Globalization of Labor
August 15, 2007 by Raj Sheelvant
As organizations begin to span the globe, it’s becoming increasingly challenging to the corporate executives to manage these resources. Since each knowledge resource is unique, a lot of effort needs to go into understanding the uniqueness of each person. The question then arises – how do you build the ‘relationship’ if the labor is dispersed all around the globe? How do you map their unique culture (including their regional and country culture) with the corporate culture? These are some of the challenges we will have to start addressing very soon. My thoughts in this blog are specifically to IT/Software Development talent.
The usual globalization of work force in IT is driven by 2 reasons.
1) Labor arbitrage: Cheaper labor in India, Russia etc. can get the job done at a fraction of cost compared to US/Europe.
2) Follow the Sun: Having development team in 2 different time zones gives organizations the added advantage of increased bandwidth of labor. When a team in one time zone is ready to call it a day, another team in a different time zone can pick up the work and continue working.
Both these reasons look tempting to the corporate executives, but as we have seen in many corporations, execution to the above mentioned reasons can be extremely cumbersome. Complexity of communication and management increases dramatically with globalization of labor. Dissimilar cultural values and ethics further exasperate these issues. As it turns out the cost savings are not that great. In my opinion the executives should shun the narrow vision of cost saving due to cheaper labor as the only reason to expand their labor globally. In fact it’s the wrong reason for globalization.
The main reason or the only reason the organizations should go for global labor distribution is to achieve diversity. Diversity means acquiring human resource with differing/unique skill sets, collaborating to get multiple perspectives on problem definition, understanding different ways of solving problems at hand. As the market expands, especially in Asia and Latin America, the labor diversification in those regions means local knowledge in that consumer market. Finally, diversity of labor is diversification of labor and sensible human resource risk management. With a large number of ‘Baby-boomers’ retiring in US, globalization of labor reduces the risk of shrinking labor and the work can move where the labor is ready.
I will elaborate more on these views in my future posts.
Updated Sept 13th: Read the continuation of this blog - Globalization of Labor -II
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