This satire demonstrates a long-term plan for the use of strategic relations methods correctly implemented but for the wrong purposes. This is a hypothetical situation based on current outsourcing trends and isn't representational of any real company, nor is it consulting advice.
In Too Much Outsourcing Is Bad For Your Revenue I shared to strategies regarding the impact of outsourcing on local economies, and offered some advice on how you could address this situation for your company. Let's quickly look a strategy you company could use to take over a competitor or become the next world-wide technology leader with strategic relations methods.
Select a small country with an impressionable government interested in infrastructure investments. Many Latin American countries already have reliable access to high-speed Internet and digital phones-- but the key is to find a country with a ready intellectual base within a reasonable travel distance.
Necessary infrastructure: High speed Internet access (over 512k) can support encrypted communications for software delivery and back office activities. Bridge or trunk services can make voice phone lines appear to be US or EU based. High speed computer systems are available to most countries world-wide, including those that would support scientific research, software engineering, call center, and technical services.
Target countries: Iraq, let the US government fund the rebuild and technology placement, demonstrate ROI with step #2. Puerto Rico, land prices are low and foreign military bases have provided communications upgrades necessary (same with Costa Rico.) Brazil, if funding is coming from a stable country, this country will welcome the investment capital. India, most cities have digital communications technologies and large population of educated workers (same with China.) Risky but viable locations include Saudi Arabia, Afghanistan, and non-waring African countries.
Transportation services: Beside a means for employees to get back and forth to work, an International port (air, sea), and a moderate highway system for manufactured goods would support distribution. For technology companies doing software engineering or basic research, these aren't significant factors.
Invest in workforce training in exchange for term contracts with specific technologies. Look to EU and North American universities to support student development. Train these people were ever they will get the best knowledge possible, but require at least a one-year of work for one-year of school. Invest heavily in continuing education programs that support language skills and managerial decision making-- eventually you can lower middle management costs.
With low-cost labor force, heavily invest in research and development to advance existing technologies. While increasing your costs, new R&D should offset at least 50% the labor savings. Quality professional employees are available in most developed or semi-developed countries, your workforce training would regularly feed this pool providing top students to support advanced development programs. Seek advancements that will:
Reduce your own manufacturing or production costs,
Out pace competitive development while matching release times,
Clone successful technologies with large market space then improve on their most used features,
Significantly reduce customers costs solving specific problems,
Create technologies that have a strong ongoing service base,
Develop on open standards internally producing libraries over complete applications,
Focus on chemical and biotechnology research for license in other industries,
Market into developed countries who have capital to purchase your goods and services. While your production costs are lower, you sell these goods at their current value being careful not to increase the supply over previous levels until the appropriate demand is available. Focus on a distribution system that keeps channel profits low while improving your own profitability. To keep competition in check:
Release products better than the competitor, but not the latest technology available. This gives you an ace if another company releases something that challenges a lead product. Stay one step ahead by keeping quite about existing R&D activities.
Utilize the Internet and distribution partners over channel sales. Keep profits in-house by selling directly to customers, then distributing goods through local warehouses. With limited channel sales you remove profits middle-men get before the product gets to an end-user.
Separate technical support to sell as service contract on delivered goods. Utilize call centers for high quality technical support, provide 30 days free, but push local integrators and second tier technical support on a contract basis. Do this instead of independent service providers.
Integrate marketing business intelligence through all locations. This helps you use trend information across several markets to better predict how future markets will respond to your actions. This will let you sell to less developed markets based on the historical trends of a developed market.
Continue to repeat this process until your entire operations is outside the starting company. This can reduce your labor costs by as much as 85% and still produce quality goods and services. Shareholders will be very proud of the short term gain and most traditional competitors will have a difficult time keep up with you.
Of course, as capital once available in the buying market is used to fund off-shore ventures, less funds are available to purchase the goods produced. In addition, this new workforce will spur secondary consumer industries that over time increase the cost of living, in turn bringing up labor rates.
The long-term results are more a shift in market and delay in cost increases. The original economy occupied by the higher-cost workforce will reach a point it would welcome low wages again in the future. At that point you can return to pursue the same strategy once again.
This isn't the right way to use strategic relations, it would be better to understand the local economic needs and work together with businesses in your ecosystem to produce the innovation necessary to lower costs and increase profits.
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