newman ross

7/31/2019 Newman Ross

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Oxford University ConferenceConfronting the Challenge of Technology for Development:

Experiences from the BRICS

Conference Track:

Impact of the rising technological power in BRICS on the world economy

Information Technology Outsourcing Industries inthe BRICS Countries A Comparative Assessment

Authors:Dr. Charles NewmanProfessor and Program Director for StrategyGraduate School of Management and TechnologyUniversity of Maryland University CollegeAdelphi, Maryland, USA

e-mail: [email protected]. 561-483-1664

Dr. Jane RossProfessor and Program Director for Global BusinessGraduate School of Management and TechnologyUniversity of Maryland University CollegeAdelphi, Maryland, USAe-mail:[email protected]. 780-672-9315


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Introduction

Various studies conducted over the past 10 years have shown that information

technology outsourcing allows firms to reduce high overhead costs and improve

productivity, contribute flexibility, and thus improve overall performance of the firm.

The BRICS countries of Brazil, Russia, India, China and South Africa are all

experiencing the growth of Information Technology Outsourcing as a new industry

impacting significantly on the countries themselves and the world economy.

However, offshore IT outsourcing brings new challenges and risks (Knapp 2007). To

address these challenges and risks, this paper examines the IT Outsourcing industry in

the BRICS countries of Brazil, Russia, India, China and South Africa.

Information Technology Outsourcing, which, for the BRICS in total, generated over

$31 billion in revenue in 2007 is expected to generate over $107 billion in revenue by

2011 (EIU). In addition to providing considerable export earnings for these countries,

the investment in and experience gained in this business is supporting the overall

introduction of Information Technology into the domestic markets of these countries

and having a profound impact on their economic development.

The goal of this working paper is to review selected historical and forecasted data

about the IT Outsourcing industry in the BRICS countries on a comparative basis,

applying important conceptual frameworks to understand the industry structure (Five

Forces Analysis), industry global competitiveness (Five Diamond Model) and cultural

environment (Cultural Dimensions Model and Other) to reach tentative observational

conclusions especiallyabout the potential impact of IT on economic growth and

social development, and establish critical areas for further research.

Particular emphasis is paid to the relevance of IT Outsourcing in relation to the 8th

Millennium Development Goal: Creating a global partnership for development that

will foster more favourable international trade and financial conditions (UNDP

2008).


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Definitional Foundation

To clarify the terminology used in this paper the following definitions will apply:

Information Technology is "the study, design, development, implementation,

support or management of computer-based information systems, particularly software

applications and computer hardware." Encompassing the computer and information

systems industries, information technology is the capability to electronically input,

process, store, output, transmit, and receive data and information, including text,

graphics, sound, and video, as well as the ability to control machines of all kinds

electronically (Information Technology Association of America 2006).

Outsourcing is an arrangement in which one company provides services for another

company that could also be or usually have been provided in-house. Outsourcing is a

trend that is becoming more common in information technology and other industries

for services that have usually been regarded as intrinsic to managing a business. In

some cases, the entire information management of a company is outsourced, including

planning and business analysis as well as the installation, management, and servicing

of the network and workstations. Outsourcing can range from the large contract in

which a company like IBM manages IT services for a company like Xerox to the

practice of hiring contractors and temporary office workers on an individual basis

(cio.com definitions 2007).

Offshore outsourcing. Offshore simply means "any country other than your own. A

type of business process outsourcing (BPO), is the exporting of IT-related work from

the United States and other developed countries to areas of the world where there is

both relative political stability and lower labor costs or tax savings. Outsourcing is an

arrangement in which one company provides services for another company that could

also be or usually have been provided in-house." The Internet and high-speed Internet

connections make it possible for outsourcing to be carried out anywhere in the world,

a business trend economists call globalization. In general, domestic companies

interested in offshore outsourcing are not only trying to save money in order to be

more price-competitive against each other, but also to enable them to compete with

businesses in other countries (cio.com definitions 2007).


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Nearshore Outsourcing. Nearshore outsourcing is the practice of getting work done

or services performed by people in neighboring countries rather than in your own

country. Geographic proximity means that travel and communications are generally

easier and less expensive, and that there are likely to be at least some commonalities

between thecultures, and people are more likely to speak the same language (cio.com

definitions 2007.

Software Exports

While the worldwide sale and development of software has mushroomed over the last

two decades, its national importance and unique nature has spawned new concerns

and policy issues, especially in the trade arena (Lall 2003). There are various ways to

transmit and distribute software. It can be shipped as a tangible product (on optical

and magnetic disks or tape), increasingly as an intangible product (transmittedelectronically via the Internet). It can be exported pre-loaded on a computer or

embedded in electronic devices, such as medical equipment and automotive controls.

It also can be conveyed abroad by software programmers and engineers as part of an

information technology (IT) service, or disseminated via licensing mechanisms that

authorize foreign buyers to use a particular program, or to increase the number of

users, who can access a program that is already installed (Woods 2006).

The Millennium Goals

The Millennium Development Goals (MDGs) are eight goals to be achieved by 2015

that respond to the world's main development challenges. The MDGs are drawn from

the actions and targets contained in the Millennium Declaration that was adopted by

189 nations-and signed by 147 heads of state and governments during the UN

Millennium Summit in September 2000 (UNDP 2008).


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Goal 8 of the Millennium Development Goals

What are the Targets?

Sets out by the year 2015 to:

Develop further an open trading and financial system that is rule-based, predictable andnon-discriminatory. Includes a commitment to good governance, development andpoverty reductionnationally and internationally.

Address the least developed countries special needs. This includes tariff- and quota-freeaccess for their exports; enhanced debt relief for heavily indebted poor countries;cancellation of official bilateral debt; and more generous official development assistancefor countries committed to poverty reduction.

Address the special needs of landlocked and small island developing States.

Deal comprehensively with developing countries debt problems through national andinternational measures to make debt sustainable in the long term.

In cooperation with the developing countries, develop decent and productive work foryouth.

In cooperation with pharmaceutical companies, provide access to affordable essentialdrugs in developing countries.

In cooperation with the private sector, make available the benefits of newtechnologiesespecially information and communications technologies.

(Millennium Campaign 2008)


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Overall Information Technology Landscape

In the context of economic development, the IT Outsourcing Industry and its size as

expressed by IT Software Exports, should be seen in the context of the overall Global

Information Technology Industry, its IT Software Component, the demand for IT in

major world IT marketplaces as well as the local demand for the same IT software

services in the local country environment. This building block approach is illustrated

below.

