Category: Offshoring

A ‘Budget for Growth’ for smaller, tech-centric businesses?

Posted on by The Information Badger in Business, Change, Information Technology, Leadership & Management, Offshoring, Technology

Digital technology – the electronic systems and resources that help us communicate, work, play, travel, and live today – is everywhere. The Badger recently conducted an experiment, not one that meets the rigours of professional research, by asking those he’s met over the last week about what they thought of when hearing the phrase ‘digital technology’. A young checkout operator at a local store, for example, said social media, the internet, their smartphone and its apps, online shopping and online banking. That was pretty much a summary of all the responses from young and old alike. Why the experiment? Simply to test a perception that the general public associates ‘digital technology’ mainly with well-known mega global corporations and big brands. The experiment essentially affirmed that perception.

But here’s the thing. The UK has many medium-sized companies with <250 employees, many of which fall under the umbrella of ‘digital technology’.  Such companies, many entrepreneurial family businesses, get little profile even though they are not only part of the UK’s economic bedrock, but also have digital technology which is used globally but invisible to the general public even though it touches them every day. The Badger knows, for example, of a company whose technology enables, controls and cures printed text and images on the packaging used for foodstuffs, medicines, chemicals, and even Christmas wrapping papers! It’s a global leader, employs <250 people, and it’s systems are built in the UK, installed worldwide, and managed and maintained from this country via the internet. It’s innovative companies like this that are crucial to our rhythm of life and the country’s success.

One of the Badger’s neighbours, who’s mid-career with children at school, is part of the leadership team at a different tech-centric, smaller company. While chatting recently, the Badger asked them how the recent UK budget would impact their company. ‘We’re used to challenges’ they said with a grin, adding that recruitment had been frozen, leavers were not being replaced, maximising automation had become the top priority, and work was being moved to lower cost offshore locations. They then added, ‘Now my pension pot is subject to inheritance tax, there’s little point in striving for more success or providing longer-term financial security for my family. I expect to leave the workforce within a decade to ensure I spend whatever wealth I’ve accumulated because there’s no point doing otherwise anymore’.

The Badger flinched. It seems a) that the recent budget isn’t a ‘budget for growth’ as far as smaller, tech-centric companies are concerned, and b) that the mindset and priorities of strivers in such companies is already changing. Has the UK  government’s budget damaged this country’s smaller ‘digital technology’ companies and their employees’ desire to succeed? Time will tell, but the omens don’t look good…

India, a technological force to be reckoned with…

Posted on by The Information Badger in Change, Information Technology, Offshoring, Space

Legend has it that Buzz Aldrin played a cassette of Frank Sinatra’s ‘Fly me to the moon’ when the Apollo 11 lander touched down on the Moon in 1969. If that’s true, then it was the first song ever played on the lunar surface.  This trivia came to mind when India’s  unmanned Chandrayaan-3 mission recently landed at the Moon’s South Pole, just days after Russia’s Luna-25 failed attempting the same feat. News of the Indian landing made the Badger wonder if the lander had played Bollywood music on touch down! Whether it did or not is, of course, immaterial. What is material is that India has cemented its position as a force to be reckoned with in space technology, and that its achievement will reverberate for decades to come.  

The Badger first visited India in the late 1990s when offshoring software development and IT services was rapidly accelerating. This first visit, as a member of a UK team performing due diligence on a small Bangalore company being strategically purchased to grow into a major offshore delivery centre, changed and expanded the Badger’s mindset. On the flight to India, the Badger had been sceptical that he would observe capabilities similar to the norm in the UK, Europe, or North America. On the return flight, that scepticism had reduced significantly because he’d witnessed impressive technical prowess from people who were young, well educated, motivated, hungry to learn, hungry to better themselves and their families, and hungry for success for their team and country.  

