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Issue 99
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Manufacturing is Mobile - so is Professional Services!In Ireland over the last 20 years, we took full advantage of the fact that manufacturing multi-nationals, when deciding where to locate their factories could take a world-view of the competitive positioning of each country in relation to one-another. Many companies, particularly US manufacturers, chose to locate here for a variety of reasons - our low cost labour, the grants available and our educated work force. More recently, some parts of our manufacturing base, both foreign and to a lesser extent Irish owned, have started to migrate to lower cost countries.So the concept of mobile manufacturing is one that we are familiar with. However there is a brand new reality emerging which we now have to face - knowledge intensive white collar work could become as mobile as manufacturing is. Given the fact that considerably more people are employed in this than manufacturing, the potential impact could be highly significant to the Irish business community and the economy as a whole. Ireland is particularly vulnerable in this situation - check out this table which shows, at a high level, that less than 10% of the workforce are employed in non-high/medium -tech related manufacturing (traditional manufacturing) and at least 55% are employed in services. Therefore the threat of services becoming mobile is a real one. Inevitably this will mean that professionals will have to locate in foreign, more cost-competitive countries. It could also mean that services you consume in Ireland will be delivered by a professional based in India, Africa, Australia…. Imagine going to a clinic where the nurse takes your temperature and you then you have a consultation with a foreign medical consultant via video link. Obviously as well as the threat to our service industry, there will also be real gains - in this example we could radically reduce medical treatment waiting lists and potentially slash costs. Many Irish companies are already looking at the threats and opportunities this presents. One Irish online business has been delivering Internet marketing campaigns targeted at the UK market and managed by a client based in France for a number of years. Take Compuscript, as another example where their ebusiness development provided Compuscript with a platform which facilitated dealing easily and efficiently with its own suppliers, particularly those in India, a foreign market in which Compuscript was taking advantage of cheaper labour costs. The time difference between India and Ireland also meant that Compuscript was able to run a virtual 24 hour organisation, switching jobs to India when the Irish office closed at 5.30pm and switching back again in the morning. This obviously allowed Compuscript to turn jobs around far more quickly than before and this would not have been possible without new technologies. And to a large extent that's the point - services can be mobile due to the enormous leaps in technological developments in recent years. Technological developments mean that it is now cost effective even for small companies to contract out knowledge work to distant suppliers. As physical boundaries are no longer an inhibitor to entering new markets, there is an enormous range of threats and opportunities - remote services could also include preparing accounts for audit, teaching in the Class room over video, remote help desks (already well established) etc. Inevitably this will force many sections of the economy to become a lot leaner and more cost effective, which could be a wonderful advantage. But only if we're ready for it. How can your company be a first-mover in making the most of this opportunity? |