Figure 1: Sizing the Supply and Demand for IT Offshore Outsourcing

Sizing the Supply and Demand forIT Offshore Outsourcing

SoftwareExports

Local Demand:IT ServicesSpending

World DemandIT Offshore Services

Spending

Total IT Spending


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World Total IT Spending

In 2007, over $1.2 trillion was spent on Information Technology globally, and this is

expected to grow at just under 6% per year to $1.5 trillion in 2011.The United States

is the largest market for IT spending, representing approximately 38% of the world

total. It, thus, remains the largest single market for those companies and countries that

wish to offer IT Offshoring services.

Chart 1: World Total IT Spending (EIU 2007)

WORLD TOTAL IT SPENDING ($MM)

0.00

200,000.00

400,000.00

600,000.00

800,000.00

1,000,000.00

1,200,000.00

1,400,000.00

1,600,000.00

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year

($MM)

WORLD

The BRICS countries had $108 billion of IT spending in 2007 and this will grow at

over 12% per year to reach $172 billion in 2011. The establishment of a domestic

overall IT industry is an important factor in providing global competitiveness for IT

Offshoring capabilities in these countries.


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Chart 2: BRICS IT Spending (EIU 2007).

BRICS Total IT Spending ($MM)

0.0

10,000.0

20,000.0

30,000.0

40,000.0

50,000.0

60,000.0

70,000.0

80,000.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year

($MM

BRAZIL

RUSSIA

INDIA

CHINA

SOUTH AFRICA

Information Technology Services Spending (Market Potential)

After taking out the cost of hardware and of pre-packaged software, the remaining

software and operational IT spending is considered to be IT Services Spending. That

is the component of IT spending that includes IT Outsourcing, so it may be seen as a

more refined market potential for IT Offshore Outsourcing. In 2007 IT Services

Spending totaled $489 billion globally and is expected to grow 5.9% per year,

reaching $616 billion in 2011.

Chart 3: World Total IT Services Spending (EIU 2007)

WORLD TOTAL IT SERVICES SPENDING ($MM)

0

100000

200000

300000

400000

500000

600000

700000

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year

($MM)

WORLD


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BRICS Countries IT Services Spending

Within the BRICS countries, IT Services Spending totaled $27 billion in 2007 and is

forecasted to grow 16.5% per year to reach $51 billion in 2011. This demonstration of

local demand for IT Services represents an important element in the development of

IT Software Service capabilities which can lead to sustainable competitive capabilities

for also providing these services to markets offshore. China and Brazil are and will

remain during the forecast period the largest domestic spenders on IT Services which

correlates with the size and technological sophistication of their domestic business

environments.

Chart 4: BRICS IT Services Spending

BRICS COUNTRIES IT SERVICES SPENDING

0.0

2,000.0

4,000.0

6,000.0

8,000.0

10,000.0

12,000.0

14,000.0

16,000.0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Year

$MM

BRAZIL

RUSSIA

INDIA

CHINASOUTH AFRICA

Worldwide IT Offshore IT Services Spending (Demand)

The demand for IT Offshore Outsourcing reached $18 billion in 2007 and is

conservatively expected to grow at 17.6% per year to $29 billion in 2010 (IDC 2007).


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Table 1. Worldwide offshore IT services spending (IDC: 2007).

Worldwide Offshore IT Services Spending ($MM)

Country/Region 2005 2006 2007 2008 2009 2010 CAGR%

United States 10,394 12,214 14,482 17,210 20,298 23,659 17.9

Canada 146 155 165 175 185 195 6.0

EMEA 2,275 2,726 3,212 3,758 4,200 4,659 15.6

Asia-Pacific 250 338 438 564 699 862 28.0

TOTAL 13,066 15,433 18,297 21,707 25,382 29,404 17.6

These figures demand that forecasts take into consideration, not only the inherent

demand due to the size and growth of the developed worlds IT sectors, but also the

constraining factors of regulation, foreign exchange rates, and political pressures.

BRICS countries IT Outsourcing Experience and Forecast

A major component of IT Offshore Outsourcing from the BRICS countries is

expressed as their level of IT Software Exports which reached $31 billion in 2007 and

is forecasted to grow at 36% per year to $107 billion in 2011. This constitutes a

significant level of export and spending that can be interpreted in a broader sense as

business leaders worldwide, and the corporations they represent, negotiate contracts

and attempt to improve business processes and applications.

Figure 2. BRICS IT Outsourcing

BRICS IT Outsourcing 2011 ($B)

Brazil

$5B

Russia

$24B

India

$50B

China

$19B

South Africa

$9B

0

5

10

15

20

25

30

35

40

45

0 10 20 30 40 50 60 70 80 90 100

2007-2011 CAGR %

2003-2007CAGR%

Brazil

Russia

India

ChinaSouth Africa


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India will continue to dominate the IT Offshoring business, however, very rapid

growth by Russia will bring it to the number two position by 2011. Brazil, while

remaining relatively small, will be experiencing the second highest growth during the

2007-2011 period. China, will become more important as time goes on and South

Africa will be an emerging player (BRASSCOM 2007, NASSCOM 2007, RUSSOFT

2007, China Software Industry Association 2005, EIU 2007, South Africa

Information Technology Association 2008).

The magnitude of the amount of IT Offshoring activity and its exceptional growth

rates make it one of the most important contributors to the economic development and

global competitiveness of the BRICS countries.

Porters Five Diamond Model of Country Competitiveness in IT Outsourcing

To see the BRICS countries comparative strategic competitiveness in the IT

Outsourcing Industry, it is useful to apply Porters Five Diamond Model (Porter

1990).. This will illustrate the comparative factor conditions, demand conditions,

relating and supporting industries, and the strategy and structure of the IT

Outsourcing industry, which in turn will allow for preliminary conclusions about the

relative viability of a nation competing n a particular international market.

Figure 3. Porters National Diamond Framework (Porter (1990)

FACTOR CONDITIONS

DEMANDCONDITIONS

RELATING ANDSUPPORTINGINDUSTRIES

STRATEGY, STRUCTURE,AND RIVALRY

Porters National Diamond Framework

1. FACTOR CONDITIONSHome grownresources/capabilities more importantthan natural endowments.

2. RELATED AND SUPPORTING INDUSTRIESKey role of industry clusters3. DEMAND CONDITIONSDiscerning domestic customers drive quality &


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Each of the BRICS counties can be examined from the perspective of its ability to

compete in the global market for IT Outsourcing Services. The determinants of

national competitive advantage identified by Porter (1990) provide a framework for

doing this. The results below are based upon the authors assessments.

FACTOR CONDITIONS: The nations position in factors of production, such asskilled labor or infrastructure, necessary to compete in a given industry.