During the trip, the Badger visited a lush, modern, technology campus housing mainly call centres for some large UK financial services companies. It was buzzing, well organised, and the people were articulate and passionate about their work.  Most call handlers were university graduates. They were paid a good salary by India standards, but a fraction of what was paid in the UK, Europe or North America. The campus visit, and days spent with the technical designers and programmers at the company being purchased, opened the Badger’s mind. India’s software and IT talent could not be ignored, and it was good value for money.  On the flight home, the Badger knew that capitalising on that talent by offshoring to India was essential, and that making it happen across an established UK IT business would be a challenge.  

Much has happened in the intervening years. Today, Indian companies like TCS and Infosys are ranked in the Top 10 global IT companies (none of which are headquartered in the UK). All the Top 10 have sizeable capabilities based in India. The Chandrayaan-3 moon landing thus further illustrates the depth and diversity of India’s technological prowess. India will undoubtedly be a technological force to be reckoned with for decades to come. Can the same be said for the UK? Now that’s an interesting question…

A retrenchment to globalisation…

Posted on by The Information Badger in Business, Change, Information Technology, Offshoring, Risk

IT offshoring to India gained momentum in the late 1990s helped by improved and lower cost telecommunications, the policies and actions of the Indian government, and a few major corporations who opened operations that tapped into the country’s huge young, lower-cost, graduate-level workforce. At the end of the 1990s the Badger was part of the due diligence team for the purchase of a small software product company in Bangalore. The purchase was a strategic investment to establish a presence in India that could ultimately grow into an offshore outsource and software development centre. Visiting India for the due diligence hammered home to the Badger that the true globalisation of  IT work was inevitable, and that India would a force to be reckoned with for outsourcing and software development.

Globalisation – the spread of products, services, and manufacturing etc, across borders producing ever stronger economic interdependence between nations – has been underway for the last two centuries driven by transportation and communication advances. The internet and digital technology, however, has accelerated it exponentially over the last 20 years, but the COVID-19 pandemic and its impact on global supply chains, for example, has highlighted that globalisation may have gone too far. It now looks inevitable that the pandemic, continued advances in digital technology and virtual connectivity, and changes to the world order due to the Russia-Ukraine conflict,  will trigger some retrenchment to globalisation as businesses and nations rebalance their risk and dependence on others.

The current level of globalisation has made us all extremely and rapidly vulnerable to events anywhere in the world. Globalisation will, of course, not disappear, but the Badger’s in no doubt that in the current decade we will see some retrenchment to address the vulnerabilities that have been exposed. A trot through the programme of events at this week’s 2022 World Economic Forum (WEF) at Davos shows that deglobalisation and the impact of ever more advancing technology permeates most of the sessions, either directly or covertly. The WEF at Davos claims to have achieved much over the past 5 decades, but most people – including the Badger – are hard pushed to name any of its achievements and consider it to be a talking shop for global elites in the world’s most expensive country. However, when those attending Davos are discussing globalisation, then you know there’s something to worry about and change is ahead!

Over the last 20 or so years, the small software company purchased in Bangalore has grown into the broader capability envisaged in its original strategic goals. Since change is perpetual, however, it is not immune to retrenching globalisation or technological advances that enable IT work to be done economically without offshoring at scale. No sector is immune to retrenching globalisation, and this decade is already unfolding to be one of huge change on all fronts. Hold onto your hats, it’s going to be a bumpy ride…  

Chips with everything…

Posted on by The Information Badger in Life, Offshoring, Risk, Technology

Did you know that what’s printed on the tubs of butter you buy at the supermarket relies on microchips to control the curing of the ink? You probably didn’t, but it’s true.  It’s a simple example that there’s ‘chips with everything’ in today’s world. While media headlines concentrate on how the global computer chip shortage impacts things like games consoles, cars, and smartphones, it’s worth remembering that the shortage has a much broader impact.   

It’s easy to believe that current supply woes are wholly caused by the pandemic, but that’s not the case, as many articles analysing the causes illustrate, see here and here , for example. US-China trade tensions are a factor, for example, and so are the decisions made by major corporates in some industry sectors when the pandemic hit.  On the latter, many swiftly cancelled orders with chip suppliers who understandably compensated by prioritising sectors where orders continued to flow. As current delays to new vehicle production in the auto industry illustrates, many companies now find themselves further down their supplier’s priority lists than they perhaps expected now that things are slowly opening up.   

