From Chapter V

                                      WHAT’S SERVICE GOT TO DO WITH IT?

In the same way that the United States has ceded vast swaths of its manufacturing sectors to overseas producers, so too, are we in danger of losing much of our service industry. It might be comforting to chuckle at the singsong speech of the young man or woman call-center attendant in Manila, the Philippines, who is trying to help a U.S. caller identify an unauthorized charge on his telephone bill (never mind that the attendant is most likely fluent in two other languages besides English!). Rest assured, however, that the Filipinos, the Indians, the Malaysians, and others will eventually overcome their accentuation and inflection difficulties with the English language, and when next we call to ask about a questionable charge on our phone bill we won’t know if the attendant is in Manila or in Omaha. We will chuckle no more.

In a similar vein, I am reminded that when I was in graduate school—admittedly a very long time ago—it was widely believed that software engineering would never slip from our grasp as manufacturing was then just beginning to do in a big way. The conventional wisdom, so it ran, was that the Asians—meaning the East Asians generally, and the Chinese specifically—could not master the intricacies of computer programming. The implication was that Asian cognition was somehow different: it was holistic, contextual, intuitive, and tolerant of ambiguity. In contrast, computer programming as a hierarchical, procedural, precise, and sequential process seemed to be tailor made for the more analytical Western mind. Surprise, surprise. The Chinese have apparently shed their cognitive baggage! The Chinese are not quite there yet, but in another 10 years, perhaps, they will be in a position to challenge the Indians for dominance in software engineering on the world stage. It should be noted that the threat to our service industries isn’t confined to the Far East. In addition to the threats posed by the current front runners in Eastern Europe—Czech Republic, Hungary, Poland, and Russia—I have personally met with delegations from two other countries you might not think are in the same league: Egypt and Morocco. Each has the potential to play the role of spoiler on the world stage. Both countries, besides offering the obvious wage-cost benefits, provide tax-free zones, efficient broadband communication access, and a highly educated and multilingual workforce. There is more. This workforce, as many employers who have taken their business offshore can attest, is very grateful to have jobs and will reward the employer with little absenteeism or turnover.

If all of this isn’t enough to cast a pall over the future of much of our service industries, consider a recent trend: American firms outsourcing Spanish-language call-center services—not just the long-outsourced high-end information technology and business processing services—to locations in South America, notably Argentina, to deal with U.S.-based Hispanic consumers. Think about it. The United States, a nation of roughly 40–50 million Hispanics, is outsourcing its call-center work to Argentina to avail itself of Spanish-language service workers! (In another reminder of the fixation of today’s enterprise with short-term results—or perhaps a reflection of the short-term memories of enterprise leadership— consider that Argentina has been an economic basket case during the last 30 years, bearing witness to spasms of hyperinflation, civil turmoil, and, most relevant to the foreign investor, defaulting on its debt on four different occasions!)

Is there a lesson in all of this? Recall our discussion in chapter 1 about the likelihood that the modern enterprise, regardless of industry, will be suffused with all manner of service activities and interactions. If manufacturing slipped away from the United States in a generation, it won’t take nearly as long for service activities—more easily outsourceable than manufacturing ever was—to disappear from our shores. The process, unfortunately, is already well on its way in fields as diverse as software engineering, product design, call centers, and a number of back-office business processes. If the United States is to avoid a nuclear winter in its service industries, it has no choice but to excel in service, do so at globally competitive prices, and do so now.

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