In this Internet age and in a world flattened by global competition, UNC Professor Jay Swaminathan sees a future in which companies will have to fight harder than ever to keep their edge.
“The biggest scare today is how quickly competitive advantage gets eroded,” Swaminathan, a Ph.D. who teaches in Operations, Technology and Innovation Management at the Kenan-Flagler Business School, told WRAL Local Tech Wire when asked what scares him most about business. “The presence of the Internet and the lack of too many restrictions across the global economy [are] making it harder for firms to hold onto sustained competitive advantage today.”
He will share his thoughts with business leaders in Durham today at LTW’s “The Exchange Executives’ Edge” series event that is focused on “Dual-Shoring” of IT jobs in the U.S. and foreign countries. On the panel with him will be two other experienced international executives, Marco Fregenal, the chief executive officer of Carpio Solutions, and Jamie Duke, chief operating officer at SciQuest. (For details, check the LTW Events tab.)
Businesses can benefit from emerging market opportunities, Swamihathan told LTW, but the task isn’t easy.
“The biggest challenge that firms face today is trying to leverage the tremendous opportunities presented by the emerging countries such as India and China,” Swaminathan explained. “In today’s world, firms that can figure out how to leverage resources globally and create innovations are the ones that are going to be successful.”
A native of India who is now a U.S. citizen, Swaminathan is widely published and has won numerous awards in mass customization, retail operations, supply chain management, the role of technology in innovation and managing operations in emerging economies. He also has consulted with numerous firms, including IBM, Ford, 3Com and Sarah Lee.
He is the author of the forthcoming book, “Indian Economic Superpower: Fiction or Future.” After earning an undergraduate degree in computer science and engineering at IIT Delhi, he came to the U.S. and earned a master’s and a doctorate in industrial administration at Carnegie Mellon University. Before joining Kenan-Flagler, Swaminathan taught at the University of California business school in Berkley.
At UNC, Swaminathan is the Kay and Van Weatherspoon distinguished professor, chair of the OTIA area and a professor of statistics and operations research.
In a Q&A with WRAL LTW, Swaminathan talked about a variety of issues facing business executives and entrepreneurs today, from immigration to a shortage of skilled information technology workers in the United States.
Do you see “dual-shoring,” where more U.S. companies are bringing back to the U.S. jobs that had been outsourced, as a growing trend? What are some of the major reasons?
Dual-shoring is becoming a best practice as firms are striving to be cost-efficient while at the same time be responsive (i.e., be quick). It enables firms to gain cost efficiencies from the overseas deployment while gaining other competencies from the local source. Dual-shoring is also an important risk-management strategy whereby a firm can reduce the risks associated with sole reliance on a supplier or other political risks.
In your opinion, will dual-shoring or in-shoring of IT jobs be of benefit for the U.S. long term?
Dual/in-shoring of IT jobs has benefits for the U.S. in the short term. It is going to have a positive influence … [b]ut it is hard to say what will be the degree of impact in the long term. Fundamentally, that boils down to what kind of competencies can be developed in the on-shore facility and how integral they become in the value chain.
Does this pose an economic threat to India, China and other emerging countries? How are these countries reacting?
Clearly, as more firms start on-shoring more of the jobs, there is going to be some effect on countries such as India and China. However, the degree of off-shoring is so high in comparison to the amount of on-shoring that those effects are not going to be significant. Further, many of the Indian firms in the IT sector are themselves setting up facilities in the U.S.
For example, Wipro is planning to set up a call center in Atlanta this year, and Infosys is recruiting heavily in the U.S. and European markets. Therefore, the on-shore facility that would employ American nationals for the most part may be run by Indian companies.
There has been a great deal of discussion about a shortage of qualified IT workers in the U.S. and therefore immigration guidelines for skilled workers need to be changed. What is your opinion about the visa situation?
There is a huge shortage of workers in the IT area in the U.S. Increasing the number of visas for foreign nationals is a stopgap, (a) short-term solution. But in the long run, we as a nation have to create policies and plans that would make engineering and science an exciting career option so that the number of graduates in these areas increases several-folds over the next decade or two. Barring this, we would have to outsource most of the technical work to graduates outside of the U.S. in countries such as India, China and Russia.
Do you agree with people such as Duke adjunct professor Vivek Wadhwa who say that the U.S. faces the threat of a brain drain if more foreign workers can’t gain green cards and longer U.S. residency, perhaps even citizenship?
I have seen some people leave the country because of the complexities in the visa process, but I do not believe that it is a threat to the economy, the simple reason being there are many more people in this sector who are striving to come to U.S. than those who are returning back due to visa issues.
The drain, in my opinion, is happening because of tremendous career opportunities for mid-level executives in the IT sector who want to return to India (or China). There is a huge demand for people who have had good experience at multinationals and there is a shortage of such talent, therefore such people are in high demand and can get very good compensation (sometimes comparable to their U.S. salaries) and much higher quality of life.
I am a U.S. citizen for the past three years. I had no problem getting my green card. (It took about a year).
I applied for my citizenship after about eight years and got it within six months. (I could have applied five years after getting the green card). I hated all the paperwork and documents that had to submitted, but I think every country has requirements for these things and one needs to be respectful of those.
Given your own story, do you sympathize with other immigrant workers facing these residency and citizenship challenges?
The U.S. has clear policies in terms of criteria for visas and immigration, just like any other country. As an individual, you pick the route that you want to take in that process.
What is the most pressing challenge (or challenges) your consulting clients face? How do you recommend they deal with this situation(s)?
The biggest challenge that firms face today is trying to leverage the tremendous opportunities presented by the emerging countries such as India and China. In today’s world, firms that can figure out how to leverage resources globally and create innovations are the ones that are going to be successful.
In your classes, what’s your primary goal?
[T]he courses that I teach are Global Operations, Global Supply Chain Management and Doing Business in India. In all these courses, my aim is to make our students aware of the sea change that is happening in the global economy and teach them strategies and techniques that will enable them (and their firms) to leverage global resources effectively.
What scares you most about doing business today?
The biggest scare today is how quickly competitive advantage gets eroded. The presence of the internet and the lack of too many restrictions across the global economy is making it harder for firms to hold onto sustained competitive advantage today.