India Inside: The Emerging Innovation Challenge to the West by Nirmalya Kumar & Phanish Puranam

Author:Nirmalya Kumar & Phanish Puranam
Language: eng
Format: mobi
Publisher: Harvard Business Review Press
Published: 2011-10-17T14:00:00+00:00

The Death of Distance? Not Quite, but . . .

Students and seminar audiences often ask us, somewhat skeptically, just how widely applicable the global delivery model really is. By now everybody has probably heard the argument: “I still have to get my haircut/eat my meals/have my tailoring done right here. Try offshoring that!” Our usual rejoinder is, “Fine, but someone can book your appointment/reserve your table/do the actual stitching anywhere in the world.” The attractions of wage arbitrage and specialization have always pushed people to find ways to divide tasks across people and organizations. The global delivery model offers a systematic method for doing so.

Intuitively, this process should work well for fairly routine, mundane, standardized tasks (e.g., booking flights and making restaurant reservations). Can it work just as well for high-value-added knowledge work or creative work such as movie making, R&D, or analytics? This may in fact be asking the wrong question. The key insight from our research into the global delivery model is that the ability to execute a task remotely has little relation to whether the work itself is simple and standardized. Rather, it depends on whether the links across the subtasks can be managed across distances. If work can be divided into chunks that can be executed more or less independently, whether the chunks themselves involve creative or standardized work matter less. It seems like a simple idea, but it took us about two years to confirm it with data.4

And for the evidence that work that is more creative can be offshored, consider Tata Elxsi. This division of the Tata Group set up a unit in Santa Monica and hired Academy Award–winning special effects artist Joel Hynek to get a slice of the Hollywood action.5 The work will be divided between the Hollywood branch and Tata Elxsi’s Mumbai offices, much the same way that Aurigene Discovery Technologies split contract R&D work between its Boston and Bengaluru offices (chapter 3). Having worked on movies like Spider-Man 3, Tata Elxsi estimated that about a quarter of the most sophisticated work on a film is kept for its California office, with the remainder being done in India. The effective cost savings to clients could be as much as 40 percent, and as a result, Hollywood is moving from outsourcing basic functions to having Indian visual effects firms bid for larger and more complete contracts.

Almost Telepathy . . .

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