Modern globalization Geopolitical risk mitigation, wage inflation and carbon footprint reduction are the new rewards

HALIFAX - The world is smaller. The world is flatter. And the world is about to get a whole lot smarter.

That was the message of Suhas Bhide, partner and vice-president of global delivery and business services for IBM India, the opening keynote speaker of Monday's Balanced Viewpoint 2009 Worldsourcing Conference.

Standing at the podium on the Neptune Theatre's stage, Bhide gave the crowd - a mix of business leaders, government and experts - a very brief history lesson. Spanning British colonization, two world wars and the new millennium, he outlined modern globalization.

It started with trade routes and the exporting of raw materials. Then came multi-national corporations and protectionist trade laws. But the future, he says, lies in globally integrated enterprises.

And it was at this point in the conference that the delegates - eager to learn how the current trends, drivers, and risks of outsourcing in light of the current economic challenges will change the world - leaned forward in their seats.

"Accelerated and increased global collaboration - made possible with communications technology, an opening up of the business environment and a reduction of trade barriers - has caused a tightening of the world," says Bhide, who is based in Bangalore.

"Over the last few years companies have looked to India for service providers or China for manufacturers and these countries have participated more and more in global supply chain," he says during an interview after his address.

"The playing field is levelling off so everyone can contribute and the whole world is coming together better. That's been the phenomenon that we've referred to colloquially as the flattening of the world." But Bhide says the phenomenon of a flat world - described in the bestselling book by Thomas L. Friedman The World Is Flat: A Brief History of the Twenty-First Century - is old news.

With rimless glasses and a polished suit, Bhide explains with a soft accent that the world today is more instrumented, interconnected and intelligent than it was when Friedman first published the book in 2005.

"The world is becoming smarter," he says. "Companies are no longer outsourcing just to reduce costs," he adds. "They are expecting increased innovation and value-addition from the service providers. There is more partnering and collaboration and that's why globally integrated enterprises are the wave of the future."

Bhide says this demand creates not only smarter companies, but smarter industries and a "smarter planet."

"In the past when companies needed IT outsourcing they'd go to India or for manufacturing outsourcing to China," he says. "But there is a lot more thought going into the decision-making."

Bhide says historically outsourcing decisions were made strictly from a cost-benefit point of view. But increasingly companies are looking at the risk and reward of going into certain areas of the world.

And other big players - like in Latin America, Eastern Europe and Egypt - are offering alternatives.

"When companies start to consider geopolitical risk mitigation, wage inflation and reducing their carbon footprint, these other areas sometimes emerge as smarter places to do business."

But Bhide quickly points out that this smarter way of doing business is not about altruism or doing good.

"Companies can actually gain a competitive advantage while at the same time doing good. It's win-win."