00:00:01
[Music]
00:00:08
[Music]
00:00:20
in this uh final segment of our
00:00:22
discussion uh would love to talk about
00:00:25
uh what's coming up next so moris uh I
00:00:28
wonder if uh starting with you we could
00:00:30
look at the prospects for ruring over
00:00:33
the next year 3 years and 5 years what
00:00:37
do you think it's going to happen well I
00:00:39
don't have a definitive answer for that
00:00:41
uh not surprising and in fact we're
00:00:43
doing research now surveying companies
00:00:46
around the world asking them what
00:00:49
decisions have you made what are your
00:00:51
intentions and what are the reasons for
00:00:53
making that and what do you think the
00:00:55
impact will be and we're in the in the
00:00:56
midst of collecting such data uh all
00:01:00
past Studies have shown a remarkably
00:01:03
High number of companies on the order of
00:01:05
30
00:01:06
40% admit publicly that they're
00:01:09
considering or have made decisions to
00:01:11
resore or to restructure their supply
00:01:14
chains a comparable number also thinking
00:01:17
about Outsourcing as well so it's going
00:01:19
in both directions I I I would say we
00:01:22
are at a at a time of great ferment of
00:01:26
great change that there are a lot of
00:01:28
factors that we've mentioned here on
00:01:30
technology on education on government
00:01:32
regulation on cost Trends uh that are
00:01:36
are driving this and will have different
00:01:38
impacts in different countries and in
00:01:40
different Industries I think that the
00:01:43
you know there's a a realization that
00:01:45
this is this is very important for the
00:01:48
future welfare of our country we have to
00:01:51
get back to closer to where we were and
00:01:54
we and yet we will never get back to
00:01:57
where we were as well so it's going to
00:01:58
be different technology has changed so
00:02:01
I'm bottom line it's going to increase
00:02:04
I'm an optimist I think we're going to
00:02:06
see uh multiple changes in different
00:02:10
Industries but it's a global economy
00:02:13
we're not going to go back to where we
00:02:15
were in the
00:02:16
1950s where we dominated in certain
00:02:18
industries you know and we have to learn
00:02:20
to live with the fact that every region
00:02:24
in the world has the same objectives
00:02:26
they want their children to be employed
00:02:28
they want them to have valuable jobs
00:02:30
they want them to have you know to add
00:02:33
value and so I think that the what the
00:02:35
equilibrium will be I don't know but I
00:02:38
think generally we will we've seen the
00:02:40
low point and I think we're we're
00:02:42
improving and I think over the next 5 10
00:02:44
years we're going to see more
00:02:45
manufacturing jobs come back and you
00:02:48
know so bottom line I'll say I'm an
00:02:50
optimist uh what does your crystal ball
00:02:52
say Scott yeah on the technology side
00:02:54
I'm very optimistic as well but I think
00:02:56
that you know that it's it's important
00:02:58
to understand what the what the the
00:02:59
secret formula is for setting up us
00:03:02
delivery centers in in various parts of
00:03:05
the country and it's it the best formula
00:03:08
is to be in partnership with a major
00:03:10
research University in a tier 2 City to
00:03:14
that keeps costs down and in a business
00:03:17
friendly State and I think when you look
00:03:19
across the country there's a finite
00:03:21
number of them so I think what you're
00:03:23
going to see over the next year or two
00:03:25
is a Mad Dash to uh set up Partnerships
00:03:29
with those University cities and states
00:03:32
M tree as I mentioned earlier has set up
00:03:33
a 400 person Center in Gainesville
00:03:35
Florida with the University of Florida
00:03:37
but we're going to open up another one
00:03:39
this year in the Midwest and another one
00:03:41
a year later in either the Mountain Time
00:03:43
Zone or the Pacific time zone and then
00:03:45
we're just one company in the space
00:03:46
there's other companies you know doing
00:03:48
it as well so I think at some point that
00:03:51
we're going to get we're going to get to
00:03:53
an area where that there's there's a cap
00:03:56
to how much we can do and we really need
00:03:58
the tech Talent to keep continually
00:04:01
increase and maybe other universities to
00:04:04
step up we can't just rely on the big
00:04:06
engineering schools you know maybe some
00:04:08
other universities will step up and some
00:04:10
other states will step up but I think
00:04:12
the most important thing to realize is
00:04:13
that it takes that ecosystem in order to
00:04:16
make these things successful yeah you
00:04:18
can't just have one of those pieces in
00:04:20
place and and think it's going to work
00:04:22
so I'm very optimistic but at the same
00:04:24
time I I know we've got to move fast to
00:04:26
make sure that we stay ahead of our
00:04:27
competitors and and lining up these
00:04:29
Partnerships so in addition to Florida
00:04:31
which other states are likely to benefit