Brazil - Large, well established domestic IT industry, moderate but growingIT workforce, with low English skills.

Russia - Large, well established domestic IT industry, large highly educatedIT workforce, with low English skills.

India - Large, well established domestic IT industry, large highly educated IT

workforce with good English skills.

China - Large, but fairly new domestic IT industry, with a large highlyeducated IT workforce, and low English skills.

South Africa - Moderately sized and new domestic IT industry, with ashortage of highly educated IT workforce having good English skills.

RELATED AND SUPPORTING INDUSTRIES: The presence or absence in thenation of supplier industries and other related industries that are internationallycompetitive.

Brazil - Strong telecom industry with some IT hardware industry developing.

Russia - Moderate telecom industry with some IT hardware industry

India - Moderate telecom industry with very little IT hardware industry

China - Strong telecom industry with moderately strong IT hardware industry

South Africa - Moderate telecom industry and no IT hardware industry

DEMAND CONDITIONS: The nature of home-market demand for the industrysproduct or service.

BrazilRelatively large and sophisticated industrial and retail industry environmentwhich require IT support.


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RussiaRelatively large and sophisticated government, industrial and retail industryenvironment which require IT support.

IndiaModerately large and sophisticated government, industrial and retail industry

environment which require IT support.

ChinaVery large and sophisticated government, industrial and retail industryenvironment which require IT support.

South AfricaModerate government, industrial and retail industry environment needing ITsupport.

STRATEGY, STRUCTURE, RIVALRY: The conditions in the nation governinghow companies are created, organized, and managed, as well as the nature of

domestic rivalry.

BrazilMostly modest sized domestic IT Outsourcing firms and a few largemultinational IT Outsourcing firms. Level of competition is moderate.

RussiaMostly small sized domestic IT Outsourcing firms, with few largemultinational IT Outsourcing firms. Level of competition is moderate.

IndiaIT Outsourcing dominated by large domestic IT Outsourcing firms and manymajor large multinational IT Outsourcing firms. Level of competition is high.

ChinaMany small domestic Outsourcing firms and a growing number of largemultinational IT Outsourcing firms. Level of competition is high

South AfricaMostly small sized domestic IT Outsourcing firms, with very few largemultinational IT Outsourcing firms. Level of competition is low.

(BRASSCOM 2007, NASSCOM 2007, RUSSOFT 2007, China Software IndustryAssociation 2005, EIU 2007).


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Porters 5-Forces Model for IT Outsourcing Industry in BRICS

PortersFive Forces Model (Porter 1979) provides a framework for understanding the

structural characteristics of an industry in terms five fundamental forces which define

the competitive environment within which individual companies must operate. This

model applies well to IT Outsourcing in the BRICS countries.

It is important in our discussion of BRICS countries to drill down more deeply than

the National Diamond Model to understand the structural characteristics of the IT

Outsourcing industry in each country, by assessing the five competitive forces below

as defined by Porter.

The Threat of New Entrants: depends on economies of scale, capital investment

requirements, customer switching costs, access to industry distribution channels,

access to technology, brand loyalty, the likelihood of retaliation from existing

industry players and government regulations.

Figure 4. Porters Five Forces

New EntrantsHow easy or

difficult is it fornew entrants tostart competing

IndustryCompetitors

How intense is

the rivalry

BuyersHow strong is

their bargainingposition

SuppliersHow strong is

their bargainingposition

SubstitutesHow easy can a

product besubstituted


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Brazil -High degree of bureaucratic impediments for start-ups, little brandloyalty and low customer switching costs. Moderate threat of new entrants.

Russia - High degree of bureaucratic impediments for start-ups, little brandloyalty and low customer switching costs. Moderate threat of new entrants.

India Moderate degree of bureaucratic impediments for start-ups;brandequity high among the top three firms in the industry: Tata ConsultancyServices (TCS), Infosys and Wiprothat account for over 89% of the business.Low threat of new entrants.

China - Very few impediments for start-ups and no dominance by any majorplayers. Little brand equity and low customer switching costs. High threat ofnew entrants.

South Africa - Some impediments for start-ups or foreign entrants.Fragmented industry with no dominant players. Low customer switching

costs. Moderate threat of new entrants.

The Bargaining Power of Buyers: depends on the concentration of buyers, structure

of industry costs, the degree of product differentiation, the role of quality and service,

the threat of backward and forward integration into the industry and switching costs.

Brazil- Local buyers have few IT alternatives, except to in-source their IT.- Multinational buyers have other countries from which they can source.- Bargaining power is moderately high.

Russia- Local buyers have few alternatives.- Multinational buyers have other countries from which they can source.- Bargaining power is low.

India- Multiple domestic and multinational IT Outsourcing firms to select

from to gain best possible results and billing rates, though top firmsaccount for 80% of the business.

- Bargaining power is moderate.

China- Many small and medium size local IT Outsourcing firms from which

to select.- Bargaining power is high.

South Africa- Local buyers have a few local IT Outsourcing firms to select from.- Bargaining power is low.


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Intensity of Rivalry: depends on the structure of the competition, the structure of

industry costs, switching costs, strategic objectives, and exit barriers.

Brazil

- Fairly small number of IT professionals, growing demand for them- Bargaining power is high

Russia

- Large number of highly qualified IT professionals- Few with English language skills- Bargaining power is low

India- Large pool of highly skilled, educated software engineers- Shortage of suitable software developers in India- Bargaining power low

China- Large pool of highly skilled, educated software engineers.- Few with English language skills- Bargaining power is low

South Africa- Relative small number of highly skilled, educated software engineers- Bargaining power high

The Threat of Substitutes: depends on quality, buyers willingness to substitute, therelative price and performance of substitutes, and thcost of switching to another

product.

Brazil- Relatively few IT domestic substitutes; low threat

Russia- Relatively few IT domestic substitutes; low threat

India- Many IT sourcing alternatives exist; high threat

China- Many IT sourcing alternatives exist; high threat

South Africa- Few IT sourcing alternatives exist; low threat


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Rivalry Among Existing Competitors: Does a strong competition amongst the

exiting players exist? Is one player dominant or are all players equal in strength and

size?

Brazil- Industry is highly fragmented; level of rivalry is moderate

Russia- Industry is highly fragmented; level of rivalry is moderate

India- Industry is consolidated in the top tier, fragmented in the lower tier- Facing competition from other low wage countries; intensity of rivalry

high

China- Industry is highly fragmented; intensity of rivalry is moderately high

South Africa- Industry is nascent and fragmented; intensity of rivalry is moderate.

