The World is Hilly © 2006, Jesse Kedy

Overview The Florida–Friedman Flaws Are Economic Hills Important? What is BPO? Argument: What is Happening? How is it Happening? Examples & Proof Future of BPO © 2006, Jesse Kedy

The Florida–Friedman Flaws

Are Economic Hills Important?

What is BPO?

Argument: What is Happening?

How is it Happening?

Examples & Proof

Future of BPO

Our World: Spiky or Flat? Florida Peaks, Hills, and Valleys Hills Support Peaks Gravitational Pull Friedman Economic Playing Field Levels of Competition Individual Roles Static “Snapshot”, not Trend Innovation ≠ Development Economic Activity: One-Way Reason for ≠ Purpose of Hills Too Forward-Looking Relevance to Economic Development Dependence of Tier 2 & Tier 3 Locations The Flaws © 2006, Jesse Kedy

Florida

Peaks, Hills, and Valleys

Hills Support Peaks

Gravitational Pull

Friedman

Economic Playing Field

Levels of Competition

Individual Roles

Static “Snapshot”, not Trend

Innovation ≠ Development

Economic Activity: One-Way

Reason for ≠ Purpose of Hills

Too Forward-Looking

Relevance to Economic Development

Dependence of Tier 2 & Tier 3 Locations

Focus: Economic Hills Characteristics “ Manufacture the world’s established goods” “ Take its calls” “ Support its innovation engines” Importance Free Up MNE Resources Support Global Innovation in Spikes Create Process Innovation © 2006, Jesse Kedy

Characteristics

“ Manufacture the world’s established goods”

“ Take its calls”

“ Support its innovation engines”

Importance

Free Up MNE Resources

Support Global Innovation in Spikes

Create Process Innovation

Business Process Outsourcing (BPO) Interaction Level: Back Office Middle Office Front Office Horizontal vs. Vertical © 2006, Jesse Kedy Low Complexity Middle-End Higher Complexity Data entry; Processing & Digitization Pre-publishing Website support Call centers; Reservations Customer service Tech support Finance; Accounting Insurance processing Loans/ Mortgage/ Tax processing Back-Office Services (Usually Horizontal) Front-office Services Back-Office Middle-Office (Industry-Specific)

Interaction Level:

Back Office

Middle Office

Front Office

Main Argument: What is Really Happening Some Economic Activity Flows Inward Related to Core Business High Complexity/ Value-Added Other Activity Flows Outward BPO Other Supporting Functions Relatively Faster Outward Movement ( from Spikes ) Overall : Disparities will Decrease , not Increase © 2006, Jesse Kedy

Some Economic Activity Flows Inward

Related to Core Business

High Complexity/ Value-Added

Other Activity Flows Outward

BPO

Other Supporting Functions

Relatively Faster Outward Movement ( from Spikes )

Overall : Disparities will Decrease , not Increase

How this is Happening Globalization : Commoditizing Capabilities ( Taking the R out of VRIO ) MNE Goals : Sustained Competitive Advantage MNE Focus : Increasing Rare / Unique Capabilities Problem : Limited Resources Solution : Eliminate Non-Core Activities MNE Entrepreneurialism ( Cultural Shift ) © 2006, Jesse Kedy

Globalization : Commoditizing Capabilities

( Taking the R out of VRIO )

MNE Goals : Sustained Competitive Advantage

MNE Focus : Increasing Rare / Unique Capabilities

Problem : Limited Resources

Solution : Eliminate Non-Core Activities

MNE Entrepreneurialism ( Cultural Shift )

Economic Spikes (Level 1) Large Hills (Level 2) Emerging Hills (Level 3) © 2006, Jesse Kedy

Openness to Diversity Reliance on B2B Relationships More Offshore BPO (to L-2) More Secure Transactions & Reliability BPO Provider Improvements Sub-Contracting Low-End Processes (to L-3) L-3 Areas – Specialization & Sophistication Less Emigration from L-3 L-2 Saturation  Need to Innovate Results of the Cultural Shift © 2006, Jesse Kedy

Openness to Diversity

Reliance on B2B Relationships

More Offshore BPO (to L-2)

More Secure Transactions & Reliability

BPO Provider Improvements

Sub-Contracting Low-End Processes (to L-3)

L-3 Areas – Specialization & Sophistication

Less Emigration from L-3

L-2 Saturation  Need to Innovate

India’s BPO Clusters L-3 L-2 © 2006, Jesse Kedy

India’s BPO Clusters (cont)

The Future of BPO Clusters © 2006, Jesse Kedy

© 2006, Jesse Kedy

Questions © 2006, Jesse Kedy