00:04:34
the most from this trend yeah so I think
00:04:36
you know it's it's got to be in states
00:04:39
that have high tech Talent um but uh can
00:04:43
but can keep the cost down um because at
00:04:45
the end of the day cost is still a
00:04:46
driver and when a CIO is making a
00:04:49
decision about where they're going to
00:04:50
put the tech Talent cost does come in
00:04:53
they're running a business um you know
00:04:56
it doesn't have to mean that they have
00:04:58
to match uh cost overseas it just has to
00:05:01
be a competitive cost and uh so again
00:05:05
it's it's it's a finite number of states
00:05:08
and cities and universities uh that can
00:05:10
that can pull this off um and I think
00:05:13
the good news is that they're all
00:05:14
rallying to that cause right now they
00:05:15
realize that there's a window now and
00:05:18
that they need to uh get into that and
00:05:20
uh it's good news for everybody but I
00:05:22
think um it's the most important thing
00:05:24
is that we continue to to to you know
00:05:26
enable kids to get into stem and
00:05:29
continue to increase the number of kids
00:05:31
that are graduating because there's
00:05:32
certainly jobs for them Maris what would
00:05:35
you consider to be the kind of jobs that
00:05:38
are most likely to come back to the US
00:05:41
uh over the next uh you know few years
00:05:44
well it's an interesting question
00:05:47
um it's clear that the kind of jobs that
00:05:50
are going to grow are not the jobs that
00:05:53
you know we had in the past uh it's
00:05:56
they're going to have more information
00:05:58
technology content they're going to be
00:06:00
more technology driven um I don't think
00:06:03
we can compete in this country uh with
00:06:06
providing low cost labor uh in the way
00:06:09
that maybe you know we we provided it
00:06:12
Generations past so it's got to be a
00:06:14
more educated more technologically savvy
00:06:17
uh the other thing that we haven't
00:06:18
talked too much about is that you know
00:06:20
we're in a service economy 70% of all
00:06:23
employment is in service and one of the
00:06:25
areas that I do a lot of research is in
00:06:27
the interplay between services and
00:06:29
manufactur uring and most products today
00:06:31
are not just sold as products they're
00:06:33
sold as services and they have Services
00:06:35
bundled with them and most people even
00:06:38
in manufacturing companies aren't making
00:06:40
anything they're providing Services
00:06:42
either internally or externally so I
00:06:44
think that we have to understand we're
00:06:46
in a service economy we're in a
00:06:48
high-tech economy where skills are
00:06:50
important and the jobs that come back
00:06:53
have to somehow leverage off the fact
00:06:55
that there has to be a high service
00:06:57
content there has to be a high
00:06:58
technology let me one final comment just
00:07:02
last week we had a forum jointed with
00:07:04
Wharton and
00:07:05
MIT on this topic and our keynote
00:07:09
speaker was Mike molar uh from the
00:07:11
Bureau of Standards who is heading up
00:07:13
the the White House program on
00:07:15
manufactury and he announced that uh or
00:07:18
he described the current program that
00:07:20
the federal government has put forward
00:07:22
to promote all of this and they are
00:07:24
setting up centers of excellence across
00:07:27
the country they're getting different
00:07:29
levels of schools from community
00:07:31
colleges to universities uh they're
00:07:34
getting companies and and it's a very
00:07:36
exciting prospect that you know they're
00:07:38
really getting a lot of of of input and
00:07:40
they're they're investing large amounts
00:07:42
of money they want to turn the tide you
00:07:45
know this has been you know President
00:07:46
Obama said in his State of the Union
00:07:48
we're going to do this and they're now
00:07:51
have launched a program so I think this
00:07:53
is good and the states are also doing
00:07:55
this and the cities I was just asked to
00:07:58
participate in if I was interested in
00:08:00
participating in a in an RFP from the
00:08:03
city of Philadelphia who wants to add
00:08:06
manufacturing jobs to the city of
00:08:07
Philadelphia Mayor Nutter has said we
00:08:09
have to promote this so this is
00:08:11
happening at all levels of government in
00:08:13
all locations everybody recognizes what
00:08:16
the what the problem is and and so I
00:08:19
think with all of that Ingenuity and all
00:08:21
of that attention that this country can
00:08:23
throw at it I think I think we're going
00:08:25
to see some interesting things happen
00:08:27
that's really interesting uh SC what do
00:08:29
you think in terms of the kind of work
00:08:32
that can be done in a place like
00:08:34
Bangalore versus what can be done in
00:08:36
Florida are you seeing you know
00:08:38
different jobs coming back to the US
00:08:40
than what may have been uh sent overseas
00:08:43
I think it's a little different in the
00:08:44
tech space because I think there's a
00:08:46