(BRASSCOM 2007, NASSCOM 2007, RUSSOFT 2007, China SoftwareIndustry Association 2005, EIU 2007. South African Information TechnologyAssociation 2008).

Political, economic, social and technological environment (PEST)

In addition to understanding the global competitiveness and industry structure of the

IT Outsourcing industry in the BRICS countries, it is important to recognize and

understand the political, economic, social and technological environment (PEST) in

each country within which the industries operate.

The global consulting firm, A.T. Kearney, conducts an annual assessment of the IT

Outsourcing Services environment and attractiveness of 50 countries on behalf of its

client, who are major purchasers of such services. They assess, from the perspective

of IT Outsourcing, the financial attractiveness, people and skills availability and

business environment of each country, and establish scores (1-5, with 5 being the

most favorable) and rankings.


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Table 2. A.T. Kearney Global Sources Location Index (Kearney 2007)

Rank Country FinancialAttractiveness

People andSkillsAvailability

BusinessEnvironment

TotalScore

1 India 3.22 2.34 1.44 7.00

2 China 2.93 2.25 1.38 6.565 Brazil 2064 1.78 1.47 5.89

31 South Africa 2.52 1.18 1.6 5.30

37 Russia 2.61 1.38 1.16 5.14

Index Metrics:

In order to derive an overall score for the comparative favorability of the country

environment for IT Offshore Outsourcing, the Financial Attractiveness, People andSkills Availability and the overall Business Environment need to be assessed and

weighted. The specific factors and weightings for each of these three dimensions are

provided below.

Financial Attractiveness (40%) includes Compensation Costs (average wages,

median compensation costs for relevant positions), Infrastructure Costs (rental costs,

commercial electricity rates, international telecom costs, travel to major customer

destinations), tax and regulatory costs (relative tax burden, corruption perception,

currency appreciation or depreciation).

People and Skills Availability (30%) includes remote services sector experience and

quality ratings (size of existing IT and BPO sectors, contact center and IT center

quality certifications, quality ratings of management schools and IT training, labor

force availability (total work force, university-educated work force, work force

flexibility), education and language (scores on standardized education and language

tests), attrition risk (relative IT and BPO sector growth and unemployment rates).

Business Environment includes Country Environment (30%) includes investor and

analyst ratings of overall business and political environment (A.T. Kearney Foreign

Direct Investment Confidence Index), security risk, regulatory burden and

employment rigidity, government support for the information and communications

technology (ICT) sector), infrastructure (overall infrastructure quality, quality of


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telecom, Internet, and electricity infrastructure), cultural exposure (Personal

interaction score from A.T. Kearney Globalization Index), and Security of Intellectual

Property (Investor ratings of IP protection and ICT laws, Software piracy rates,

Information security certifications).

It would seem that Brazil, South Africa and Russia have PEST environments that can

constrain their attraction for providing IT Outsourcing to clients from developed

countries. With respect to South Africa and Africa as a whole, Wood (2002) suggests

that Africa could surpass the current income level of South America and identifies

opportunities underpinning prosperity in the region, stressing that improvements in

governance are needed to reduce the risks of investment, accompanied by scientific

research, education and communications. The cultural dimensions of IT Outsourcing

will be examined in greater detail later in the paper.

The Internet as a facilitator of IT Outsourcing

It is widely accepted that the rapid growth of IT Offshore Outsourcing has been

facilitated by the availability of the Internet as a mechanism for efficient synchronous

and non-synchronous interchange of information between offshore IT Outsourcing

providers and their clients. It is thus, important to review the e-business environment

within the BRICS countries and also the general growth of the Internet within eachcountry.

The Economist Intelligence Unit conducts an annual systematic assessment of the e-

readiness of 60 countries, including the BRICS countries. The chart below presents

the assessment ratings for Brazil, Russia, India, China and South Africa. (EIU 2008).

These ratings are based upon IT connectivity and technology infrastructure (20%),

Business Environment (15%), Social and Cultural Environment (15%), Legal

Environment (10%). Government Policy and Vision (15%), and Consumer andBusiness Adoption (25%). The resulting scores, based on a scale of 0-10 provide an

overall comparative assessment of the environment for the conducting of business

over the Internet. This environmental factor is critical to the operation of IT

Outsourcing, most of which is conducted over the Internet.


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Chart 5. E-business readiness (EIU 2008).

e-BUSINESS READINESS INDEX

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

2001 2002 2003 2004 2005 2006 2007

Year

IndexValue(0-10) BRAZIL

RUSSIA

INDIA

CHINA

SOUTH AFRICA

BRICS AVERAGE

Major IT Outsourcer Companies multi-country presence in BRICS Countries

The top 20 Global IT Outsourcing companies have a significant multi-BRICS-country

presence and operational capability. This is to maximize their overall cost/risk

competitive profile and to mitigate cultural, physical or time zone differentials that

could inhibit their service to clients. In the context of this paper and conference, their

widespread presence may be seen as an indication of the growing sophistication of the

major IT Outsourcing companies and a recognition on their part of the importance of

a truly global capability. An itemized list of some of the major players can be

followed below.


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Table 3. (BusinessWeek 2006)

Major Players in IT Outsourcing BRICS Presence

Company HQ

Country

Offshore

RevenueRange

Brazil Russia India China South

Africa

Accenture U.S. >5 B X X XCSC U.S. >5 B X X

EDS U.S. >5 B X X XHP U.S. >5 B X

IBM U.S. >5 B X X X XCapgemini France $1-5 B X

Infosys India $1-5 B X X

TataConsultancy

India $1-5 B X X X

Wipro India $1-5 B XCognizant U.S. $500-

999MM

X X

PatniComputerSystems

India $500-999MM

X

HCLTechnologies

India $500-999MM

X X X

ClientLogic U.S. $100-500MM

X

Sapient U.S. $100-500MM

X

Softtek Mexico $100-500MM

X

Syntel U.S. $100-500MM X

Mphasis India


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Risks, rewards, challenges and opportunities for BRICS countries

Today, less than 10% of American companies outsource to more than one country,

but most are evaluating multiple locations. This is likely true for companies from

other developed countries as well. Although labor costs will continue to be the

driving factor behind offshoring, CIOs in developed economies like must consider

the cost-versus-risk equation (CIO Offshoring Guide, 2006). The primary

differentiator between the BRICS countries would seem to be the English Proficiency

of the IT workforce.

From the working papers of Stewart (2000) and colleagues, we find that social norms

in developing countries have changed from hierarchical and based on power

relationships in the colonial era, to a more cooperative stance in the post-world wartwo era, to markets and monetary incentives as a way of organising behaviour in the

80s, to the most recent era that can be characterized by excessive reliance on

monetary incentives, a situation in which trust and cooperation can be undermined

endanger market efficiency outcomes.

