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September 28, 2007

Flattener #6: “Offshoring”

Filed under: Uncategorized — yoddha @ 9:27 pm

Here, Friedman shares with us the details how in a few decades the status of China changed from ‘sold in China’ to ‘made in China’ and how in the next decade, it can change to ‘designed in China’. This shifting of jobs from manufacturing sector to services sector happens in any country that goes from developing status to developed status.

The year 2001, when China joined the World Trade Organization, proved to be a major booster for its economy. This and the emergence of Internet changed the outlook of China to that of a capitalist and emerging economy helping it attract offshoring business. China also benefits from the fact that it is so close to Japan.

How is offshoring different from outsourcing? Outsourcing means moving specific but limited function to another company and then integrating this back in the main company. Offshoring, in contrast, is when the whole factory is moved to another place.

Friedman also lets us know how the general impression that offshoring is lose-lose proposition for America is wrong. To get the complete picture, one need to take into account the profits that help American companies invest more in job opportunities in America and add more money to America’s economy.

In the end, Friedman cautions the investors of a political turmoil in the far future against the communist government in China. Also, a strategy ‘China plus one’ (invest in China and one Asian country) is said to be more advantageous for investors.


September 27, 2007

Flattener #5: Outsourcing (Y2K)

Filed under: Uncategorized — yoddha @ 8:31 pm

Here, Friedman emphasizes the role that outsourcing played in flattening the world by making it possible the emergence of developing countries such as India and China.

It all started when Y2K computer crisis (the problem of confusing 2000 with 1900) threatened to shut down the computers around the world. To come out of this crisis, America needed huge manpower with good skills but at cheap source. India emerged as a popular candidate for this and there was no looking back for India after this.

Countries like India not only advantaged from IT boom but also advantaged from IT bust. Because of IT boom, huge investments poured in fiber optics and thus India got connected to the whole world. With IT bust, India not only could use the fiber network cheaply but also earned business from American companies, which wanted to get work done cheaply. Institues such as IITs ensured that the work delivered was not only cheap but also good in quality. All these factors encouraged American companies to outsource business to India rather than bring human resources to America.

Gloomy Days Again?

Filed under: Uncategorized — yoddha @ 2:07 pm

I am back in my ‘thinking in retrospect’ mode. In this mode, I think of the recent events in my life, the missed opportunities, the half-hearted attempts of mine and the dazy future. More I think, more I feel depressed. Confused between so many things to do, I feel voidness in my life.

September 26, 2007

Flattener #4: “Uploading”

Filed under: Uncategorized — yoddha @ 8:17 pm

Now who has created Apache Web Server for me? Friedman answers this question in explaining the power of the open source community. He extends this thought be giving the examples of blogging, wikipedia, podcasting and Amazon, various communities that contribute to the common cause. At the same time, Friedman puts an example of how this medium is being misused by negative elements of society as well.

This wave started when Bit Torrent popularized the idea of sharing the music over internet. Today, we have many open source communities which can be divided into two groups:

* Intellectual Commons Community: Where credit has to go to creator each time it is worked upon.
* Free Software: Where the only condition is that the software remains free and open.

Why do people contribute? To enjoy the feeling of having discovered something, to earn reputation, to earn peer review and to enjoy fighting with giants such as Microsoft and IBM.

Friedman comes back to the question: Who worked on this Apache Web Server that anyone can download freely and host a website? He dates back the start of this product to the mid 1990s when a web server was worked upon by a research organization in such a way that anybody can access the code and apply patches to it after the organization’s review. As the number of patches increased, a team of such open source workers collaborated and formed a product called ‘Apache’ web server. This product was named ‘Apache’ after the Apache tribe that surrendered to the oncoming US government after fighting till end. This product had to fight with big companies too. Also, it sound like ‘APAtCHy’ server, which was close to how it originated.

The product worked so well that the world’s biggest computer company, IBM, decided to take back its product and provide backing to this open source product. While IBM helped Apache in organizing its community, IBM could use this product and provide its own commercial product with customized services built on top of this freely available product.

