If you were a CEO of a multi-national corporation — with mini-companies in twenty different countries all with their own management, administration, finance, warehouse and support operations — how much money could you save if you reduced your financial centers from twenty to, say, two?
Quite a bit, wouldn’t you say? There is tremendous fixed costs associated with permanent operations in a particular place and reducing those costs through having functions in fewer places. Many companies have significantly reduced costs on just eliminating data centers from many to two (for redundancy).
As noted yesterday in The Global Enterprise: IBM changes the rules, having a company make the decision to break from a multi-national approach to operations to one of a “global enterprise” means that finding the right place to have a function allows you to evaluate all factors for that function. And cost is one of those factors as seen by IBM hiring “90,000 people in low cost countries” in the last three years.
From a company viewpoint, this makes perfect sense — find the right people with the right talent at the lowest cost to perform this function.
There are lots of implications for Cubicle Warriors as well:
No matter how you slice it, large companies with global operations will look hard at the “global enterprise” model being created by IBM. If a company makes a decision to move in this direction, the probability of being laid off significantly increases while the transition is done and — the more this approach is implemented — the harder it will be to manage our career.
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