Table 4. IT Offshoring Ratings (CIO.com 2007)

Country Overall

Ranking

English

Proficiency

Average Entry

LevelProgrammerSalary

Geopolitical

Risk

Brazil Emerging Poor $5-10K High

Russia Challenging Low $10-15K Moderate

India Leading Very Good $5-10K Moderate

China Challenging Low $5-10K Moderate

South Africa Challenging Very Good $10-15K Moderate

Thus far we have laid down the elements for international trade and IT Outsourcing in

the BRICS countries. Were we to assess no further, it is likely to appear that many ofthe key elements for the industry within the parameters of these countries have been

addressed. However, from the table immediately above, it becomes apparent that a

number of other key issues those involving the human factors, remain relatively

unexamined to this point.


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Global language skills, also referred to commonly as the language of global

commerce, salaries and geo-political risk are at the core of how well individuals can

function in a transnational work environment where they are connected in globally

dispersed work communities. As Cisco CEO, John Chambers (2008) puts it, the

technology exists for conducting global business 24/7 in a stellar way but the

cultural challenge of different kinds of people working in different places gets in the

way: How do you achieve that seamless business when

- the folks in North America and Europe are thinking mostly about time and

speed, and how to get things done faster and faster; and

- the South Americans, Southern Europeans and Arabs want to focus on

relationships and dinner, while the

- Asians are saying hold it, its all about hierarchy and role?

It is a context where the convergence or divergence of work values have become

central to debate as international companies struggle to understand the various value

systems of the people in their multi-country operations.

Now, however, many of these international companies are considering trying tobecome global organizations in the sense of having a seamless or borderless approachto organization. In essence, being a global organization implies having a universalcorporate culture. Since corporate culture grows out of the values held byorganizational members, especially the influential members of the organization, auniversal corporate culture is one where all members of the organization regardless

of where in the world these individuals grew up or now work have similar viewsand beliefs that guide their behaviours when transacting business with members fromother societies, as well a with members form their own society (Ralston, Holt,Terpstra & Kai-Cheng 2008).

Cultural dimensions impacting on IT OutsourcingCulture in the virtual communities and workplaces of global business

Following on from people and skills availability and the business environment,

including country environments of IT Outsourcing discussed in the previous section,we turn our attention to information technology as a facilitator of knowledge sharing,

a context in which culture can significantly hinder or facilitate knowledge exchange in

the culturally diverse virtual teams of global business today. For further insight we

can turn to a variety of fields: Socio-cultural Anthropology, Cross Cultural

Management, Philosophy and Psychology, to name a few.


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Socio-Cultural Anthropology

In-depth country-specific cultural information for all the BRICS countries is available

in the research and publications of anthropology. Unfortunately, in the haste to get on

with globalization and global business developments, it is rare indeed to find

individuals and companies that take this rich historic material into consideration in

project planning and management. Take the socio-cultural anthropology of Russia for

example. Prior to the Revolution of 1917 Russia participated to some extent in the

nationalist discourses of Central and Eastern Europe. After the Revolution, however,

anthropology in the USSR and later the Soviet Bloc countries became highly shaped

by the need to conform to Marxist theory (Gellner 1980). Either way, the information

available provides rich resources of cultural knowledge waiting to be tapped in the

service of change in our current global era. Although much of the material and even

religious culture has changed, values underpinning social organization persist. As one

Russian leader explained: We train our children to have one set of values in the

home and take on another set of values when they go out the door (Ross 1990).

Thankfully, a new cadre of Russian anthropologists is emerging in a number of

university centres who can provide bi-cultural perspective about the current era and its

historical roots.

Cross Culture ManagementCCM arose in recent years when multi-cultural practices and diverse values about

work and how it is done became conspicuous in corporate business, especially as a

response to situations arising with cultures and managerial values becoming

conterminous when organisations crossed country, language and value boundaries.

Business expansion revealed that synergy between corporate culture, managerial

values and the leverage of cross-cultural understanding could contribute to more

effective strategies for project and task performance. Although much has been learned

about ways to improve global business practices in this discipline, practitioners agree

that efforts to understand and apply cross-cultural practices are challenged by many

contradictions, paradoxes and conflicts (Kanungo 2005). Many outsiders looking in

tend to find aspects of the CCM approach lacking in historical and research depth.

Cross cultural management is easier to talk about than to do.


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Global IT Culture

Moving specifically to the IT Outsourcing domain, the subject of this paper and a

culture of its own - we find new fields of inquiry emerging based on multiple IT-

country sources, diverse audiences and different languages as people (having values,

social organization, networks, work values and more that differ significantly)

negotiate contracts, develop projects and attempt to work together. Cross-language

information access systems provide opportunities for workers to access and use

source materials from platforms and vendors in different languages. Accordingly,

design and communication issues not present in monolingual settings arise from

cross- language information access systems. Research (e.g., at the University of

Maryland and elsewhere) to identify possible solutions to these problems along with

potential applications for digital libraries is on the increase (Shreve, Chan, Zeng,Daquing He 2004).

Philosophy

Even philosophy has considerable to say about culture in IT communities and the

work carried out in them. Nickle (2007), for example draws attention to a formal

framework for the social acquisition of ontologies constructed from the symbolic

interaction of autonomous information sources. This provides a semantics of

information publishing acts involving a technical-based but social approach to

knowledge acquisition and representation that is applicable in the design of semantic

web and social software. The practical application here is that virtual collaborators

need to understand the impact of the communication barrier existing between them

and their unknown partners spread across the globe.

If agents are not relying on any agreement about the meaning they ascribe tothe symbols used in the conversation, semantic misalignments will arise on thediscourse domain as well, thus making the communication impossible. In wideand heterogeneous scenarios offered by the Web (and its newborn semantic

incarnation), traditional and meaning-safe methodologies for communicationneed to keep abreast of new dynamic communicative interaction modalities.The uncertainties arising from communication between actors which base theirbehavior on different and heterogeneous knowledge models have to be takeninto account, wisely balancing the extent of reachable knowledge with thetrustworthiness of its information. (Pazienza et al. 2007)


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Psychology and Business

In the business domain, psychologist Geert Hofstedes study of culture and its relation

to the workplace has enjoyed prominence since his first publications began to appear

in the 80s. Soon thereafter - business which had largely ignored the importance of

culture in its practices turned quickly to finding ways by which culture and its

dimensions could play a part in exploiting and improving business processes

worldwide. While widespread and well-used, Hofstedes material comparing

workplace cultural dimensions needs to be viewed in context. It emerged from his

work with a specific company, IBM, from 1967 1973, where he collected data from

more that 100,000 employees in some 40 countries. Before turning to specific

dimensions for BRICS countries, we will overview some basic comparisons and brief

definitions for Hofstedes value and attitude dimensions, well aware that the model

was unique to IBM workforce culture in the 70s and that a number of new

approaches to culture dimension have emerged.

