business grinding to a halt when there’s a blizzard in Chicago, while monsoon floods cause barely a ripple in Mumbai. I could have used the example of a transformer fire in Boston, never mind severe weather.

This is a paradox that experienced global business managers know, sometimes first-hand, but mid-level employees often do not.  Prospective customers for global business services in emerging economies are often reluctant to ask about country infrastructure, for fear they will seem either ignorant or prejudiced.  It’s important for salespeople to proactively address concerns about poor infrastructure, and provide real-life examples of how alternative solutions (e.g., employee buses) or back-ups (e.g., UPS electric outlets, cable and satellite internet access) work. You don’t want to belabor this or get pedantic, because experienced buyers assume these systems are in place – gauge your audience carefully and find the right mix of useful and positive information, especially if you can use it to differentiate your business in some way.

Likewise, if you’re selling business services in the U.S., clearly articulating the value of a developed economy infrastructure can boost your customers’ assessment of your overall business value.  We see this in some discussions of manufacturing today, where low wages in China (and other low cost manufacturing locations) may be outweighed by lower total costs of doing business in some U.S. locations.

The importance of infrastructure in attracting and growing businesses is getting increased visibility today, and that means it is increasingly important to discuss it with prospective clients.  Unfortunately, part of why we’re hearing more about the value of infrastructure in the American business community is because we’re falling behind, and are now ranked number 23 among countries worldwide.  Whether you’re pitching business in a developing or rich country, infrastructure differences will continue to be a factor in any international sale, and need to be covered in your customer conversations and sales collateral.

Skills for the Changing Global Business Model

I’ve seen many presentations about working in a global business that start with the same kinds of information you find in a travel guide: languages, currency, holidays, maps.  These are very important details for anyone working with people in another country, but we often overlook other elements that are equally, often more important, when we are working in a business together.

In an era when something like three-quarters of the world population, and three-quarters of economic growth, is in developing economies, it becomes essential to understand the differences in economies, infrastructure, education and workplace practices.  When you travel as a tourist, you want to understand the differences in electric voltage and plugs; when you work with colleagues in a developing country, you want to understand how often electricity is available – in the workplace and in their homes.  And then you want to understand how this impacts your ability to hold a project meeting via conference call, at different days/times, and how to manage communication gaps that may arise from issues with intermittent electricity.

My colleague, Matt Sullivan, and I will be speaking at Northeastern University tonight about management skills for working in a global business environment.  If you’re an alumni of Northeastern University, we hope you’ll join us.

 

Memorial for Jalal Alamgir

The memorial service for Jalal Alamgir, my friend and business co-founder and partner, will be held on Wednesday, March 7, from 2 – 4 p.m. at UMass Boston.  If you are  planning to attend, UMass has asked that people RSVP by email to claudette.xavier@umb.edu.

You can also honor Jalal’s memory by sending a check made out to the University of Massachusetts Boston with “Jalal Alamgir Memorial Fund” on the memo line, c/o UMass Boston, University Advancement, 100 Morrissey Boulevard, Boston, MA 02125. You may also make a secure gift online by going to: www.umb.edu/giving/give_now/

A Post-Visa World?

In a recent discussion about global IT services, one of my clients mentioned that we are essentially living in a post-visa world when it comes to India-US business. (Thank you, you know who you are!)

There’s always been some uncertainty about the availability of visas for Indian employees to travel to the US, but the current visa challenges have reached a level the industry hasn’t seen before.  Not knowing whether your key team members can get visas for onsite coordinator roles or the business analysis phase, best done with the team in one location, creates major risks for global IT projects.  With the current political climate in the U.S., I don’t think there’s going to be any relief on this soon.  The implications for global IT outsourcing providers and companies with significant captive operations in India are stark: It’s time for US employees to take on these roles and international rotations.

