For economic leaders, the cost implications of "world sourcing" are compelling.
The mood among industry and economic mavens attending the World Economic Forum in Davos, Switzerland, last week was optimistic. Demand for technology, which slumped after the Year 2000 boom and during the economic slowdown, is on the rise again.
One anticipated phenomenon in 2004 is a surge in demand for Wi-Fi, or wireless
local-area network technology. Michael Dell, chairman and chief executive officer of Dell Inc., said hot spots, or public venues offering wireless access, are the fastest growing market in the United States.
An Egyptian government minister observed how quickly airports and hotels were moving to give travelers wireless access. Wi-Fi fits the expectations of the instant-messaging generation and the global road warriors of business. But the availability of a single device to handle the array of wireless technologies including Global System for Mobile Communications, General Packet Radio Service, Bluetooth and Wi-Fi is estimated to be at least 18 months away.
Interest in Internet applications remains high. That is most evident in developing countries, which have tremendous potential for providing access to education and business intelligence. Chinese officials are investing in the country's infrastructure at such a pace that one U.S. executive suggested that in the not-too-distant future, the Chinese may visit America to observe a quaint society. He believes that the United States runs the risk of falling behind in the global marketplace because of its lack of investment in the next-generation Internet.
Everybody at the forum recognized the political implications of a U.S. election year. Yet for leaders of global companies, the costs are compelling. In the past year, 3Com Corp. transitioned from having 90 percent of its engineers based in the United States to having 80 percent in China. What is the impetus for such a move? Companies are looking for a healthy product market, accessible capital, a well-educated workforce, protection of intellectual property and competitive costs.
As with the diffusion of manufacturing jobs, U.S. communities are concerned about the loss of technology jobs, while nations on the receiving end expect to boost their economies. India has made a major play for outsourced technology work in such areas as call centers and software programming, but there is expectation that other white-collar functions, such as accounting, are not far behind.
One leading economist suggested that U.S. worries may be overstated. An argument can be made that reducing the cost of goods and services makes them more accessible to small and midsized companies and thereby fuels growth.
Finally, the focus on solutions and results is crucial to business and government leaders alike. Worldwide, executives are demanding solutions. There is little interest in buying technology parts. Even in the area of security, which continues to be a priority, one executive said, "I want a solution that is secure; I am not interested in buying security packages."
Reed is president of Acquisition Solutions Inc. Previously, she served as chief information officer for the Agriculture Department.