“ The World is Flat”: How Globalization is Changing Our Workforce System Presented by: The Widing Group Robin Widing Michele Roy Martin

Headlines For the month of July 2003, India announced the creation of 30,000 new outsourced jobs. In that same month, US firms carried out 2,087 mass layoff actions resulting in the loss of 226,435 American jobs.

For the month of July 2003, India announced the creation of 30,000 new outsourced jobs.

In that same month, US firms carried out 2,087 mass layoff actions resulting in the loss of 226,435 American jobs.

SOME STATS Since 2000, 150 million educated workers have entered the global workforce. In India, it costs $700/month to provide wages, medical benefits for an entire family, transportation, lunch and dinner to a worker in a call center. A Chinese production worker brings home $265/month or $3195/year

Since 2000, 150 million educated workers have entered the global workforce.

In India, it costs $700/month to provide wages, medical benefits for an entire family, transportation, lunch and dinner to a worker in a call center.

A Chinese production worker brings home $265/month or $3195/year

Defining Globalization in 2006 Globalization has evolved Market competition is global Turbo-charged environment Business goes where the “talent is” Life-time employment replaced by life-time employability.

Globalization has evolved

Market competition is global

Turbo-charged environment

Business goes where the “talent is”

Life-time employment replaced by life-time employability.

The Flatteners: Phase 1 Created a collaborative platform for information and relationships that were global: Berlin Wall, MS Windows Netscape Software that can “talk” across disciplines

Created a collaborative platform for information and relationships that were global:

Berlin Wall, MS Windows

Netscape

Software that can “talk” across disciplines

The Flatteners: Phase 2 Businesses are now building upon a common technological interface and infrastructure to create processes that are more efficient and fuel innovation: Open-sourcing In-sourcing Outsourcing Supply-chaining Off-shoring Information Diving “ Technology on Steroids”

Businesses are now building upon a common technological interface and infrastructure to create processes that are more efficient and fuel innovation:

Open-sourcing

In-sourcing

Outsourcing

Supply-chaining

Off-shoring

Information Diving

“ Technology on Steroids”

How Has Business Changed? Decentralized Organizational Structures Collaborative Partnerships Leverages technology Common data and process standards Functional view of work processes Open communication Emphasis on knowledge & innovation

Decentralized Organizational Structures

Collaborative Partnerships

Leverages technology

Common data and process standards

Functional view of work processes

Open communication

Emphasis on knowledge & innovation

A Globally Competitive Workforce Individuals competing against other individuals. Previously “specialized” skills becoming commodities, performed by the lowest bidder. Workers must possess the knowledge, skills, attitudes and behaviors to continually adapt to ever-changing and escalating labor market requirements. Workers must have the ability to integrate and apply their academic, technical and practical knowledge and skills to solve real-world problems Workers must take charge of their own learning. Ability to work in a team environment and work effectively with customers, coworkers and supervisors.

Individuals competing against other individuals.

Previously “specialized” skills becoming commodities, performed by the lowest bidder.

Workers must possess the knowledge, skills, attitudes and behaviors to continually adapt to ever-changing and escalating labor market requirements.

Workers must have the ability to integrate and apply their academic, technical and practical knowledge and skills to solve real-world problems

Workers must take charge of their own learning.

Ability to work in a team environment and work effectively with customers, coworkers and supervisors.

How does this change jobs? OUT Generalists Basic Literacy Occupations & Career Ladders Employee Life-time employment IN “ Versatilists” Workplace Literacy Skill Clusters & Skill Ladders Entrepreneur Life-time employability

OUT

Generalists

Basic Literacy

Occupations & Career Ladders

Employee

Life-time employment

IN

“ Versatilists”

Workplace Literacy

Skill Clusters & Skill Ladders

Entrepreneur

Life-time employability

Value-Add Services for Job Seekers OUT Barrier assessment Basic Literacy development Service plans Geographic job matching— “what local jobs will match our job seeker’s skills?” IN Comprehensive assessment Workplace Literacy development Career Plans Skill matching– “what global jobs might match our job seeker’s skills?” Skill development for a global market— “What skills could our job seekers develop that would make them competitive in a global market?”

OUT

Barrier assessment

Basic Literacy development

Service plans

Geographic job matching— “what local jobs will match our job seeker’s skills?”

IN

Comprehensive assessment

Workplace Literacy development

Career Plans

Skill matching– “what global jobs might match our job seeker’s skills?”

Skill development for a global market— “What skills could our job seekers develop that would make them competitive in a global market?”

Value-Add Services for Business OUT Taking job orders Job Matching Job Fairs Job development– “hire our local workers” IN High-level skill analysis Trend and data analysis to stay ahead of workforce trends Job development— “how can we help you find the best workers?” Innovative use of technology Focus on building skills that “fill the pipeline”

OUT

Taking job orders

Job Matching

Job Fairs

Job development– “hire our local workers”

IN

High-level skill analysis

Trend and data analysis to stay ahead of workforce trends

Job development— “how can we help you find the best workers?”