Basab Pradhan, the head of Global Sales at Infosys, pointed out a couple of years ago that having local employees in the buyer’s country (usually the U.S. or the U.K.) is going to be increasingly important for global outsourcing providers, for a couple of reasons – it’s key to building the key competitive differentiators of domain expertise and industry relationships, and it’s an increasingly important aspect of managing the business and political risk of anti-offshore sentiment.  But the big Indian outsourcing players – Infosys, Wipro, Cognizant, TCS  – have not made major strides in their recruiting and retention of U.S. employees.  Pradhan’s article talks about some of the challenges – additional costs for travel and bench time for U.S. employees, the perception that the Indian companies are unwelcoming to US employees.

Fundamentally, though, I think it comes down to the difficulties of working across cultures, and learning a new business model, that of the global IT team.  Indian employees are very motivated to work through these challenges – these are top jobs, in a fast-growing industry with long-term career opportunities. They are usually willing, even eager, to take on the personal and family sacrifices required to move to another country for months or years.  (This is so much the case that many companies provide relatively little support for the moves in this direction, compared to substantial “expat” support for other country relocations.)

American employees are usually not so motivated.  I am making gross generalizations, of course, but in my experience, American IT employees are often reluctant to learn how to work effectively with India-based teams.  I’ve had clients specifically ask me to assure them that they will not have to make early morning or late night calls to India.  Many colleagues have told me how difficult it is to work with Indian teams, without apparently recognizing that this is not an intrinsic issue with Indian teams, but with management of any virtual, cross-cultural, globally distributed team.

When it comes to the “knowledge transfer” phase of IT projects, it would often make more sense for an American employee to do a three-month on-site rotation in India, but I’ve heard of only a handful of cases where this approach was considered.  To be sure, it’s not easy to move from the United States to India for a few months or a year – moving from any developed economy to a developing economy has many more challenges than the other way around.  But in a post-visa United States, I believe U.S. to India rotations are going to become increasingly important to the success of global IT projects.

Global IT services companies will be better positioned for success in delivery, and increasingly, in selling, if they have the capability to fill on-site consulting and coordinator roles with domestic employees and manage knowledge transfer rotations in any direction.

Even Intel’s China strategy needs better alignment

I read this article because of the amazing story of Sean Maloney’s stroke and recovery process (my sister had a similar stroke in February, 2010, and writes about it here).

Buried near the end of the article is this little nugget about Intel’s China strategy:

Early this year Intel’s top brass started talking about upgrading leadership in China. Intel is doing fine in China, but the three parts of the business — R&D, manufacturing, and sales and marketing — never got properly aligned. The stakes are higher than ever because next year China is expected to become the world’s largest computer market.

This reflects a common challenge among companies operating in the big emerging markets – they may have started there for global production arbitrage, expanded the kind of work they do in the country, and then began to see the huge potential market.  In Intel’s case in China, perhaps their biggest market.  Yet the organizational structure and strategy is still rooted in the original arbitrage model, so the different parts of the country’s operations are not “properly aligned.”  Simply moving to the traditional MNC country-by-country model would lose the benefits of global arbitrage and perhaps aggregation for the rest of the company.  What’s a company to do?

There are no easy answers here.  To quote Pankaj Ghemawat in Redefining Global Strategy “Nobody has yet figured out the optimal way to organize a complex global economy, but much can be learned from looking at leading-edge companies.” (p. 218)

Soft Skills for Hard-Hitting International Execs?

I keep mulling over the PR mistakes that the BP execs made in handling the Gulf oil spill (yeah, I know – if you’re looking for fast-breaking news, you are at the wrong blog!).   I’m not the only one still thinking about this – Peter Goldman dissected the PR mistakes at BP, Toyota and Goldman Sachs just last week in the NY Times. One of Haywood’s egregious gaffes,  “I’d like my life back” [so I can go sailing on my very expensive yacht] is not going to be forgotten any time soon!  But let’s also not forget their chairman’s comment with a mis-translation of a Swedish idiom – “We care about the small people” – that made them sound like the world’s most arrogant large corporation (which some would argue they are).

