Worldsourcing's Next Frontier: R&D
Friday 23rd January 2004 - 6:15pm - 7:30pm
Worldsourcing's Next Frontier: RD
Annual Meeting 2004
This diverse panel produced a lively discussion on a wide range of issues brought on by the global outsourcing of everything from call centres to R&D. The discussion ranged from the role of governments to the implications of developments in IT.
Francis Mer, Minister of Economy, Finance and Industry of France, took on the issue of outsourcing R&D. He described the role of the R&D effort in renewing the flow of goods and services as "the solution for our problems in Europe, if we want to keep the system alive". Disagreements over outsourcing come from countries not understanding the benefits to its consumers. "Either we agree the new game implies movement for the benefit of others, or we find our countries will refuse to play the game,"Mer said.
Patricia Hewitt, Secretary of State for Trade and Industry of the United Kingdom, agreed with Mer s focus on benefits for consumers. She also challenged whether outsourcing of call centres, for example, necessarily leads to job losses. She described some call centres as saviours of communities that lost manufacturing jobs, implying the communities might be better served by other types of jobs. She said the "reality in the UK, despite the heavy, painful process, is we have had a fall in long term unemployment every year."Hewitt said the United Kingdom is also producing higher end call centre jobs, and even attracting them from the US. "I have no doubt the Indian economy will thrive,"she added, pointing to the 250,000 highly educated graduates it produces a year.
Sanjay Kumar, Chairman and Chief Executive Officer, Computer Associates International, USA, put the phenomenon in perspective. Giving a third party responsibility for running one s manufacturing or network is not new and done all over the world, he said. Offshoring is giving a third party some responsibility for a specific business function, such as R&D, and taking it offshore, he explained. "Business process offshoring", he stated, is a new phase extending to back office functions such as accounts payable and receivable and tax processing. Kumar described it as a gradual process enabled by technology. Because it is now hitting a new segment of jobs, "broad swaths of the population are getting focused on the issue,"he explained. Kumar added that, "the next generation technology is going to make it so easy it will make your head spin." "The subject gets more attention when it starts affecting jobs for graduates of the Wharton School,"suggested Stephen J. Kobrin, Professor of Multinational Management, The Wharton School, University of Pennsylvania, USA.
Jeffrey Joerres, Chairman and Chief Executive Officer, Manpower, USA, focused on some of the problems. This type of outsourcing breeds a lot of insecurity. His firm is seeing "many highly skilled engineers walking through our doors because they think their job is in danger". On the other hand, he maintained a business can save itself by outsoucing some jobs, so it s worth doing. As for the retraining, he cautioned that his company, which has offered many retraining programmes, has seen many dropouts.
J. T. Battenberg III, Chairman of the Board, President and Chief Executive Officer, Delphi Corporation, USA, pointed out that his company s operations in the US often supply their new factories in China and Russia. "It costs a billion dollars to build a chip factory. I m not going to build another chip factory,"he said. Instead, it will continue to supply those plants from factories in Europe, the US and Mexico.
The importance of India in R&D was stressed by two participants: one from an Indian pharmaceutical company who noted that it costs US$ 50 million to develop a new drug in India as opposed to US$ 1 billion in the US; the other an entrepreneur who said companies now need an "India connection"in order to get venture capital.
Philip J. Jennings, General Secretary, Union Network International (UNI), Switzerland, said that "entrepreneurship by itself is not going to solve the problem,"and urged an active labour policy.
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Philip J. Jennings
General Secretary, UNI Global Union, Switzerland
1975, BA (Hons) in Business Studies, Bristol Polytechnic; 1976, MSc in Industrial Relations, London ...
Chairman, ManpowerGroup, USA
BBA, Marquette Univ. Formerly: IBM; VP, Sales/ Marketing, ARI Network Services. Since 1993, Manpower...