The pandemic has, of course, had some direct impact, but rational and objective observers will conclude that the event has starkly exposed a serious consequence of the globalisation and extended supply chains that have become the norm over the last twenty or so years.  Over just two decades the number of key semiconductor fabrication companies has essentially reduced to just three, namely Taiwan’s TSMC, South Korea’s Samsung, and Intel. When the two Asian firms have more than 70% of the fabrication market from facilities centred in the Far East then we shouldn’t really be surprised when a disruptive event puts the supply/demand equation out of balance. There’s little doubt that many country leaders, politicians, and corporates will already be considering whether the developed world’s heavy dependence on globalised supply chains has gone too far. Global trade’s important, and it has been for centuries, but it seems likely that there’ll be some strategic retrenchment towards a better local/offshore balance in order to mitigate strategic risks over the coming years.

For years we’ve been told by health professionals that eating chips (fries) with everything isn’t healthy, and most people in developed economies are more informed today about the importance of a healthy diet than previous generations. Analogously, we need to appreciate that a life regimen that relies on ‘chips with everything’ for the goods, devices, appliances, and facilities we use every day in the modern world isn’t good for us either. Chips as part of a balanced diet or in a balanced every day life are, of course, perfectly acceptable, and so perhaps a shortage of computer chips isn’t such a bad thing if it helps us return to a better balance in the way we live.   

‘We are all doomed!’… No we are not…

Posted on by The Information Badger in Business Continuity, Education, Offshoring, Opinion, Uncategorized

This blog item – the 100th since the blog’s inception – arose from a conversation with someone grumbling about their employer offshoring software development and IT support to India. They used the phrase ‘We are all doomed!’ from the UK Dads Army TV series and ignored the Badger’s ‘No we are not’ riposte.

The Badger remembers ‘We are all doomed!’ being frequent refrain of UK IT staff in coffee-point discussions during the surge of offshoring to India in the early part of this century. UK IT staff were initially sceptical and dismissive of the capabilities in India, and hence reluctant to move work offshore. Offshoring, however, was a necessity driven by market forces and staff eventually realised that ‘No we are not’ was the right riposte to ‘We are all doomed!’. Today, globalised IT work is a norm. The Badger was part of this journey because ~20 years ago he helped to acquire a small software company in Bangalore and then monitored it proudly as it blossomed into a very large, successful, global IT delivery centre.

That small Bangalore company was full of young Indian staff who were hungry to learn and succeed. It was clear from the outset that they would flourish after being acquired because they had an impressive commitment and attitude that contrasted markedly with an ‘entitlement culture’ evident in some UK youngsters at the time. Today, however, things seem different.  Based on the number of UK millennials who want to work hard, learn, acquire skills, and be successful that the Badger meets, that ‘entitlement culture’ appears to have waned. Coupled with advancing technology and changing geo-political environments,  perhaps we’ll see some retrenchment of offshoring and IT globalisation in the future.

The Badger thinks that ‘We are all doomed!’ has also become an unspoken undercurrent to matters relating to the potential coronavirus pandemic in recent weeks, especially in social and broadcast media and the press which seem to have erupted with a questionable mix of instant opinion, misinformation, grumbles, individual experiences, and comments on country responses. Even stock markets have taken flight, ostensibly because – surprise, surprise – no one can predict the future. The Badger takes the hopefully rational view that we are definitely not doomed! Why would we be when we have overcome challenges from ‘The Millennium Bug’, SARS, Swine Flu, Bird Flu, and Ebola in the last 20 years?

The Badger does feel, however, that coronavirus is the starkest reminder yet of the downside risks of the relentless march of globalisation. Perhaps this combined with climate change will mark a turning point for globalisation? Time will tell.

Finally, just remember that humans are excellent creative problem solvers, so if someone suggests ‘We are all doomed!’ just say ‘No we are not’. Then playfully ask their view on what would happen if social media, global communication, and internet services collapsed. They’ll look you in the eye and scream ‘We are all doomed!’ much, much louder…