The World Is Flat

I’m half way through Thomas Friedman’s The World Is Flat: A Brief History of the Twenty-first Century. I will not go into a lot of detail but let me tell you what is the main lesson that you’d learn from reading this book, yes you guessed it, the world isn’t round, it’s flat! Friedman argues that the barriers to global competition are disappearing quickly and that whether you’re an American (or a Saudi), you will soon have to compete with everyone else in the world. It used to be the case in the past century that global competition was in the product market, i.e. my products against yours and we saw how Japanese cars and electronics manufacturers beat their American competitors and how the Koreans (and recently the Chinese) are threatening this Japanese supremacy. In the future, the competition will be on jobs.

 

It used to be the case that Indian programmers had to move to the US and work at American companies, that was how they threatened American programmers but today, they can stay in Bangalore and compete from there. The over-investment made in the 1990s in fiber-optic cables connecting the whole world means that the cost of moving digital information around is almost zero, and the development of collaboration technologies means that more and more tasks can be done remotely, from anywhere in the world. And I’m not talking about mundane jobs like call centers, that is “so 1990s”. Today, if an American goes to his accountant to get his tax returns done, there is a high probability that part of that work will be done by an Indian accountant in Bangalore that specializes in say New York or Massachusetts tax law. The accountant in New York or Boston would take the information, scan it into his computer system and within seconds it will be available in Indian where most of the work will be done and sent back to America. Today, the Indians and increasingly the Chinese and East Europeans are doing Design and Engineering tasks. Qualified doctors in India examine MRIs done in American hospitals during the night and send their diagnosis back to the American hospitals without the patient knowing that the specialist who examined his MRI is on the other side of the globe. If you’re an executive in San Francisco and you have a presentation due tomorrow, you can send an email to your remote Executive Research Analyst/Assistant in India in companies like Brickwork (at a cost of $1,500-2,000 a month) and by the time you arrive tomorrow the presentation will be in your email inbox! Not only that, they’ll do proposals and more complex research and analysis for you.

 

Competition is becoming global, and the Indian and Chinese are not only cheaper, they are highly-motivated, they have a great work ethic, and they are becoming as good as or better than Europeans and Americans. It is no longer enough to be better than everyone in your school or city; you have to compete with the world. Notice that I’m talking about Americans and European who are highly-educated and very skilled, so where do we fall as Saudis? Are we ready to compete with the world? The bureaucrats at our Ministry of Labor (a.k.a ignorant idiots) don’t seem to see this coming. They think that if they can only make stronger laws and apply them stringently and prevent Indian from coming here to take the jobs that Saudis could fill, they’ll solve the Saudis employment problem. Guess what? Today, I can form a company here in Saudi in whatever field I desire and have very few employees here in Saudi. With the exception of jobs that require an interaction with clients or customers, I can outsource to India or China almost any job. I can outsource my back office tasks (such as accounting, accounts receivables and billing). I can outsource design and manufacturing. I can even outsourcing jobs that require monitoring and maintaining systems. Why would I do that? How would I do that? I would do that because I, too, have to compete in the global market place of products and services and I have to maintain my cost, efficiency and productivity and a globally-competitive level. And I would do that by simply digitizing all of those tasks and linking them seamlessly with any of the outsourcing companies in India.

 

We must understand that we are not alone in the world and we cannot protect ourselves with walls and barriers. And, quoting Friedman, the world is flat and getting flatter by the day, are we ready for this new reality?