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executives would want a one…stop Web…based interface where they could get a handle
on all the governance and ethics issues facing their organizations… whether it was
employee education； the reporting of any anomalous behavior； stewardship of a
hard…earned corporate reputation； or government compliance…and where they could get
immediate visibility into where their company stood。
So Seidman faced a double challenge。 He needed to do two things at once： keep growing
his market share in the online compliance education industry； and design a whole new
integrated platform for the companies he was already working with； one that would
require a real technological leap。 It was when faced with this challenge that he
decided to enlist MindTree； the Indian consulting firm； in an outsourced relationship
that offered him about five well…qualified software engineers for the price of one
in America。
〃Look；〃 said Seidman； 〃when things are on sale； you tend to buy more。 MindTree offered
a sale not on last season's closeout； but on top…notch software engineering talent
that I would have been hard…pressed to find elsewhere。 I needed to spend a lot of
money defending and extending my core business and continue to take care of my
customers； who
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were working off my current programs。 And at the same time； I had to make a giant
leap to offer my customers what they were asking for next； which was a much more robust
and total online solution to all their ethics； governance； and compliance questions。
If I don't meet their needs； someone else will。 Partnering with MindTree allows me
to basically have two teams…one team ＇mostly Americans＇ that is focused on defending
and extending our core business； and the other team； including our Indian consultants；
focused on making our next strategic leap to grow our business。〃
Since ethics is at the core of Seidman's Los Angeles…headquartered business； how he
went about outsourcing was as important as the ultimate results of the relationship。
Rather than announcing the MindTree partnership as a done deal； Seidman conducted
an all…hands town hall meeting of his 170 or so employees to discuss the outsourcing
he had in mind。 He laid out all the economic arguments； let his staff weigh in； and
gave everyone a picture of which jobs would be needed in the future and how people
could prepare themselves to fit in。 〃I needed to show my company that this is what
it would take to win；〃 he said。
Have no doubt； there are firms that do and will outsource good jobs just to save money
and disperse it to shareholders or management。 To think that is not happening or will
not happen is beyond naive。 But firms that are using outsourcing primarily as a tool
to cut costs； not enhance innovation and speed growth； are the minority； not the
majority…and I would not want to own stock in any of them。 The best companies are
finding ways to leverage the best of what is in India with the best of what is in
North Dakota with the best of what is in Los Angeles。 In that sense； the word
〃outsourcing〃 should really be retired。 The applicable word is really 〃sourcing。〃
That is what the flat world both enables and demands； and the companies that do
sourcing right end up with bigger market shares and more employees everywhere…not
smaller and fewer。
〃This is about trying to get bigger faster； about how we make our next leap in less
time with greater assurance of success；〃 said Seidman of his decision to source
critical areas of development of his new platform to MindTree。 〃It is not about cutting
corners。 We have over two hundred clients all over the world now。 If I can grow this
company the way that I
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want to； I will be able to hire even more people in all our current offices； promote
even more people； and give our current employees even more opportunities and more
rewarding career paths…because LRN's agenda is going to be broader； more complex and
more global。 。 。 We are in a very competitive space。 This ＇decision to use outsourcing＇
is all about playing offense； not defense。 I am trying to run up the score before
it's run up on me。〃
Rule #7： Outsourcing isn't just for Benedict Arnolds。 It's also for idealists。
One of the newest figures to emerge on the world stage in recent years is the social
entrepreneur。 This is usually someone who burns with desire to make a positive social
impact on the world； but believes that the best way of doing it is； as the saying
goes； not by giving poor people a fish and feeding them for a day； but by teaching
them to fish； in hopes of feeding them for a lifetime。 I have come to know several
social entrepreneurs in recent years； and most combine a business school brain with
a social worker's heart。 The triple convergence and the flattening of the world have
been a godsend for them。 Those who get it and are adapting to it have begun launching
some very innovative projects。
One of my favorites is Jeremy Hockenstein； a young man who first followed a
time…honored path of studying at Harvard and going to work for the McKinsey consulting
firm； but then； with a colleague from McKinsey； veered totally off course and decided
to start a not…for…profit data…entryfirm that does outsourced data entry for American
companies in one of the least hospitable business environments in the world； post…Pol
Pot Cambodia。
Only in a flat world！
In February 2001； Hockenstein and some colleagues from McKinsey decided to go to Phnom
Penh； half on vacation and half on a scouting mission for some social entrepreneurship。
They were surprised to find a city salted with Internet cafes and schools for learning
English…but with no jobs； or at best limited jobs； for those who graduated。
〃We decided we would leverage our connections in North America to try to bridge the
gap and create some income…generating opportunities
for people；〃 Hockenstein said。 That summer； after another trip funded by themselves；
Hockenstein and his colleagues opened Digital Divide Data； with a plan to start a
small operation in Phnom Penh that would do data entry…hiring locals to type into
computers printed materials that companies in the United States wanted in digitized
form； so that it could be stored on databases and retrieved and searched on computers。
The material would be scanned in the United States and the files transmitted over
the Internet。 Their first move was to hire two local Cambodian managers。 Hockenstein's
partner from McKinsey； Jaeson Rosenfeld； went to New Delhi and knocked on the doors
of Indian data…entry companies to see if he could find one …just one…that would take
on his two Cambodian managers as trainees。 Nine of the Indian companies slammed their
doors。 The last thingthey wanted was even lower…cost competition emerging in Cambodia。
But a generous Hindu soul agreed； and Hockenstein got his managers trained。 They then
hired their first twenty data…entry operators； many of whom were Cambodian war
refugees； and bought twenty computers and an Internet line that costthem 100 a month。
The project was financed with 25；000 of their own money and a 25；000 grant from
a Silicon Valley foundation。 They opened for business in July 2001； and their first
work assignment was for the Harvard Crimson； Harvard's undergraduate daily newspaper。
〃The Crimson was digitizing their archives to make them available online； and because
we were Harvard grads they threw some business our way；〃 said Hockenstein。 〃So our
first project was having Cambodians typing news articles from the Harvard Crimson
from 1873 to 1899； which reported on Harvard…Yale crew races。 Later； actually； when
we got to the years 1969 to 1971； when the turmoil in Cambodia was all happening；
they were typing ＇Crimson stories＇ about their own story 。 。 。 We would convert the
old Crimsons； which were on microfilm； to digital images in the United States through
a company in Oklahoma that specialized in that sort of thing； and then we would just
transfer the digital images to Cambodia by FTP ＇file transfer protocol＇。 Now you can
go to thecrimson。com and download these stories。〃 The Cambodian typists did not have
to know English； only how to type English charac365
ters； they worked inpairs； eachtyping the same article； andthen the computer program
compared their work to make sure that there were no errors。
Hockenstein said that each of the typists works six hours a day； six days a week；
and is paid 75 a month； twice the minimum wage in Cambodia； where the average annual
income is less than 400。 In addition； each typist receives a matching scholarship
for the rest of the workday to go to school； which for most means completing high
school but for some has meant going to college。 〃Our goal was to break the vicious
cycle there of ＇young people＇ having to drop out of school to support families；〃 said
Hockenstein。 〃We have tried to pioneer socially responsible outsourcing。 The U。S。
companies working with us are not just saving money they can invest somewhere else。
They are actually creating better lives for some of the poor citizens of the world。〃
Four years after starting up； Di