Backing the World

        "back the world"

        Staffing Overseas Assignments

        Foreign Language Fluency

        Use of Indigenous Staff

        Use of In-Country Consultants

        Price as a Selection Factor

        Major Market Areas through 2000

        Near-Term International Trends

        Conclusions

        Brian Lewis is a management consultant who works with design firms. He may be contacted at 4220 Morningstar Drive, Castle Rock, CO 80104-9092, 303/660-8868.

        "back the world"

        In the words of the immortal Frank Zappa, American rock musician and global entrepreneur, "In the fight between you and the world, back the world." A survey of consulting-firm principals reveals several trends in their approaches to doing business in the global marketplace. Firms surveyed on a broad scope of topics ranged in size from 30 to 5,000 employees.

        Staffing Overseas Assignments

        Of the firms surveyed, 50 percent responded that staffing overseas assignments today is much more difficult than 10 years ago. The respondents cite difficulties that include:

        • Concern with being out of the firm's loop

        • Uncertainty regarding options for future achievement

        • Change of location, fear of the unknown

        • Worry about risk in some locations

        • Finding the right capabilities to meet position requirements

        Firms address staffing problems by seeking to send singles, staff with no children, or those whose children had left home. However, they admit that such limitations inhibit their staffing selections.

        Among the solutions are in-house programs to train young professionals for foreign assignments; sending overseas staff special monthly bulletins on firm activities at home; and emphasizing that experience outside the U.S. is generally much broader than that gained at home, particularly in the areas of operations, finance, and human resources. Companies also rely on hiring from the pool of workers who move from job to job in overseas locations.

        More than half of the firms interviewed indicate extra compensation is the primary incentive for inducing staff to work outside the U.S. They also stress opportunities for personal growth, to gain wider, deeper experience through taking on challenging assignments. For some locations, lifestyle is emphasized as an incentive. Workers with families are offered allowances to cover schooling costs for their children and/or frequent visits home. Most companies take pains to assure staff they will not be bypassed for promotions at home.

        Foreign Language Fluency

        Firms cite lack of foreign language capability as an inhibitor in assigning staff to overseas assignments. In Latin America, fluency in Spanish is often more important to the client than technical capability. Several firms observe that English is becoming more easily accepted by Asian clients. One company limits overseas efforts to locations where English is spoken.

        Language deficiency is seen as more of a problem with senior staff, since foreign language fluency is often a requirement in hiring younger staff members. Some firms actively seek recent immigrants who are naturally fluent. Spanish, Arabic, and Mandarin are perceived as the languages most likely to be useful. Two larger firms have set up in-house language training programs in anticipation of future staffing needs. Other firms encourage and pay for external language lessons.

        Use of Indigenous Staff

        All the firms interviewed said use of indigenous staff is a necessity. Most indicate that U.S. citizens make up 10 percent or less of their overseas staff, with one firm reporting 40 percent as the high. In-country technical staff are favored because:

        • Staffing costs are lower, which enhances price competitiveness

        • Clients require technology transfer

        • It's often a condition of winning the project

        • Insufficient U.S. workers are available for assignment

        • "Raiding" the U.S. staff for overseas commitments is disruptive to domestic project delivery

        Some firms place indigenous staff on the payroll of a local associate or subcontractor to avoid entanglement with labor and hiring regulations. Others assign them to the payroll of a specially created international subsidiary to avoid long-term commitments by the parent firm.

        Many firms say they welcome indigenous staff to their ranks, advancing them to managerial positions as competence warrants, and offering the same employee privileges available to domestic staff, including ownership. Several ESOP and ESOP-type firms observe this trend as both inevitable and desirable to encourage long-term employment. One major firm already has indigenous staff managing seven of its nine international offices.

        The challenge to consulting firms is to make global employment and firm ownership essentially seamless, as many Fortune 500 companies have done already.

        Use of In-Country Consultants

        Of the firms interviewed, 90 percent agree there is a trend toward increased use of in-country consultants as team members on projects. Use of in-country consultants is seen as worthwhile to:

        • Reduce cost of service and increase efficiency

        • Give local firms a "rightful" role

        • Meet local legal requirements

        • Help win the project, sometimes with the local firm in the lead

        An official in the procurement section of the World Bank comments that the bank is moving toward insisting on involvement of in-country firms. Selection points awarded for local firm involvement underscore the importance of this trend.

        Competition for competent overseas partners is increasingly intense. Smaller U.S. firms who do not become a permanent or frequent presence in an overseas location face the possibility of being unable to align themselves with competent local firms.

        Price as a Selection Factor

        Those interviewed said price is more frequently emphasized now as a selection factor than it was 10 years ago. Comments indicate tough competition from European firms. The French, Germans, and Italians are noted for their ability to creatively provide financing, thus tilting the selection process in their favor. Australians, New Zealanders, and Canadians are also seen as very cost-competitive.

        Major Market Areas through 2000

        Interviewees say the best opportunities through the year 2000 are (in descending order) Asia, Latin America, Europe, the Middle East, and Southern Africa. Specific countries of interest include China (PRC) and Japan in Asia; Western Europe and CIS; and the environmental market in the Middle East.

        Near-Term International Trends

        Firm leaders enunciate the following important trends for doing business internationally:

        • The increasing globalization of the marketplace and the transparency of national borders, particularly in the private sector

        • The universality of competition (increasingly price-based) and the consequent greater difficulty of selection for U.S. firms

        • The need for multi-national teaming

        • The need to "go local" with permanent overseas offices and strong teaming relationships with local firms--as one principal says, "There is no substitute for being an hour away."

        • The trend toward inclusive delivery systems, including the ability to either facilitate funding or to finance projects--with a greater emphasis on design/build

        • More public/private partnerships in ownership and financing, hence more privatization

        • The international banks do not have sufficient funds to finance all the infrastructure needs. Power plants alone could consume $50 billion per year.

        • An ongoing need for early project identification and positioning

        Conclusions

        The world has truly become a global village in the 1990s. As U.S. firms pursue more opportunities overseas, particularly in regions where they have not worked previously, they should pay attention to the words of Akio Morita, former Sony chairman. He told the story of two shoe sales representatives who happened upon a primitive tribe deep in the rain forest. The first person faxed the boss, saying, "No opportunities here. All the people go barefoot." The second one also sent a message to headquarters, with a different perspective: "Everyone here barefoot. Huge opportunity. Send all possible sizes and styles." As always, success will be maximized by appropriate market research, client understanding and relationship-building, and knowledge of the language and cultural context. Careful preparation can avoid the plight of chicken king Frank Perdue, whose ad agency thought they had correctly translated his company slogan. Unfortunately, "It Takes a Tough Man to Make a Tender Chicken" was rendered as "It Takes a Sexually Stimulated Man to Make a Chicken Affectionate."

        There is no reason to believe the worldwide environment for consulting services will become any friendlier for U.S. firms. The Europeans and other long-established players in the international marketplace are still in there pitching. Companies from "third-world" cultures are rapidly gaining in sophistication as they learn from their business partners and competitors. Remember Frank Zappa's admonition: "In the fight between you and the world, back the world."