It was the noted American economist, Thomas Friedman, who first mooted ‘the world is flat’ theory in his book of the same name. According to him, it is the Internet that has made this possible.
Suddenly, a person sitting in the US could connect to someone in India or anywhere else in the world where computers and Internet connections were available. This opened up exciting possibilities for global commerce. In short, it flattened the world and made it a level field for competition where the best services could be availed of at the best rates.
This in turn led to the ‘outsourcing’ phenomenon. In India, it started with European airline companies outsourcing their back office operations to India. Soon, many American and European companies began outsourcing to India to take advantage of the low cost of labor and the vast pool of English-speaking, literate and skilled personnel in various sectors.
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In the 70s, Concorde aircraft were produced as a joint venture between France and the UK. But today, the world’s largest airlines, the Airbus- 380, sources parts even from India. Thus, it is not just services but also manufacturing that has come under the outsourcing or off-shoring umbrella.
The flattening of the world has brought equal opportunities for developing countries to garner a share of the global economic pie. The growth of BPOs and KPOs in India has transformed the economic profile of all sections of the country from Tier I cities to Tier II and Tier III towns. Growing affluence and improving lifestyles have changed the face of India from a struggling third world country to a global powerhouse.
This is the power of a flat world. Almost any activity can be outsourced to a country where the same thing can be done at half the cost without any compromise on quality. This is possible because of cheaper labor, lower taxes, subsidized energy, etc. This has helped the companies which outsource their work to make massive profits.
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At the same time, countries which take up outsourced work also benefit in the form of generating more jobs which help reduce poverty. Medical transcription, legal transcription, advertising, fashion designing, financial operations, etc., are only some among the vast spectrum of activities that are being outsourced today.
Supply-chaining enables ‘horizontal collaboration’ among suppliers, retailers and customers for better global collaboration. Work-flow software empowers people to design, display, manage and collaborate on business data which had been handled manually before. This helped more work to flow faster between companies and continents.
The spread of Internet, email, mobile telephony, etc has compressed distances and the time taken for communication. All these are the tools which man has used to create a flat world.