The World is Getting Flatter All the Time

Even if you haven’t read Thomas Friedman’s The World is Flat, you know that we live in a global economy where work can be distributed across geography almost seamlessly. In the last few years, we have had a number of clients whose customers have said to them, “we can have this work done for 25% of the cost you charge by going off-shore” (the numbers usually vary from 10 to 40%, so I’ll split the difference here). Sometimes, the outsourcing takes place just down the street, and the cost is only 75% or 90%. But the same logic applies. If someone can do it cheaper, your clients are going to consider it.

When this happens, companies typically go through a number of stages:

Stage I: Denial – They cannot believe that this is happening to them. They often ignore it for a while, convinced that their clients will wake up and realize that the quality at 25% of the cost will put their company at great risk. The clients, however, see it as a higher risk not to test this cheaper alternative.

Stage II: Disagreement – They spend long hours documenting for their clients and anyone else that will listen all the ways that off-shoring will fail, and why their approach (and cost) is justifiable. The clients still feel compelled to look elsewhere.

Stage III: Adaptation – They realize that they cannot change a global trend that is fueled by sound economic logic. They look at their position, and they decide to learn and adapt. Not everyone gets to this point—some businesses never learn from the lesson and their sales begin to erode.

You may read this and think that, “it would never happen to me.” But it is happening on some level to every single business. Rather than letting it happen to you, get proactive. Adapt. Read on for some tips on how to do this from Michael. -Mary Adams   2007