Globalization takes on a new look

Cross-fertilization of companies and countries is creating something brand-new Globalization is not only alive and well, it's happening on a massive scale. How else to explain why certain Indian outsourcing providers are buying up U.S.-based companies? They do this to get deeper domain or industry expertise, but meanwhile, U.S. companies are pouring millions of dollars and hiring thousands of employees in India

Cross-fertilization of companies and countries is creating something brand-new

Globalization is not only alive and well, it's happening on a massive scale.

How else to explain why certain Indian outsourcing providers are buying up U.S.-based companies? They do this to get deeper domain or industry expertise, but meanwhile, U.S. companies are pouring millions of dollars and hiring thousands of employees in India and China.

For U.S. companies, this practice allows them to offer a global delivery model. They can provide strong technical and business process capabilities at the best possible cost, accomplished through offshoring or the use of temporary (H-1B) workers.

IBM alone has 53,000 employees in its development and datacenters in India. A Unisys representative sounded almost apologetic when he told me that it has only 6,000 employees in India but added that the company is ramping up quickly.

The fact is that companies cannot be stateless; they have to be
headquartered somewhere. That "somewhere," however, merely pays lip service to local and international laws. For instance, a recently formed company, Darwin/Suzsoft, has headquarters in China as well as the United States and is a melding of Darwin Partners (a U.S. IT consultancy) and Suzsoft (a Chinese outsourcer for IT services).

It’s important to remember that the concept of globalization does not simply refer to companies with worldwide reach. There have always been plenty of those: General Motors, Colgate Palmolive, and the like. Rather, it represents a complete cross-fertilization where companies have global integration of their workforces, their markets, and perhaps over time, their identities.

I present for your edification just one example: Caritor, an outsourcing company with Indian roots but with U.S.-based headquarters. It recently acquired Keane, a U.S. company that specializes in financial services, insurance, health care, pharmaceuticals, retail, and telecommunications. The acquisition strategy follows the pattern of Indian companies such as Infosys and Wipro that have been acquiring U.S-based companies. The Indian companies need to buy what they cannot build: industry or domain expertise in order to move upmarket. Thus, Keane, with its depth of services and expertise, enhances Caritor's market position.

Keane also gives Caritor something it needed badly in order to go upstream and capture bigger deployments and customers: a large U.S. presence.

And yet, I asked Imran Sayeed, senior vice president of global industry solutions at Keane, if Caritor is a U.S.-based presence, why would it need to acquire Keene?