Europe lags the United States in reaping from the booming outsourcing business
But that is little exaggeration. Over-emphasise on these, has actually hid its inexcusable failures like labour inflexibility, lack of cultural openness, over-cautiousness on national identity. Leading countries like Germany, France have very rigid and conservative laws regarding employment and layoffs. There is a need to realise and learn from the US for its open, diverse culture, a land for all. Many Asian companies are not comfortable initiating businesses in those countries. However, the UK, is exception.
The matter of the fact is the EU has not imposed any protectionist laws but as the maxim says, “delay in restructure is delay in regeneration,” slow pace of restructuring and policy adoption incurs huge cost to these economies. A research by McKinsey Global Institute revealed that each dollar of corporate spending that US companies outsource to India or China, it generates as much as $1.14 whereas with the present stiffness in laws, slow pace of adopting policies and keeping the labour re-employment rate as low as 40% Germany brings back merely €0.80 for every euro of corporate spending but if it can match with the US and raise re-employment rate as high as 70%, Germany can actually end up creating €1.05 in every euro corporate spending for German economy.
To put things in perspective, it is EU’s failure not to cope up with the changing phase. Its success is in re-orienting its laws, business practices, thinking et al to live in globalisation and extracting maximum profits from it. If the EU, as a country streamlines rules and policies with the changing business climate, it might get a chance to reap rich harvests from ‘global village’ before it gets too late.
But that is little exaggeration. Over-emphasise on these, has actually hid its inexcusable failures like labour inflexibility, lack of cultural openness, over-cautiousness on national identity. Leading countries like Germany, France have very rigid and conservative laws regarding employment and layoffs. There is a need to realise and learn from the US for its open, diverse culture, a land for all. Many Asian companies are not comfortable initiating businesses in those countries. However, the UK, is exception.
The matter of the fact is the EU has not imposed any protectionist laws but as the maxim says, “delay in restructure is delay in regeneration,” slow pace of restructuring and policy adoption incurs huge cost to these economies. A research by McKinsey Global Institute revealed that each dollar of corporate spending that US companies outsource to India or China, it generates as much as $1.14 whereas with the present stiffness in laws, slow pace of adopting policies and keeping the labour re-employment rate as low as 40% Germany brings back merely €0.80 for every euro of corporate spending but if it can match with the US and raise re-employment rate as high as 70%, Germany can actually end up creating €1.05 in every euro corporate spending for German economy.
To put things in perspective, it is EU’s failure not to cope up with the changing phase. Its success is in re-orienting its laws, business practices, thinking et al to live in globalisation and extracting maximum profits from it. If the EU, as a country streamlines rules and policies with the changing business climate, it might get a chance to reap rich harvests from ‘global village’ before it gets too late.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
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