Another example of popularity of this open-source product is Linux OS which was built by Linus Torvalds. While this is a free product even today, Novell Software Company is the biggest distributor of the commercial product that provides custom services. This has come to be known as ‘blended model’ of open source product. Here, a company like Red Hat can not sell ‘Linux’. But it can build services around this free product and then sell. Such a company thus contributes to the open community that builds this product.

Another reason for why big corporates contribute to such products is that this helps them in weakening their rivals. This is the reason why IBM supports Linux. This is the reason why Sun Microsystems support

But that’s not the complete picture, as explained by Microsoft. While the open source community helps bringing innovation to the product, MS thinks that a specific solution is what businesses require today and only organized companies such as Microsoft can do that. Moreover, the money it earns from selling such products is used by it to do further R&D and bring more innovation.

Looking at both points of view, Friedman summarizes that we definitely need community-developed software because of the breakthroughs it brings to the industry. In the future, we will see traditional commercial softwares such as SAP, Business rent-a-software from and free softwares such as Linux.

Through a gold mining example, Friedman explains how this community work has not only brought changes in software industry but also in every aspect of life. We have bloggers as citizen journalists today. We have podcasters as music creators today. Wikipedia has replaced all other forms of encyclopedias. All these are examples of how community develops the solutions. In the future, we will see Wikibooks, Wikinews, Wikispecies and so on.

Yes, no one can guarantee that the information uploaded will always be true and for the right purpose, but uploading has led to flattening of the world where any one can volunteer and become a contributor.

Flattener #3: “Workflow Software”

Filed under: Uncategorized — yoddha @ 7:50 pm

Giving an example of animation studio in US, Friedman lets us know how groups of people in different parts of world work together for a single project. As World Wide Web became popular, it became important not only to standardize the protocols but also to standardize the business processes that run on these protocols. This is this need of standardization that led to the distribution of sales, marketing, manufacturing, billing and inventory processes of an organization around the world. For instance, seeing the potential of PayPal, a C2C transaction solution, eBay bought it and used it extensively.

It started with the need of standardizing the communication between the different machines which led to the development of data description language: XML and the corresponding transport protocol: SOAP (Simple Object Access Protocol). Latest to join this endavor is AJAX, a technique to embed complex business applications into web pages. This enabled easy access to web based business tools such that one can run the whole company online. Microsoft joined this revolution in 2005 when it came up with business web versions of its two most popular solutions: Office Live and Windows Live.

This flattener was quieter in comparison to the first two flatteners but it played an important role in this globalization.

Flattener #2: “1995: The new age of connectivity: When the web went around and Netscape went public”

Filed under: Uncategorized — yoddha @ 6:46 pm

Friedman emphasizes on the role played by Tim Berners Lee in this globalization. It was his invention of World Wide Web that brought the life to the Internet. He clearly draws a line between Interent and WWW in this globalization. While Internet is nothing but a network of networks with cables and computers, WWW is the abstract space of information. WWW is a system for creating, organizing and linking the documents on the Internet. Lee came up with an addressing scheme, HTML and HTTP protocol to create this system.

Later, Netscape with its easy to use web browser started a dotcom bubble that required infinite demand for Internet usage and Internet Products. While the bubble was economically dangerous to many, this led to faster innovations and huge investments in fiber optics.

Fiber optical cables with its ability to carry more data with more security made the phone calls and internet usage cheaper. This led to the emergence of Bangalore and many such Kansas like cities around the world.

At the same time, Friedman lays the importance of standard protocols developed during this period. This includes: FTP, HTTP, HTML, SMTP, POP, SSL, TCP/IP that led the this new age of connectivity.

Flattener #1: “11/9/89: The New Age of Creativity: When walls came down and Windows went up”

Filed under: Uncategorized — yoddha @ 3:01 pm

Friedman dates back the first factor in Globalization 3.0 to 1989 when Berlin became the focal point of the changes in the attitude of the people. The fall of Berlin Wall brought with it the fall of Communism, the fall of Soviet Empire and the fall of physical and geopolitical barriers. The earlier years of 1990s is the time when the whole world became open to creative and new ideas.

