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Globalization

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Massachusetts Governor Mitt Romney's Message: Globalize or Die

 

(URL: http://www.crn.com/showArticle.jhtml;jsessionid=HV04UPK5RVOU2QSNDBNCKHSCJUMEKJVN?articleID=174300587)

 

By Paula Rooney,

 

 

7:14 PM EST Wed. Nov. 16, 2005

 

U.S. businesses must globalize or whither away and die.

 

That's the message Massachusetts' governor and top technology executives said at the Forrester Research executive strategy summit in Boston on Wednesday.

 

Gov. Mitt Romney, a former Bain Capital venture capitalist who is mulling a presidential run in 2008, said jobs will continue to be lost to emerging economies but U.S. businesses have far more to gain by selling their products into massive markets such as China and India than they risk losing by not participating at all.

 

He advised CIOs and technology executives to stop worrying about lost jobs and concentrate on innovating globally that will grow jobs here and abroad.

 

"I'm not happy exporting jobs but we must move ahead in technology and patents. I don't like losing any jobs but we'll see new opportunities created selling products there. We'll have a net net increase in economic activity, just as we did with free trade," Romney said. "It's tempting to want to protect our markets and stay closed. But at some point it all comes crashing down and you're hopelessly left behind. Then you are Russia."

 

According to Forrester Research, only two percent of U.S. IT jobs moved offshore by 2004 and that number will increase to less than 10 percent by 2015.

 

Romney said the United States should be investing heavily in technology because it will help fuel continued economic growth over the next century. If US businesses fail to do this, he said, it will lose its leadership position to emerging economies.

 

"China and India have huge populations. There's no reason why they can't emerge as an economic and military superpower in 100 years," the governor said. "We need to be at the leading edge of technology.

 

At the conference, executives from IBM Global Services (IGS), GM, Proctor & Gamble, Samsung, Safeway, Palm, Network Technology Consulting, Avaya, Best Buy, Pitney & Bowes, WiPro and Akamai discussed the benefits and challenges they are encountering as they globalize their businesses.

 

IGS has established several centers for excellence around the globe to develop service capabilities they can leverage globally.

 

Avaya, for its part, is transforming its business on a global level to fight off mounting competitive pressure from startups like Vonage and Skype – and others. Avaya's domestic revenues once represented 85 percent of its total revenues. Today, that figure stand at 40 percent, said Thomas Lesica, group vice president of Global information technology and Business operations for Avaya.

 

Smaller businesses that generate less than $1 billion in annual revenues may have a tougher time getting in the global game than many of the Fortune 100 companies featured at the conference. Yet, smaller enterprises and small companies including service partners can participate in the next generation "global innovation networks" that are springing up around the world, said Navi Radjou, a vice president at Forrester Research.

 

One executive from WiPro Technologies said outsourcers are no longer just low cost services providers and have moved into lucrative services and intellectual property markets. The India-based systems integrator, for example, owns several wireless patents and is building up a portfolio of patents it will leverage.

 

WiPro has worked with software vendors and existing banking customers to build a customer-facing portal that accesses back end systems. In that case, WiPro also interacts directly with a hosting provider that hosts the bank's solution.

 

He told CRN he thinks solution providers can participate in these networks as long as they have a specialty and domain expertise in a particular vertical.

 

"We become an integrator of innovation for an ecosystem," said Theodore Forbath, chief strategist and practice leader of Global Product Strategy and Architecture Practice at WiPro Technologies. He noted that Wipro works with local integrators with specialties in mobility but will continue to also build its own IP and leverage that to extend their networks.

 

Diane Farrell, director of the McKinsey Global Institute, called for a global restructuring of all industries. While sales in the IT/Business process outsourcing market are the highest of any industry, at $3 trillion, its global trade value was $32 billion, well below steel automotive and consumer electronics businesses.

 

During his keynote, Romney warned that the U.S is unduly arrogant about its role as an innovator and that offshore engineers will surpass their counterparts here in numbers and quality without focused effort on education and innovation by private industry in conjunction with state and federal governments.

 

"There's a common misperception that we do all the innovation and send off the grunt work to people offshore, that somehow American technology does all the high-end work and we send out routine drafting elsewhere," Romney said. "We have the perception we're the best and the brightest but we didn't score as well as others in some studies.

 

"We know this market but when our market is no longer the target market in the world, when India and China surpass us, the idea that we'll be innovating and they'll be copying is not an accurate perception," the governor added.

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