Globalization can be described as a group of trends that are breaking down the boundaries between national and regional economies, making countries more dependent on one another, and resulting in the freer flow of labor and resources. These trends have been praised by free trade advocates and decried by proponents of labor rights and environmentalism. However one feels about them, it is clear that global trends are reshaping the computer and information industry in many ways, and pose significant challenges.
Global trends that affect computer technology, software, and services include:
• offshoring, or the continuing movement of manufac-turing of high-value components (and whole systems) from the industrialized West to regions such as Asia
• outsourcing—moving functions (such as technical support) from a company’s home country to areas where suitable labor forces are cheaper (see employ-ment in the computer field)
• removal of traditional intermediaries such as brokers and agents, with some of their functions being taken over by software (see software agent)
• decentralized networks (of which the Internet itself is the most prominent example) and the tendency of information to flow freely and quickly despite barri-ers such as censorship
• virtualization—creation of work groups or whole companies that are distributed across both space and time (24 hours), coordinated by the Internet and mobile communications (see virtualization)
• increasing use of open-source and collaborative mod-els of software and information development (see open source)
• blurring of the distinction between consumers and producers of information (see social networking and user-created content)
These global trends can be divided roughly into three cat-egories: movement of labor and resources, restructuring of markets, and changes in the nature and flow of production.
Movements and Shifts
Offshoring is the movement of manufacturing operations from the traditional developed industrial nations (such as the United States and Europe) to developing nations (see also developing nations and computing). The principal motivation for this (as well as outsourcing, the movement of corporate functions and services) is lower labor and related costs. India, with its large population of well-trained, English-speaking workers, was the first beneficiary of these trends in the 1990s. Many major U.S. computer companies such as IBM, Intel, Microsoft, and HP have made major investments in software develop-ment operations in India. However, it should be noted that offshoring/outsourcing is a truly global trend, with other industrialized nations taking advantage of similar situations, particularly where there are language compat-ibilities. Thus Japanese companies have invested heavily in China, while Germans and other Europeans have pre-ferred to look toward Eastern Europe.
Besides lower costs, outsourcing can speed development by taking advantage of differences in time zones, allowing for coordinated 24-hour production cycles.
Free-Trade Controversies
Proponents of these trends generally include them under the umbrella of “free trade.” Their arguments include:
• greater productivity through more efficient tapping of talent and resources
• improvement in the standard of living in developing nations
• lower prices for goods and services in developed nations
• spurring innovation through competition and the movement of displaced workers to higher-value jobs
Opponents point to a number of serious problems and issues, including:
• downward wage pressure and/or unemployment as workers in developed nations are displaced by offshore workers
• difficulty in retraining displaced workers
• lack of adequate protective regulations and labor rights for workers in developing nations
• potential deterioration in the quality of services (such as technical support) after outsourcing
• risks of dependence on offshore supply sources in times of crisis
Restructuring of Markets
Computer-related businesses must also deal with the effects of globalization on the market for hardware, software, and services. Lower-cost offshore manufacturing has helped contribute to making many computer systems and peripher-als into commodity items. This certainly benefits consum-ers (consider the ubiquitous $100 or less computer printer). However, it becomes more difficult to extract a premium for a brand as opposed to a generic name. Some companies have responded by relentless efforts to maximize efficiency in manufacturing (for example, see Dell, Inc.), while a few others have maintained a reputation for style or innovation (see Apple, Inc.). Consumers have increasingly objected, however, to the difficulty in dealing with offshore technical support.
While the power of the Internet has opened many new ways of reaching potential customers around the world, dealing with a global marketplace brings considerable added complications, such as the need to deal with different regulatory systems (such as the European Union). In some areas (notably Asia) there is also the problem of unauthor-ized copying of software and media products (see soft-ware piracy and counterfeiting).
New Ways of Working
A global, connected economy is not only changing where work is done, but also how it is done. If a software devel-oper, for example, has operations in the United States, Europe, India, and China, at any time of day there will be work going on somewhere. With the complexity and speed of operations, managers in the United States may have to keep quite long and irregular hours in order to have real-time communication with counterparts abroad. This interaction is made possible by a variety of technolo-gies, including Internet-based phone and video conferenc-ing and, of course, e-mail. However, this is not without added stress. Overall operations can be structured to take advantage of the time zone differences. Code or documents written in Bangalore might be reviewed and revised in Sili-con Valley the same day.
Global trends are likely to continue and even acceler-ate as the computer and information industry continues to develop around the world. While technology can help deal with some of the challenges, there are many larger eco-nomic and political issues involved, and whether they can be satisfactorily resolved may ultimately have the greatest impact on the industry.
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