Innovative use of technology

Focus on building skills that “fill the pipeline”

Implications for LMI Analysis Look at business and industry differently. Look at jobs/occupations differently. Change our definition of “demand-driven.”

Look at business and industry differently.

Look at jobs/occupations differently.

Change our definition of “demand-driven.”

We Need To . . . Analyze industries and jobs in terms of their “ fungibility ”—what is the likelihood that jobs can be outsourced? Become more knowledgeable about impact of technology and global markets in key industries and occupations Become pro-active and focus on developing “anchored” and “value-add” jobs.

Analyze industries and jobs in terms of their “ fungibility ”—what is the likelihood that jobs can be outsourced?

Become more knowledgeable about impact of technology and global markets in key industries and occupations

Become pro-active and focus on developing “anchored” and “value-add” jobs.

Work in the Global Economy “Fungible” Jobs “Anchored” Jobs Value-add Jobs— “To be competitive you have to be more than plain vanilla.”

“Fungible” Jobs

“Anchored” Jobs

Value-add Jobs— “To be competitive you have to be more than plain vanilla.”

Fungible Jobs (1) Repetitive, skill-based work requiring a minimum of interpretation or decision-making “ As a general rule, the less a job requires independent thought or advanced training , and the more transitory or seasonal its nature , the greater the odds are that job candidates are fungible.”

Repetitive, skill-based work requiring a minimum of interpretation or decision-making

“ As a general rule, the less a job requires independent thought or advanced training , and the more transitory or seasonal its nature , the greater the odds are that job candidates are fungible.”

Fungible Jobs (2) Easily digitized (can be done on computer, over phone) Not tied to a particular geographic location ( this is more flexible than you think ) Processes can be more “automated” Will tend to go to where labor costs are the cheapest

Easily digitized (can be done on computer, over phone)

Not tied to a particular geographic location ( this is more flexible than you think )

Processes can be more “automated”

Will tend to go to where labor costs are the cheapest

Examples of Fungible Jobs Bill payment/processing Medical transcription Insurance claim processing Hotel/Airline reservations Mortgage loan servicing Computer programming & software design Tax return preparation “ Junior” accounting, legal and architectural activities

Bill payment/processing

Medical transcription

Insurance claim processing

Hotel/Airline reservations

Mortgage loan servicing

Computer programming & software design

Tax return preparation

“ Junior” accounting, legal and architectural activities

Sectors Most At Risk Office Support Computer Operators Data Entry Business and Financial Support Computer and Math Professionals Paralegals and Legal Assistants Diagnostic Support Services Medical Transcriptionists SOURCE: “The New Wave of Outsourcing”--Fisher Center for Real Estate and Urban Economics (UC-Berkeley)

Office Support

Computer Operators

Data Entry

Business and Financial Support

Computer and Math Professionals

Paralegals and Legal Assistants

Diagnostic Support Services

Medical Transcriptionists

Attributes of Outsourced Jobs No Face-to-Face Customer Servicing Requirement High Information Content Work Process is Telecommutable and Internet Enabled High Wage Differential with Similar Occupation in Destination Country Low Setup Barriers Low Social Networking Requirement SOURCE: “The New Wave of Outsourcing”--Fisher Center for Real Estate and Urban Economics (UC-Berkeley)

No Face-to-Face Customer Servicing Requirement

High Information Content

Work Process is Telecommutable and Internet Enabled

High Wage Differential with Similar Occupation in Destination Country

Low Setup Barriers

Low Social Networking Requirement

Anchored Jobs Must be performed in a particular geographic location Wages set by local conditions (demand & supply). BUT . . . There are “fungible” parts of anchored jobs that can and will be outsourced.

Must be performed in a particular geographic location

Wages set by local conditions (demand & supply).

BUT . . . There are “fungible” parts of anchored jobs that can and will be outsourced.

Anchored Jobs—Two Tiers Retail sales clerk Waiter/Waitress Cleaning Landscaping/ Lawncare Hair stylist School bus driver Healthcare--Nurse, PT, OT Automotive Tech Over-the-road Truck Driver Chef

Retail sales clerk

Waiter/Waitress

Cleaning

Landscaping/ Lawncare

Hair stylist

School bus driver

Healthcare--Nurse, PT, OT

Automotive Tech

Over-the-road Truck Driver

Chef

Anchored Jobs with Fungible Parts Radiologists in India are reading X-rays for American patients. McDonald’s is outsourcing drive-thru ordering. Hospitals in India now offer reasonably-priced post-surgical sight-seeing trips. They serve 55,000 foreign patients/year 75% are uninsured and underinsured Americans

Radiologists in India are reading X-rays for American patients.

McDonald’s is outsourcing drive-thru ordering.

Hospitals in India now offer reasonably-priced post-surgical sight-seeing trips.