In India, Manmohan Singh, who was the Finance Minister during this period, opened India’s economy to foreign institutions and helped India boom when she was running out of hard money. Trade controls were abolished and the whole world witnessed the rise of India’s growth rate from a mere 3% to approximately 7% in a short period of time.

Europe saw the emergence of power of Europen Union during this period. Euro was accepted as the unified currency of this union.

While the walls came down, the Windows went up. 🙂

With the success of Apple’s home computer, IBM PC was launched into the market in 1981. But it was the coming of popular version of Windown Operating System, Windows 3.0, that made this PC popular. While the fall of Berlin Wall broke the physical barrier, the popularity of Windows OS broke the barrier to the amount of information an individual can possess. It brought IAYF. (Information At Your Fingertips)

Chapter 2: The ten forces that flattened the world

Filed under: Uncategorized — yoddha @ 3:01 pm

Friedman introduces to its readers the ten factors that levelled the global playing field. Friedman calls these factors ‘flatteners’:

  1. Collapse of Berlin Wall-11/9
  2. Netscape
  3. Workflow software
  4. Open sourcing
  5. Outsourcing
  6. Offshoring
  7. Supply chaining
  8. Insourcing
  9. In-forming
  10. The Steroids

Chapter 1: While I was sleeping

Filed under: Uncategorized — yoddha @ 3:01 pm

Presenting the readers with different experiences in his life, the author presents the everyday work and life situations where people from different cultures, and countries collaborate to work for a common goal. Friedman compares Bangalore, India to Kansas, US in terms of the big corporations that have set their offices in these places. Mentioning how all knowledge centers have connected into a single global network, Friedman improvises the Columbus’s finding from ‘World is round’ to ‘World is flat.

Analyzing the events in the history, Friedman comes up with three eras of globalization:

1. Globalization 1.0: When different countries strived to increase their power and increase their area. This is the era of colonisation.

2. Globalization 2.0: When different companies expanded their business to different parts of the world. This is the era of MNCs.

3. Globalization 3.0: The present era, when even an individual can make a difference and contribute to any business at any place.

Globalization 3.0 was quieter in comparison to other globalization eras but it brought about the changes of same magnitude as the other too. In fact, the breadth and the speed of these changes is phenomenal in the current globalization era.

Presenting examples of outsourcing accountancy related jobs, radiology related jobs, journalism (Reuters) related jobs, the author says how cheap outsourcing of regular work can help corporations pursue research oriented tasks with more people and money.

Friedman amazes at the effort the people in Call Centers at India make to neutralize their accent and speak in an American way. At the same time, Friedman says that ‘what goes around, comes around’. The same call centers in India that shift jobs from US to India import the products manufactured from US.

Again he gives example of how a city in China, Dalian, has emerged as a Japanese Outscourcing city, even when China and Japan have been historic rivals. Friedman follows this with more examples:

  • JetBlue Airways Corp, a low cost Airline, using the cheap services of people working from home for booking air-tickets.
  • Using a small pilotless aircraft with a high power television camera in Iraq and operating and viewing it from different places.
  • e-tutoring
  • Blog Journalism

Friedman ends this chapter by comparing these events to fundamental shifts and inflection points in the mankind such as Gutenberg’s invention of printing press, the rise of nation-state, the Industrial Revolution, etc that led to changes in the business strategies, changes in the lifestyle and changes in the human thinking.

The World is definitely flat

Filed under: Uncategorized — yoddha @ 3:00 pm

Lets start reading, people.

These days, I am reading the book ‘The World is Flat’ and I plan to start this blog by providing a comprehensive summary of this book.

‘The World Is Flat: A Brief History of the Globalized World in the 21st Century:

This, best selling non-fiction book by Thomas L. Friedman, presents an exciting view of the today’s new era of globalization. First published in 2005, this book discusses the emerging of a levelled world in 21st century. This levelling of the different parts of world makes the author change the once-popular words ‘World is round’ to ‘World is flat.

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