there'll be a a small percentage of jobs
00:08:48
that come back but I think what's more
00:08:51
important for job growth in the US and
00:08:53
the tech Bas is that this the pie in
00:08:55
general is growing so the jobs that are
00:08:57
created here in the US on the tech
00:08:59
technology side will probably be
00:09:01
slightly different than what was
00:09:03
outsourced in the future one of the big
00:09:05
trends in technology is a move toward
00:09:08
agile software development agile
00:09:10
software development is a faster way to
00:09:12
build applications but it requires a a
00:09:14
much more high level of touch with the
00:09:17
business user who's driving the
00:09:18
requirements and it's hard to do that
00:09:20
from 7,000 miles away or wherever you
00:09:23
might be so a lot of the tech jobs that
00:09:26
that we're creating uh in the states and
00:09:28
that we're seeing are competitors create
00:09:30
are more focused on on projects that are
00:09:34
that require a high level touch with a
00:09:35
business user almost a day-to-day
00:09:37
interaction or multiple uh interaction
00:09:40
points per day and a change toward
00:09:42
faster software development so that
00:09:45
companies can hit these time-to Market
00:09:47
uh aspects that they're looking for the
00:09:49
other thing is obviously there's a drive
00:09:51
toward mobile app development uh and
00:09:53
there's certain components of mobile app
00:09:54
development that are are easier done in
00:09:56
the states as well because same reasons
00:09:59
that
00:09:59
uh the process of creating a mobile app
00:10:02
is a very visual process and you want to
00:10:05
be sharing those visual constructs with
00:10:08
your business user on a on a very
00:10:10
interactive almost Dynamic basis so
00:10:13
there's a lot of uh a lot of change
00:10:16
that's certainly happening in in the
00:10:17
industry in terms of how things get
00:10:19
developed and and certain Technologies
00:10:22
so I think the nearshoring I'm I'm sorry
00:10:24
the reshoring that's occurring in the
00:10:26
tech space a lot of it's being driven
00:10:28
just by the new things that are
00:10:29
happening in the space great now as the
00:10:33
phenomenon of reshoring plays out over
00:10:35
the future do you think it's going to
00:10:37
lead to some sort of a global shift in
00:10:40
competitive Advantage between the US and
00:10:43
the Emerging Markets or will things
00:10:45
never really go that far what do you
00:10:48
think I think there there has
00:10:50
been you know fundamental shifts uh you
00:10:53
know one of the things we haven't
00:10:54
touched on is
00:10:56
demographics uh you know we say we need
00:10:59
jobs we need high-tech jobs we need jobs
00:11:01
you know where are we going to find them
00:11:03
you're going to find them in people in
00:11:05
India you're not going to find them
00:11:06
going as much going forward in China
00:11:09
you're certainly not going to find them
00:11:10
in Japan you're going to find them in
00:11:12
South America these are the large pools
00:11:14
of available labor and I think that uh
00:11:17
it's clear that economic activity is
00:11:19
going to have to continue to grow in
00:11:22
those areas notwithstanding they also
00:11:24
have huge domestic markets so there have
00:11:27
been major shifts and so the US still is
00:11:31
is a leader you know I I'm not sure if
00:11:33
today China is a bigger manufacturer
00:11:35
than the US they're they're about even
00:11:37
now and and it's gone back and forth in
00:11:39
the last year or so uh but you know we
00:11:42
no longer have the
00:11:44
obvious assumed dominant position that
00:11:46
we had a generation or two back it's a
00:11:49
much more competitive world everybody
00:11:51
understands what what the stakes are and
00:11:55
I think there's going to continue to be
00:11:56
a shift and a balance and I think this
00:11:58
country and every country has to look
00:12:00
for its comparative advantage you know
00:12:03
there are things in our Marketplace that
00:12:05
deal with Innovation with the nature of
00:12:07
of our markets the nature of our
00:12:09
population that give us certain
00:12:10
advantages and there are other places in
00:12:12
the world where they have advantages and
00:12:14
so the balance is going to work out so
00:12:17
uh all I can say is the future will not
00:12:19
be like the
00:12:20
past and what about the IT industry uh
00:12:23
do do you see a competitive shift and
00:12:26
Advantage there yeah so I think the IT
00:12:28
industry again a little different
00:12:30
because there's a Glo there's a global
00:12:32
shortage of it talent and that that is a
00:12:35
a little bit of a differentiator to to
00:12:37
the space that I'm in and again I think
00:12:40
going back to what's happening with
00:12:41
reshoring I don't think it's it's an
00:12:43
either or uh combination between whether
00:12:47
companies want to do the work in the US
00:12:49
or whether they want to do it offshore
00:12:51
versus India they actually want to do
00:12:52