Comparisons: Hofstede's Dimensions and Cultural Scores for BRICS

RegionCounty

Individual vsCollectivism

PowerDistance

Uncertainty/Avoidance

Masculinity-Femininity

Long-Term Orientation andother Dimensions

BRAZIL

Collectivism

38

High

69

High

76

Masculine

49

Extroverted; prefer orderlycustoms and procedures

65

RUSSIACollectivism

50

Low

95

Medium

90

Masculine

4010

INDIA 48 77 40 56 61

CHINACollectivism

20

Low

80

Low

60

Masculinefeminine

50

Emphasis on tradition,Marxism, Leninism and Maothought

118

S. AFRICA49 65 49 63

Not ranked.

Chart 6. Comparative Culture Scores for BRICS Countries. (Nath & Sathu 1988).


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Hofstedes value and attitude dimensions

Power Distance Index (PDI)

extent to which less powerful members of organizations/institutions accept/expect thatpower is distributed unequally

inequality: is defined from below, not from above; endorsed by both followers and leaders 'all societies are unequal, but some are more unequal than others'.

Individualism (IDV) individualism/collectivism and degree of group integration

individualist society: ties between individuals are looseeveryone expected to look after him/herself and his/her immediate family.

collectivistsocieties: people integrated into strong, cohesive in-groupsextended families important; protect in exchange for unquestioning loyalty.

Masculinity (MAS) versus femininity

distribution of roles between genders; range of solutions are found. IBM studies revealed that

(a) women's values differ less among societies than men's values;(b) men's values from one country to another range from very assertive and competitive, andmaximally different from women's values on the one side; to modest and caring and similar towomen's values on the other: assertive pole = 'masculine'; modest, caring pole 'feminine'.

Uncertainty Avoidance Index (UAI)

deals with a society's tolerance for uncertainty and ambiguity ultimately refers to human search for Truth unstructured situations are novel, unknown, surprising, different from usual. Uncertainty avoiding cultures:

- minimize unstructured situations by laws/rules, safety/security measures- on philosophical and religious level belief in absolute Truth- emotional, and motivated by inner nervous energy.

Uncertainty accepting cultures:- tolerant of differing opinions; try to have as few rules as possible- philosophically and religiously relativist; allow for diverse practices

phlegmatic and contemplative, not expected to express emotions.

Long-Term Orientation (LTO)versus short-term orientation

study of students in 23 countries; questionnaire designed by Chinese scholars Long-term orientation: value thrift and perseverance Short-term orientation: respect tradition, meeting social obligations, saving 'face' positive and negative rated values found in teachings of Confucius (500 B.C.) dimension also applies to countries without a Confucian heritage.

(Hofstede 1983)


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Culture dimensions in Brazil

World averages

Chart 7. Culture dimensions: Brazil and World Averages (Hofstede 2008).


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Power distance

Power distance for Brazil, overall, is high, ranking a score of 75 in comparison to the

world average of 52.

Individualism vs. collectivism

Brazil has an Individualism rank of 38 compared to the average Latin population

score of 21. However, virtually all the Latin countries are considered to be

Collectivist societies as compared to Individualist cultures. This is manifest in a close

long-term commitment to the member 'group', be that a family, extended family,or

extended relationships. Loyalty in a collectivist culture is paramount, and over-rides

most other societal rules. (Hofstede Brazil 2008)

Masculinity Femininity

With respect to Masculinity-Femininity scores, Brazil is closer to the world average

of 48 with its own country score at 45.

Uncertainty avoidance.

Brazil's highest Hofstede Dimension is Uncertainty Avoidance at 76, indicating the

societys low level of tolerance for uncertainty. To minimize or reduce this level of

uncertainty, strict rules, laws, policies, and regulations are adopted and implemented

with the ultimate goal being to control as much as possible in order to eliminate or

avoid the unexpected. Due to this high Uncertainty Avoidance characteristic, the

society, in Hofstedes view, is risk adverse and does not readily accept change

(Hofstede Brazil 2008).


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Culture dimensions in India

World averages

Chart 8. Culture Dimensions for Indian and World Averages (Hofstede 2008).

Power Distance. Power Distance (PDI) is the highest Hofstede Dimension for the

culture, with a ranking of 77 compared to a world average of 56.5. This Power

Distance score for India indicates a high level of inequality of power and wealth


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within the society. This condition is not necessarily subverted upon the population,

but rather accepted by the population as a cultural norm.

India's Long Term Orientation (LTO) Dimension rank is 61, with the world average at

48. A higher LTO score can be indicative of a culture that is perseverant and

parsimonious (Hofstede 2008).

Individualism vs. Collectivism

India scores 42 in this dimension with the world average at 40. To interpret, it is likely

that varied social customs at work in diverse parts of the country where people are

organized in a number of different ways were not factored in, thus yielding a score

which appears similar to crude world averages.

Masculinity/Femininty. India has Masculinity as the third highest ranking Hofstede

Dimension at 56, with the world average just slightly lower at 51. The higher the

country ranks in this Dimension, the greater the gap between values of men and

women. It may also generate a more competitive and assertive female population,

although still less than the male population (Hofstede 2008).

As frequently happens, however, there are other ways of viewing the score: Shauna

Singh Baldwin reveals in her audio essay that Indian men have the power to be

feminine (CBC 2007).

Uncertainty Avoidance

India's lowest ranking Dimension is Uncertainty Avoidance (UAI) at 40, compared to

the world average of 65. On the lower end of this ranking, the culture may be more

open to unstructured ideas and situations. The population may have fewer rules and

regulations with which to attempt control of every unknown and unexpected event or

situation, as is the case in high Uncertainty Avoidance countries.

Long-term Orientation

On this dimension, the Hofstede scores rank India at 58 with the world average at 42.

Once again, it is not clear how factors relating to religious values and beliefs about the

after life were factored in by Hofstede. This is an area where anthropology and other


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approaches have a great deal to offer in understanding. Harriss-White (2005), for

example, shows how non-market and non-state institutions such as land, labour and

commodities reveal the vitality of caste and religious pluralism in their functioning.

While it may be tempting to view these elements as vestiges from an earlier era, she

demonstrates how they are being refashioned in the interests of business and

globalisation.