And that is precisely what keeps coming back to me: that in the business world, huge amounts of self-confidence and even arrogance, a hard-hearted, “take no prisoners” style, are usually seen as positive, even essential elements to becoming a successful executive.  Yet in this situation, what the business really needed was an exec at the helm with excellent “soft” skills – humility, empathy, cross-cultural communication skills.

Are these skills only needed in crisis situations?  I don’t think so.  In fact, I think these soft skills are an essential requirement for any businessperson who operates in a multi-national environment (which, increasingly, is all of us).  Check out these notes from and about two very successful global business executives:

An article in Businessweek about Dominique Senequier who leads AXA, one of Europe’s largest private equity firms, noted that:

Senequier…spends 240 days a year in Asia and North America raising money. She says that in her business, being French is more of a handicap than being a woman, because her country is not known for its private equity industry. “Our investors don’t understand that we can be French and succeed,” she says. “I tell them being a minority forces us to be more open to other cultures and forces us to be modest.”

Her mission now, she says, is to persuade people to invest in Europe…That will open the door for private investors and sovereign wealth funds from developing nations with budget surpluses, particularly China. “We’ll have to try to capture this flow, and this will be possible only if we show our willingness to invest” in those countries, too, she says. “It has to be a win-win game.”

And from an article in the WSJ about Craig Naylor, an American heading a Japanese company, Nippon Sheet Glass Co., a big glass manufacturer:

I decided …that if I was ever running a global business, I would create a multicultural, multiregional team that would have input into the strategy —not just for implementing the strategy, but for creating the strategy…

Some people believe that the onus is on the Japanese to learn English, but in the meantime the responsibility is on the English-speaking people to make yourself understood. You need to meet them more than halfway. When I first came to Japan I tried the idioms and spent 15 minutes explaining why this idea doesn’t have a snowball’s chance in hell.

Modesty? Creating a win-win strategy? Soliciting input into the strategy? Meeting people more than halfway? These are not buzzwords you often find promoted in the American business press, but I think they are sage advice for businesspeople seeking to build success across cultures.  And it’s too bad Svanberg didn’t take note of Craig Naylor’s advice about idioms before he talked to the press…

The Drum Beat of Growth in Emerging Markets

This is one of those weeks when it seems as though every news source is mentioning the growth of emerging markets:

• The pharmaceuticals industry is tracking five big deals in emerging markets…
• Universities in Asian emerging markets are recruiting US professors…
• The majority of Tupperware’s sales are now in emerging markets (30% annual growth in India since 1996!)…
• Africa’s consumer markets are growing at two to three times the rate of developed markets…
• And the big news everywhere is that China is now the world’s 2nd largest economy.

It seems more and more likely that emerging markets are going to be  the engine for economic growth in this century, and one of the big disadvantages

Speaking of Supporting International Trade…

Just after I wrote about a nationalistic tone in Obama’s speech where he encouraged selling into international markets, he signs into law dramatically higher fees on H1B visas that seem to be targeted directly at Indian IT/BPO services companies.  The reaction from India has been swift:

India is protesting a bill in the U.S. Congress that would increase visa fees for foreign workers in the U.S. as discriminating against Indian companies.

“It is inexplicable to our companies to bear the cost of such a highly discriminatory law,” the Commerce Ministry said

Obama Says Start Selling to International Markets

Why focus on international marketing and sales?  Because your president tells you to!  I missed this when he actually made the speech at a Ford factory on August 5, but my ears picked up when I heard this snippet in a story on NPR about overseas demand for American milk, and then went to look up more details.  Here’s what President Obama said:

And it’s going to help us reach the goal that I set in my State of the Union address, which is we are going to double America’s exports of goods and services over the next five years.  We’re tired of just buying from everybody else — we want to start selling to other people, because we know we can compete.

That’s how we’re going to grow our economy.