both they want to have both options but
00:12:55
what I think the uh where I think the
00:12:57
biggest effect of reshoring we'll have
00:13:00
is on the Nearshore centers so Nearshore
00:13:03
being primarily Canada Mexico Latin
00:13:06
America South America I think what we're
00:13:08
seeing from a pricing standpoint is that
00:13:11
the difference in pricing between
00:13:13
Nearshore providers and onshore
00:13:16
providers in these tier 2 you know
00:13:18
highquality locations that we talked
00:13:20
about is very thin and so I think
00:13:22
companies are starting to realize that
00:13:24
there's not a lot of reason for them or
00:13:26
a big driver for them to Outsource it
00:13:29
work to a Nearshore Center versus doing
00:13:32
it here in the states what I think their
00:13:35
Nearshore gen uh centers will do is they
00:13:37
will service their business in those
00:13:40
regions so you know companies will have
00:13:42
Nearshore centers in South America but
00:13:44
primarily to support their business in
00:13:47
that region not necessarily to export it
00:13:50
work from the US to that region I think
00:13:52
the at the end of the day they'll settle
00:13:54
on three locations which is doing work
00:13:56
on site doing work offshore in a in a
00:13:58
local cost Place high quality place like
00:14:00
India and then doing work in onshore
00:14:03
Development Centers or delivery centers
00:14:04
I think that's the shift that we think
00:14:06
we'll see so so just wrap things up I
00:14:09
have one final question for each of you
00:14:12
let's assume that uh a CEO of a major
00:14:16
company comes to you Morris and says so
00:14:20
uh you're doing a lot of very
00:14:21
interesting research on
00:14:23
reshoring uh as how can my company uh
00:14:27
what advice would you give my company uh
00:14:29
to take advantage of this phenomenon
00:14:32
what's in it for my company what would
00:14:34
you say well I think what I would say is
00:14:38
that don't take anything for granted I
00:14:41
mean there are a lot of generalities
00:14:43
that have been stated about should you
00:14:45
resore should you not resore where
00:14:47
should you resore and these are
00:14:49
generalities that don't hold up to
00:14:51
scrutiny I think that every company has
00:14:54
to look at their
00:14:55
situation which is unique and they have
00:14:57
to look at it very extens intensively
00:15:00
they have to make a comprehensive
00:15:01
analysis of the business case taking
00:15:03
into account all of these risk factors
00:15:05
and cost trade-offs trying to understand
00:15:08
what future scenarios they are they have
00:15:10
they have to do do the analysis to
00:15:13
support it I think what has happened in
00:15:15
the past is the the labor the wage cost
00:15:19
differential was so high that it became
00:15:22
the default we all offshore it's a
00:15:24
no-brainer we we'll just everybody else
00:15:27
is doing it we're going to do it and now
00:15:29
some are coming back some are not coming
00:15:31
back some are combining it in a
00:15:33
combination it's a lot Messier it's a
00:15:36
lot more complicated as it should be and
00:15:39
I think that any company that would come
00:15:40
to me I'd say let's look at the numbers
00:15:43
let's look at the Strategic issues and
00:15:46
let's do you know do an analysis that is
00:15:49
appropriate for your company and your
00:15:50
industry don't take things for granted
00:15:53
right uh same question for you Scott U
00:15:57
CEO has approached you uh with uh a
00:16:00
proposition to possibly reshore it
00:16:04
operations what's your advice to them I
00:16:06
think I'd say three things I would say
00:16:09
one the time is is right I couldn't have
00:16:12
said that two three four years ago I can
00:16:15
say that today the time is right to look
00:16:16
at this the second thing I would say is
00:16:19
pick your location very carefully the
00:16:22
success or failure of of of reshoring or
00:16:26
building a tech center in the US is very
00:16:29
dependent on the location you pick so
00:16:32
look at the demographics look at the
00:16:35
trends um you know we we did that when
00:16:37
we picked picked our first center we
00:16:39
looked at the simple migration trends of
00:16:42
the US population and the business
00:16:44
community and it certainly shows east to
00:16:46
west and north to south which is why our
00:16:48
first center is in Florida it makes a
00:16:50
lot of sense people want to live there
00:16:52
you can attract Tech Talent there
00:16:53
there's a lot of of reasons a lot of
00:16:55
high quality of life pick to Center very
00:16:58
carefully if you pick it in a place that
00:17:00
you won't be able to scale it then it'll
00:17:02
fail and the third and last thing I
00:17:04
would say is you know you know talk to a
00:17:07
a company like a m tree who does this
00:17:08
for a living you know we can help with
00:17:10
that
00:17:11
process great well thanks to both of you
00:17:14
for thank you very much discussion thank
00:17:16
you yeah appreciate it
00:17:25
[Music]