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Culture dimensions in China

World averages

Chart 9. Culture Dimensions for China and World Averages (Hofstede 2008).

Hofstedes analysis for China has Long-term Orientation (LTO) as the highest-

ranking factor (118), which he claims applies for all Asian cultures. This Dimension


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indicates a society's time perspective and an attitude of persevering; that is,

overcoming obstacles with time, if not with will and strength (Hofstede 2008).

A Chinese childrens opera viewed by the author in Shanghai (Ross 1978) illustrates

the point well. In the story, Ling-ling, a girl of five years old is dreaming about what

the world will be like in the Year 2000. She is propelled fast-forward ahead and above

to a place amongst the stars in the sky from which to view a world in which China is

world leader. Chinese guides at that time were keen to inform their western

management visitors that China plans well for the future in long-term plans reaching

500 year ahead.

Individualism vs. Collectivism.

The Chinese rank lower than any other Asian country in the Individualism (IDV)

ranking, at 20 compared to an average of 24. This may be attributed, in part, to the

high level of emphasis on a Collectivist society by the Communist rule, as compared

to one of Individualism. The low Individualism ranking is manifest in a close and

committed member 'group', be that a family, extended family, or extended

relationships. Loyalty in a collectivist culture is paramount. The society fosters strong

relationships where everyone takes responsibility for fellow members of their group.

Chart 10. Culture Dimension Uncertainty Avoidance, China. (Hofstede 2008).


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From this chart it appears that atheism is high, yet we are not provided with

interpretation of what this term means to the Chinese. Given that the studies were

conducted in the 70s and not long after the cultural revolution, it is likely that the

depth of Confucian and Buddhist believes underpinning the official atheism are not

factored in. As one Chinese academic put it (Ross 1978), atheism is the very thin

and visible layer atop centuries of beliefs and values. Taking these figures at face

value, and outside the regional contexts and social configurations existing within the

country, business people might well make misleading interpretations that could be

costly in a number of ways.

There are many more inferences that could be drawn from Hofstedes work for the

cultural dimensions of the countries addressed above, and likely also for Russia and

South Africa. We feel, however, that this representative sample provides insights into

how the Hofstede work may be applied, as well as its limitations. We believe it is

more fruitful to consider for a moment at least some of the ways by which the concept

of cultural dimensions can be pushed further in the IT Outsourcing industry. We

realize we are making only a brief step in what follows.

Pushing the concept of cultural dimensions further in IT Outsourcing

Conventionally, business seeks to build and distribute technology according to

business and IT capacity. What about the potential of reversing this approach to one

in which technology systems were built around local knowledge, resources and

economies and even need, thereby enhancing the skills of the poor and linking them

to established sources of science and technology (Abroi 2005)? As well, the problem

can be viewed in terms of how low levels of economic and development sustainability

thwart the efforts of emerging and developing countries can thwart efforts towards

global integration and inter-country and regional support (Bhalla 2002). Applied

specifically to IT Outsourcing, Feng (2004) argues that effectiveness in

communicating optimally with a target audience online requires that companies adapt

their Web sites for customers in the target countries, and know how to make these

adaptations based on variations such as those proposed by Hofstede.


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As the people of the world press for a greater portion of the worlds economic and

resource pie, IT Outsourcing holds potential for the new partnerships envisioned in

the 8th Millennium Development goals. For example when members of more than 100

non-government groups met in Brazil recently at the GCAP (Global Call to Action

Against Poverty) meeting, they were joined by organized groups in more than 80

countries worldwide. Their message was strong: Instead of focusing on reducing the

number of people living in extreme poverty, the world's leaders should be working

towards combating the root causes of poverty, since this is the only real way of

eradicating it (Osava 2008). Since BRICS countries appear to be gaining some

ground in this respect, their role is unique and their knowledge needs to be tapped.

But more on that later.

Culture-Code Framework

Much cross cultural training and sensitization consists of language training, lists of

dos and donts, descriptive cultural practices and as we have seen in the previous

section - scores. The problem is, how to apply these details in the rough and tumble of

daily business where the pace increases continuously.

Clotaire Rapaille, in The Culture Code, An Ingenious Way to Understand Why the

People Around the World Live and Buy as They Do, takes us well beyond scores and

lists to provide a new method for understanding culture; one that probes through the

layers and prescriptions to determine what triggers understanding at the emotional

levels on a range of key issues that affect everything around us is perceived:

The Culture Code is the unconscious meaning we apply to any given thing acar, a type of food, a relationship, even a country via the culture in which weare raised It is obvious to everyone that cultures are different from oneanother. What most people dont realize, however, is that these differencesactually lead to our processing the same information in different waysThecombination of experience and its accompanying emotion creates somethingknown widely as an imprint Once an imprint occurs, it strongly conditionsour thought process and shapes our future actions. Each imprint helps make usmore of who we are. The combination of imprints defines us. Earlyimprinting has a tremendous impact on why people do what they doAnimprint and its Code are like a lock and its combination. If you have all of theright numbers in the right sequence, you can open the lock. Doing so over avast array of imprints has profound implications. It brings us to the answer toone of our most fundamental questions: why do we act the way we do?(Rapaille 2006). Why do people act the way they do?


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Understanding the Culture Code is a systematic way to understand any culture. It has

potential for including IT and corporate culture and the complexities involved in IT

outsourcing and other areas. It provides possibilities for new approaches for unlocking

the global IT domains and for better understanding of development economics and

needs, bringing with it ways to unlock the potential of emerging economies to join

developed nations find keys to ending poverty (World Economic Forum 2008; Sachs

2005; Roche 1968).

Ultimately, what is needed most is an approach that enables understanding any culture

or sub-culture, including ones own and how culture of origin shapes how other

cultures are interpreted and understood. For business success and global economic

development - the goal is to be effective in all situation where operations and

management decisions need to be made amongst international counterparts oremployees from any cultural background working any time and anywhere.

Integrated thinking bridging the market and governance gap

Just as we have looked at Rapailles culture code and other ways to get beyond the

narrow parameters of Hofstedes cultural dimensions that are largely set in a specific

time and industry, so too we need approaches that will take us beyond the categories

of the past in other areas impacting on technology transfer, social and business and

adaptation. How can business approaches be addressed in relevant cultural ways?

History shows there are no panaceas, and to beware of bullets which seem to come

with a promise of magic.

With these cautions in mind, we welcome what Roger Martin (2007) has to tell us in

The Opposable Mindwhere he demonstrates the power of integrative thinking; i.e.,

the ability to hold opposing views at the same time in order to achieve synthesis

containing elements of both but improving on each (Martin (2007). Likewise, Jane

Jacobs (1992) division of human activity and social organization into the two

domains of commercial (market) and guardian (governance) can also help.