They serve 55,000 foreign patients/year

75% are uninsured and underinsured Americans

“Value-Add” Jobs Requires: Specialized knowledge and/or skills to perform Adaptability Depth/breadth of skill Life-long learning Development of “Whole New Mind” Definition of “value add” changes as technology and work processes are changing. Economic growth directly tied to region’s ability to attract and retain “value-add” work & workers.

Requires:

Specialized knowledge and/or skills to perform

Adaptability

Depth/breadth of skill

Life-long learning

Development of “Whole New Mind”

Definition of “value add” changes as technology and work processes are changing.

Economic growth directly tied to region’s ability to attract and retain “value-add” work & workers.

LMI in a Round World What are the major industries in our area? What jobs do they say they want to fill? What is the capacity of our area to fill those jobs (demographics, education, etc.)? What do we need to do to fill the pipeline?

What are the major industries in our area?

What jobs do they say they want to fill?

What is the capacity of our area to fill those jobs (demographics, education, etc.)?

What do we need to do to fill the pipeline?

LMI in a Flat World Which of our local jobs could be done overseas for less money? Which of our local jobs could be done faster or better by a computer? How will technology change the skill and knowledge requirements of our local jobs? Which jobs offer the greatest stability (self-sufficiency wages and “untouchable” status)? Which do we have? Which do we want to attract?

Which of our local jobs could be done overseas for less money?

Which of our local jobs could be done faster or better by a computer?

How will technology change the skill and knowledge requirements of our local jobs?

Which jobs offer the greatest stability (self-sufficiency wages and “untouchable” status)?

Which do we have?

Which do we want to attract?

Could It Be Done Overseas for Less? Average Salaries of Programmers Country Salary Range Poland and Hungary $4,800 to $8,000 India $5,880 to $11,000 Philippines $6,564 Malaysia $7,200 Russian Federation $5,000 to $7,500 China $8,952 Canada $28,174 Ireland $23,000 to $34,000 Israel $15,000 to $38,000 USA $60,000 to $80,000 Source: CIO magazine, November 2002, Smart Access Survey, Merrill Lynch.

Average Salaries of Programmers

Country Salary Range

Poland and Hungary $4,800 to $8,000

India $5,880 to $11,000

Philippines $6,564

Malaysia $7,200

Russian Federation $5,000 to $7,500

China $8,952

Canada $28,174

Ireland $23,000 to $34,000

Israel $15,000 to $38,000

USA $60,000 to $80,000

Source: CIO magazine, November 2002, Smart

Access Survey, Merrill Lynch.

Could a Computer Do it Faster or Better? Turbo Tax has replaced your accountant. ATMs and on-line banking have replaced your bank teller. E-ticket check-in has replaced your ticket agent. Automation and “do-it-yourself” tests may make Med Techs obsolete.

Turbo Tax has replaced your accountant.

ATMs and on-line banking have replaced your bank teller.

E-ticket check-in has replaced your ticket agent.

Automation and “do-it-yourself” tests may make Med Techs obsolete.

How Does Tech Change the Job? With the Internet you can be your own lawyer. “ Wireless healthcare” changes how medical professionals interact with patients. Automotive technology—workers must be able to work with computerized shop equipment, electronic components and traditional hand tools. Financial Planners—more focus on empathy, ability to work with people.

With the Internet you can be your own lawyer.

“ Wireless healthcare” changes how medical professionals interact with patients.

Automotive technology—workers must be able to work with computerized shop equipment, electronic components and traditional hand tools.

Financial Planners—more focus on empathy, ability to work with people.

Demand is a Two-Way Street What jobs do we want to keep? What jobs do we want to attract? How can we prepare our workers to fill those jobs?

What jobs do we want to keep?

What jobs do we want to attract?

How can we prepare our workers to fill those jobs?

Broaden/Deepen Scope of LMI Global market for talent Who are you really competing against? What is their capacity to provide supply? What jobs do you want to attract? How do you make your region attractive to the kinds of people who want these jobs? Global Demographics Impact on industries and demand for products/services. Impact on local jobs Present and Future Impact of Technology Trends

Global market for talent

Who are you really competing against?

What is their capacity to provide supply?

What jobs do you want to attract?

How do you make your region attractive to the kinds of people who want these jobs?

Global Demographics

Impact on industries and demand for products/services.

Impact on local jobs

Present and Future Impact of Technology Trends

Challenges Skills at a premium Entrepreneurial Engineering, Math & Science Specialized skills The Quiet Crisis Numbers Gap Motivation Gap Education Gap Job Churning How NOT to leave people behind!

Skills at a premium

Entrepreneurial

Engineering, Math & Science

Specialized skills

The Quiet Crisis

Numbers Gap

Motivation Gap

Education Gap

Job Churning

How NOT to leave people behind!

The Good News! Global Economy not finite Universal Interdependence Capitalism doing well America spawns innovation Change brings opportunity Our workforce system has the capacity to address these changes.

Global Economy not finite

Universal Interdependence

Capitalism doing well

America spawns innovation

Change brings opportunity

Our workforce system has the capacity to address these changes.