Once upon a time, all of, oooh, 20 years ago, the press was full of strident headlines about site closures, the decamping of jobs to Asia and the inability of the West to compete with low-wage countries in the East. Business Week dubbed the phenomenon "the hollowing of the corporation" and wondered if the US economy would survive. \nThen, of course, the subject was manufacturing. We know what happened: manufacturing survived, but metamorphosed, with Dell, Cisco, Microsoft and Intel replacing General Motors, Ford and GE as the motor of the US and world economy. Out of the new order emerged an unprecedented phase of expansion that was only reined in when the dotcom boom toppled over its own exuberant overconfidence three years ago. \nWe should do well to bear the parallel in mind when thinking about the current outsourcing from payroll processing and account handling to customer service. \nOn the other hand, it's pretty clear that after the current reconfiguring of comparative advantage is done, it won't be business as usual. The potential for fresh combinations of resources being created will almost certainly see to that. \nMukerji's company, astutely set up by a leading bank in 2002 to specialize in "business process outsourcing" to UK and US firms, mainly in financial services, is a good example of this potential. \nNow boasting a workforce of 4,800 and six processing centers, I-OneSource grew by 134 percent last year and is projecting annual expansion "faster than the industry's 50 percent" for the next four or five years. \nThe Indian outsourcing sector will employ 1 million Indians by 2008. The same number of information technology (IT) professionals will be writing software and running offshored IT contracts. And if you thought their advantage was just low cost, think again. \n"In practice, the cost proposition only comes into play if quality is up to scratch," Mukerji says. "As an offshore vendor, you have to be even better before people will consider you." \nTypically, I-OneSource is seeking to hop quickly up the value ladder from commodity transaction supplier to fully fledged business partner, offering not just an end-to-end service but also advice and consultancy in the mould of an IBM or Accenture. \nIn a nutshell, firms such as I-OneSource are positioning themselves squarely at the leading edge of the knowledge economy. \nGiven India's output of more than 2 million graduates a year (although not all of the highest standard), this is not far-fetched. \nA year ago, says Mukerji, the choice of location for a world-class processing center was down to Mumbai or Bangalore; now eight or 10 cities are jostling to be chosen. \nIt is a different story in the UK, where service companies should be preparing for a shake-up quite as fundamental as the one that hit manufacturing 20 years ago. \nUK manufacturers in particular were slow to react to the threat of global sourcing at first, then rushed pell-mell into out- and offshoring. However they took time to register (some never did), that there's nothing inevitable about this. As the performance of many, often small or medium-sized, companies has shown, it's perfectly possible for manufacturing to prosper in the UK -- on condition that companies rethink all their processes from end to end and go lean. \nLean is a lot more than the tools and techniques it is sometimes sold as, since it involves reversing the top-down flow of influence and information -- from manager-push to customer-pull -- something that does not appeal to most managers. This is one reason why take-up was so half-hearted. \nAs specialist consultancies such as Vanguard, and now mainstream outfits such as McKinsey and AT Kearney, have shown, the lean logic applies equally well to providing service as to making things. \nAT Kearney, for instance, says the "lean leap" can take 30 to 40 percent out of the cost of transaction or other processes -- after which the offshoring equation takes on a different complexion. It may still be a sensible option, but it is then about something more sophisticated than cost advantage, which is rapidly eroded when competitors follow suit. \nAlmost all service companies are where manufacturing was 20 years ago, stuffed with waste and offering poor service and value. \nTo get beyond the attitudes that prevent them moving up to the higher-added-value uplands where most people think the UK's economic future lies, they need to clear out the clutter -- irrespective of outsourcing. \nThe lesson of manufacturing (and of comparative advantage) is that outsourcing to each other's strengths can and should be a positive-sum game: each party can gain. But to reap that benefit, service firms will need to be much cleverer in improving quality and cutting cost. Otherwise, Indian companies -- which, after all, know a lot about UK tastes -- will turn them into, well, curry.
EXTRADITION DEAL? A former prosecutor said that the US Department of Justice might ask Taiwan to extradite the men in return for the US doing something in return The US won arrest warrants for three Taiwanese men — a former president of China-based Fujian Jinhua Integrated Circuit Co (福建晉華) and two engineers — charged with stealing secrets from Idaho-based Micron Technology Inc. The effort to apprehend the three men — former Fujian Jinhua president Stephen Chen (陳正坤), and Ho Chien-ting (何建廷) and Wang Yong-ming (王永銘), who work for Taiwan-based United Microelectronics Corp (UMC, 聯電) — is notable because they were charged in 2018 in the first case filed under the “China initiative” of US President Donald Trump’s administration targeting trade-secret theft, hacking and economic espionage. However, legal experts have said
There was a net reduction last year in the number of Taipei residents and this year is expected to set a 23-year high for population decline in the city, Ministry of the Interior statistics released yesterday showed. From January to last month, 18,861 more people moved out of Taipei than moved into the capital, an increase of 7,000 from the same period last year, the data showed. That is a 7.2 percent decrease in the city’s population since the start of the year, the biggest drop in both percentage and total number among all municipalities and counties nationwide, the data showed. The data
COUNCILS CLASH: The Mainland Affairs Council said a new office in Hong Kong is to assist people with issues related to investment, study and employment in Taiwan The Mainland Affairs Council (MAC) yesterday denied an accusation by the Hong Kong-Taiwan Economic and Cultural Co-operation and Promotion Council that its Taiwanese counterpart in the territory was “interfering with Hong Kong’s internal affairs.” The Hong Kong council leveled the accusation after Taipei’s Taiwan-Hong Kong Economic and Cultural Co-operation Council this month announced it would establish a Taiwan-Hong Kong Services and Exchanges Office to facilitate humanitarian aid for Hong Kongers. The new office is scheduled to begin operations on Wednesday. The MAC yesterday asked the Hong Kong council to “not misinterpret” the government’s intentions. The two Taiwan-Hong Kong councils were established in 2010 to
IRRESPONSIBLE ATTITUDES? Some experts say the NHI system does not do enough to educate the public, or pay doctors to talk to patients, about healthy lifestyles While the life expectancy of Taiwanese newborns in 2018 reached 80.69 years, the number of years people spent in poor health hit a record high at 8.41 years, Ministry of Health and Welfare statistics showed on Saturday. Healthy life expectancy is calculated by a person’s life expectancy minus the time they spend in ill health, such as the loss of mobility, disabilities and chronic disease, based on medical records and calculations about the years they live with disabilities. The number of years that Taiwanese spend in poor health is increasing slowly, but steadily, rising by 0.46 years, or five-and-a-half months, between 2012