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Global Business

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Global Business: Small World

Small World

BBC World Service - Global Business, Small World

Why are some start-ups going global from day one?

Outsourcing used to be something only big companies did to save money. Now, small firms are learning how they can become global organisations from day one.

It seems like an inevitable trend, but lots of people are still suspicious of outsourcing.

Established corporations grow and grow, driven by huge forces: increasing so-called shareholder value, avoiding being taken over, the unending drive for efficiency which actually means overturning the innate inefficiencies that most companies accrete unto themselves over the years.

Those are the external forces.

Even more pressing are the unthinking internal imperatives for growth: the natural tendency of established organisations to seek to become bigger, as each department gathers more power and influence unto itself, brags about it, and sets off internal competition for floor space and attention and investment.

In the balmy days of the post–WW2 industrial world, this was regarded as the way capitalism worked.

Disruptive new companies would come in all lean and concentrated on breaking up the established way of doing computing or communications. 

But, lo and behold!, within a decade the sleek responsiveness would have evaporated to be replaced by the same old company perks and car parks and corporate campuses and bonuses and all the traditional accoutrements of a great big business.

It is as though there is something innately dysfunctional about the way a company grows after it is established with a clear and confident purpose. The departments it adds, the people it hires, begin to work for themselves or their immediate bosses, not for the once powerful purpose of the company.
At some stage the purpose around which the corporation was formed becomes slightly less important than the corporate structures that try to deliver it.

Companies mature, meetings proliferate. Deputies are hired, a true sign of excess. And customers become remote objects on which to conduct hired-in clipboard surveys. This seems to be a tendency which few growing businesses can resist. 

At some stage, of course, corporations realise all this adding on of people, departments, responsibilities, is becoming a horrible burden, not the great enabler it was intended to be. The organisation is in danger of collapsing in on itself.
So they call in the consultants, the approved way of Getting Things Done. Following advice, they reshape, reorganise, go for efficiency savings. They outsource.
This programme, though, is about something different but related, an apparently new small business trend. It seems that some SMEs are going global right from the start ... not just to get customers but to find staff.

Particularly high–tech firms in high cost countries in the developed world are seeking to save money and find hard-to-get software technicians by hiring faraway staff in India or Bulgaria or South Africa.

What makes this particularly feasible is the rise of fast bandwidth. Internet connectivity and very cheap or free web telephones and video–conferencing. Running a team in India can be just like running one in the next office; at least that is what at least some of the early adopters of this so–called "in"–sourcing say.

Someone who is doing it for other SMEs is Neal Gandhi, a British serial entrepreneur who has started a company called Quickstart Global to take the hassle out of a small start-up venturing abroad in this apparently cost-effective way. He calls this startup process "Born Global"; he has written a book of that name all about it.

Neal Gandhi thinks that tapping overseas talent throws a lifeline to startup entrepreneurs with a good idea and a need to grow very fast when one or two first contracts come in from clients.

He is very suspicious of outsourcing. It is so often done for all the wrong reasons, he says. But get in-sourcing right, and it could be a powerful way of driving small businesses forward. 

He says that Britain where he lives has an especially global advantage : Greenwich Mean Time. GMT gives us a time–zone that enables people based in Britain to reach back round the world to talk to staff live in the east, and forward round the world to speak to clients in places west.

Neal Gandhi thinks that Britain itself has been "born global". But we are not the only ones, I’m sure. 

By Peter Day

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