Business statistics and models and charts belong on the commercial side. How do we

this data translated into a form that is useful on the governance side, and in ways that

will enable IT and market activity to use cultural values, motivations and learning


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effectively in the service of change? And how does this attempt to bridge commercial

and governance gaps with emerging economies relate to economic development in the

world at large, especially the BRICS countries?

By bringing Martin and Jacobs into this discussion at the same time, it is clear that

solutions about economic development cannot come from the business side alone.

For any hope of success, emerging markets must their governance problems in hand,

and is an area where the concerns of the developed nations is well understood. Based

on their experience, they can and should insist that countries with developing markets

adapt the values and practices of the market: e.g., legal and regulatory mechanisms. If

not do so, the potential crises can be predicted.

We could look at it this way. What if it were possible to move the developed

economies (not without their own problems) to any of the BRICS countries? Bearing

in mind that it took the G-8 countries about 80 years to get proper mechanisms for

market control in place (roughly 1870 1950, and inclusive of two world wars and a

great depression), it is likely that the worst excesses of capitalism could occur in the

absence of legal and regulatory mechanisms that have been developed to prevent

these mistakes from being repeated. With the controls things could get rough in the

digitally connected and often volatile global era. A key issue facing the BRICS

countries on the cusp of economic take-off, is how they will confront the same things

that Britain, France, Canada, Germany, USA and others had to face when their

markets went out of control. History reveals what can happen when there are sudden

market changes without regulation. Things become can quickly become chaotic and

irrational when the hand of the state is removed. Corruption commonly results.

Ultimately it is the cultural resources of nations and people the traditions, customs

and social organization that can be brought to bear in market development and

control.

Martins opposable mind thinking is relevant for problems that are faced every day in

the area between the market and governance. Integrated thinking is not easy, but it is

necessary at all levels involving the complex affairs of a finite and shared world of:


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individuals, leaders, countries and regions. Jacobs (1992) insists that understanding

and managing the dichotomy of commerce and governance is essential for human

economic and human survival.

Implications and critical areas for further research

This paper has covered a lot of territory: IT, IT Outsourcing, installation, management

and servicing of network systems; software exports and trade; culture and selected

cultural dimensions of BRICS countries.

Back to Sanjaya Lall (2004) and his view of globalization, and to the themes of this

conference:

Globalization is a pervasive influence on industrialization in the developingworld. As the embodiment of technological progress and more open markets,it offers huge productive benefits to developing countries. However, its effectsare very uneven. It is driving a growing wedge between the (relatively few)successful countries and the (large mass of) others. The wedge is not atemporary one, a Jcruve that will reverse itself if countries persist withliberalization. It reflects underlying structural factors that are very difficult toalter in the short to medium term. Because of cumulativeness in thesestructural factors, divergences are likely to carry on growing unless measuresare taken to reverse them. Development policy has to address these growingstructural gaps and to reverse or relax the stringent rules of the game thatconstrain the use of (previously successful) industrial policy.

In honour of Dr. Lall, let us not be caught up in the heady potential and cultural

complexities of IT Outsourcing and its potential or of cultural dimension scores and

their numerical representations of how the worlds people live and think and act

without turning our attention to another side of the issues that concerned him and are

familiar to those who feel the impending threat of global income disparity and all the

other disparities the Millennium Goals have been put in place to address.

While the affluent west's luxurious lifestyle continues to consume the resources of thisplanet, millions of people starve and half of the world's population exist in poverty. In

the midst of it all we yet remain with outdated systems of foreign aid operating at the

level of charity - doling out left-overs - rather than justice (Roche 1976).


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A Model for Global Development Based on Mentorship

In the current, crisis-laden global environment, how can the progress of BRICS

countries be leveraged to confront the challenges of global development? Here we

draw on our colleagues, Dr. Wilf Backhaus and Maurice Hladik, Executive in

Residence, at the Graduate School of Management and Technology, University of

Maryland University College, who challenge us and global leaders to address how

BRICS countries can use their muscle to help other markets that are not there yet.

Mr. Hladik (2008) emphasizes the important role of governance assistance by

developed nations to emerging nations. He believes governance assistance can one

day be provided by the BRICS to developing countries which are finding their way.

Dr. Backhaus envisions a BRICS mentorship arrangement where the emerging

economies would share their knowledge and skills in new ways.

Rather than relying primarily on the G-8 countries to shoulder the major weight of

development assistance, emerging market countries (G-20 including BRICS) could

have a significantly expanded role to play in rectifying the situation. Brazil, for

example, which tends to lead the BRICS countries in terms of resources and relatively

stable governance, could mentor countries having a common language with them such

as Angola and Mozambique. Russia, hopefully, can assume more nurturing

relationships with the former Soviet states; they can also leverage the good sides of

other forms of knowledge transfer they were involved with in the postcolonial era of

the 60s (e.g., agricultural expertise and medical initiatives in African states). India,

along with South Africa, having a shared language and commonwealth institutional

heritage with countries such as Burma and many of the African states, can help out

there. Given the strength of BRICS countries IT industries, neighbourliness in the

form of a helping hand could work wonders on the world scale and free G-8 countries

for other development assistance responsibilities.

This view of how things could be is holistic and familial, calling on human beings to

practice the fine art of being human. Our times need creative solutions. The world

has witnessed the formation of new organizational entities to address crises and


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opportunites many times in the past. We believe the Backhaus Vision* is one worth

considering and working towards.

Acknowledgements

We would like to thank a host of colleagues who have been an inspiration in thedevelopment of this perspective, in particular international development and businessfriends in countries around the globe. We also acknowledge our colleagues andstudents in the MBA program, University of Maryland University College, inparticular those in the capstone global business and strategy courses. Furtherdevelopment of the Backhaus Country Mentorship model is in progress, forinformation contact Dr. Wilf Backhaus [email protected] .


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Appendix

Cultural Dimension Scores for Ten Countries/Regions

Power

Distance Individualism Masculinity

Uncertainty

Avoidance

Long-term

OrientationUSA 40L 91H 62H 46L 29LGermany 35L 67H 66H 65M 31MJapan 54M 46M 95H 92H 80HFrance 68H 71H 43M 86H 30LNetherlands 38L 80H 14L 53M 44MHong Kong 68H 25L 57H 29L 96HIndonesia 78H 14L 46M 48L 25LWest Africa 77H 20L 46M 54M 16LRussia 95H 50M 40L 90H 10LChina 80H 20L 50M 60M 118H

newman ross

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