Larry Prusak: The World Is Round
I had a chance to speak with Larry Prusak, well known business guru, executive director of IBM's Institute of Knowledge Management, and the author of Working Knowledge and In Good Company. He is planning a presentation for the upcoming Collaborative Technology Conference 2006 called The World Is Round, which he intends as a direct challenge of Thomas Friedman's The World Is Flat meme.
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Prusak argues -- not totally persuasively, in my view -- that Friedman is a self-described technological determinist, and as a result has deluded himself -- and us, I suppose -- that work will flow outward from today's more developed nations out to the less developed ones based on the frictionlessness of the Internet and other communication technologies. This, Prusak states, does not take into account the necessary societal elements necessary for the work to be performed, like stable institutions and social capital. He thinks that because we are such "technoutopians" in the US, we are likely to buy in on Friedman's position, even though real knowledge is highly contextual, and therefore much of the work that going offshore cannot be done well there. He granted that software can be built in India, for example, but he believes that other, more service-oriented work -- like call centers -- will just not be handled well enough in distant locales to make it cost effective.
I told him that I was unconvinced about his arguments, although I am sure that some people will embrace them eagerly: not necessarily because they are an accurate prediction of the future, but, sadly, because it will be what many people want to hear.
In Wednesday's Washington Post, an editorial by Howard Myerson mentions a recent article by Alan Blinder, a former vice chairman of the Federal Reserve's board of governors and now an economist at Princeton, that tells a quite different story about the shape of the world and things to come.
[from Will Your Job Survive?] In the new global order, Blinder writes, not just manufacturing jobs but a large number of service jobs will be performed in cheaper climes. Indeed, only hands-on or face-to-face services look safe. "Janitors and crane operators are probably immune to foreign competition," Blinder writes, "accountants and computer programmers are not."
There follow some back-of-the-envelope calculations as Blinder totes up the number of jobs in tradable and non-tradable sectors. Then comes his (necessarily imprecise) bottom line: "The total number of current U.S. service-sector jobs that will be susceptible to offshoring in the electronic future is two to three times the total number of current manufacturing jobs (which is about 14 million)." As Blinder believes that all those manufacturing jobs are offshorable, too, the grand total of American jobs that could be bound for Bangalore or Bangladesh is somewhere between 42 million and 56 million. That doesn't mean all those jobs are going to be exported. It does mean that the Americans performing them will be in competition with people who will do the same work for a whole lot less.
It is a strange turn of events that those with the most education may find their middle class existence threatened, as accounting and software work moves to Estonia or India. Those with specialized skills, especially those that involve face-to-face and personal relationships—like divorce lawyers or software sales staff—are more likely to hold onto to their jobs. In this we may be hearing a distant echo of Prusak's contextual knowledge argument, but in reality it’s not about having some specific sort of knowledge, it's really about the nature of the work.
So, in the final analysis, I fall in with Friedman and Blinder: absent some unforeseen new development, that giant sucking sound is the movement of white collar work out of the developed countries -- like the US -- out to the less developed countries. The fact that call center operators don't have a perfect understanding of North American vocal nuances is certainly relevant, but will not be enough to stem the tide. And, yes, it is the proliferation of low-cost communication technologies that are making this not only possible, but inevitable. So, I guess I am a determinist, too.
What are we going to do to find important work for 40 or 50 million Americans whose programming and accounting jobs will be gone? I can't foresee that programmers will willingly become crane operators or taxi drivers, or that all those accountants will become nurses working in old age homes caring for the baby boomers. But if the flat worlders are right -- and I think we are -- that is exactly what will be happening. Of course, the old age homes may be located in the developing world, soon, as well.