When Web 2.0 Met The Flat World

The scene is a back alley in Bangalore. Two shadowy figures meet warily. "I'm Thomas," says the man with the mustache. "I'm with a syndicate called Globalization, Inc." The other nods. He's taller, weathered like the Irish hills. "Tim's the name," he says. "I run a gang called the Collaborators. It's time we did a deal."If you haven't guessed, this is a story about what happens when the collaborative technologies that underpin Web 2.0 intersect with the infrastructure and business models that are driving global outsourcing. The short answer is, "You ain't seen nothing yet" when it comes to the destruction of old business models.

Late Thursday I took in a panel on global business that featured Thomas 'The World Is Flat' Friedman and Tim 'Web 2.0' O'Reilly. It was hard not to come away with the feeling that what we've been thinking about as revolutions in their own rights--offshoring and the participatory Web--are really just evolutions that have set the stage for a more profound change that will occur when those phenomena are combined. We're set for a "whatever can be done, will be done" future said Friedman.

And there's a lot that can be done when you mix technologies that make online collaboration frictionless with those that enable that collaboration to take place across the globe. O'Reilly said that Web 2.0 is all about "building systems that harness the network effect so that the systems get better the more people use them." Well, suddenly there's a lot "more people" when India, China and other emerging countries that are just starting to get fully wired (thanks to outsourcing) enter the equation. Under this scenario, Web 2.0 becomes WWW 2.0--that is, it's the truly worldwide version.

One company that's begun harnessing the synergies that happen when you get Tim and Thomas in the same room (literally and metaphorically) is news agency Reuters. Using a platform from Brisbane, CA-based Collabnet that engenders Web 2.0-style collaboration among geographically dispersed workers, the company has created an internal software team that unites developers in Beijing, Bangkok and parts of Europe and the U.S.

This is more than just farming out routine coding to the workers in the low-cost countries. (Not to further confuse things, but I'm going to call that model Outsourcing 1.0.). With a robust collaboration platform in place, the company's programmers in Thailand and China are as central to product development as those in the West. Using Wikis, blogs and other Web 2.0 tools supported by Collabnet, Reuters' developers in Asia are as about in the loop as you can get. "We're horizontal flatteners," said Reuters' COO Devin Wenig, who was sitting alongside O'Reilly and Friedman Thursday in New York.

It's my bet that Darwinian evolution will ensure that this kind of Web 2.0-powered globalization will become the business model of the future. Any major company that fails to create an infrastructure and culture through which it can absorb brainpower from the world's best and brightest, regardless of location, will be at an enormous disadvantage to competitors who do just that.

Said Friedman: "If you have a CEO that is outsourcing just to save money, tell me who it is so I can short their stock." On the other hand, expect a bull market for WWW 2.0 companies.