In This Issue

MBA students will travel to Mumbai, Goa, Bangalore, Delhi and Agra in May (larger view)

Other Stories

• Executive MBAs Examine Global Business Issues at Symposium
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• Stegman Appointed to National Academies Committee, Recognized for Public Service
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Feature Stories

Straight to the Source: Exploring the Ins and Outs of Outsourcing

Offshore outsourcing - particularly the debate over outsourcing white-collar jobs - is one of the most complex, multi-faceted and politically charged topics today. It intrigues UNC Kenan-Flagler scholars, who are researching the pros and cons of this issue on international, national and statewide levels.

MBA students will learn about it when they travel to Mumbai, Goa, Bangalore, Delhi and Agra May 10-23 for the global immersion course, "Doing Business in India: Challenges and Opportunities." Outsourcing will be among the central themes of the course, which will be led by Jay Swaminathan, Benjamin Cone Research Professor and chair of operations, technology and innovation management. Students will visit Wipro Spectramind, the largest third-party offshore business process outsourcing firm in India.

"India is going to be a key global player in this century. It will be a huge market for multi-nationals as well as a major provider in the service economy," said Swaminathan, who is researching the outsourcing of warranty services in the computer industry thanks to a National Science Foundation grant. "This visit to India will increase the knowledge and awareness of our students related to outsourcing."

Innovation and cost savings from business process redesign are the research interests of information and technology management professors Arvind Malhotra and Al Segars.

"A common claim of companies that do offshore outsourcing is that it will free up their resources to concentrate on innovation. The question, then, is whether offshore outsourcing has led companies to become more innovative," Malhotra said. "I'm also interested in the issue of cost savings. Outsourcing a business function to an offshore vendor may bring 10 to 15 percent cost savings, but coupling business process redesign with the outsourcing can bring about even greater savings."

Faculty at the School's Kenan Institute of Private Enterprise are exploring public policies and other solutions to address the challenges of outsourcing. McKinsey Consulting estimates that by 2015, U.S. firms will outsource 3.3 million white-collar jobs, including 290,000 management positions. Other studies estimate that figure could reach as high as 14 million jobs.

"In the past, the chief focus has been on worker training, but there must be a permanent, meaningful job at the end of that training program," said John D. Kasarda, a management professor and director of the Kenan Institute. "And instead of building walls to keep IT and manufacturing here, it seems wiser to focus on developing the next generation of technologies and business processes, such as nanotechnology or bioinformatics."

Policymakers need to remember that we don't have a monopoly on innovation in the United States, said James H. Johnson Jr., management professor and director of the Institute's Urban Investment Strategies Center.

"We can't say for sure that certain innovations are going to originate in the United States," he said. "If you look at what corporations are doing, they're even moving their R&D facilities offshore." As an example, General Electric's half-million square foot Jack Welch Technology Center in Bangalore hosts 1,500 scientists, engineers and researchers, who are cranking out 40 patents every six months.

Entrepreneurship plays a key role in counterbalancing the jobs lost due to offshore outsourcing, Kasarda and Johnson said. UNC recently received a $3.5 million grant from the Kauffman Foundation to create the Carolina Entrepreneurial Initiative (CEI), which will be led by the Kenan Institute.

"We have to develop greater entrepreneurial acumen in all sectors of our economy and aggressively pursue entrepreneurial approaches to job creation, poverty alleviation and community development," Johnson said. "Students will need to graduate from college with greater entrepreneurial acumen if they are to thrive and prosper in the knowledge-based economy."

"CEI is a big step in the right direction to inspire our students to become entrepreneurs, to teach them how to become entrepreneurs, to connect them with alumni mentors, academic experts and private industry, and to create new ventures, new knowledge and new attitudes," added Kasarda.

Personality Affects How You Try to Influence Others

The process of influencing people - and the tactics you choose to do so - are an important element of managerial success.

UNC Kenan-Flagler management professor Dan Cable investigates the role of manager personality in the Journal of Organizational Behavior study, "Managers' Upward Influence Tactic Strategies: The Role of Manager Personality and Supervisor Leadership Style."

"If you have a certain personality type, let's say, agreeableness, there are certain ways that you may try to influence people that seem right to you but may not be most effective for the job," Cable said. "If you're agreeable, it may feel really uncomfortable to you to use pressure tactics, but if your job primarily involves negotiation, you may need to step outside your comfort zone and use different tactics."

Cable and University of Florida colleague Timothy Judge's study uses the Big Five model of personality as a framework for studying the relationship between personality traits and influence tactics.

The types of tactics that you use also might depend on how your own leader manages you. "If a leader is a hands-off, laissez-faire leader, subordinates might have to use pressure tactics," Cable said. "What this study also says is that if you're a leader, how you lead will affect how people try to influence you. In essence, how you lead may come back to haunt you."

The Big Five factors are:

• extraversion: the tendency to be social, assertive, expressive and active
• agreeableness: the tendency to be likable, nurturing, adaptable and cooperative
• conscientiousness: the tendency toward the traits of achievement, organization, task-focus and dependability
• emotional stability: the tendency to be secure, emotionally adjusted and calm
• openness to experience: the tendency to be imaginative, artistic, nonconforming and autonomous

To learn about your personality profile, take the Big Five Personality Test at http://www.outofservice.com/bigfive/.

The Cable/Judge study then links the Big Five personality traits with nine influence tactics:

• rational persuasion: using logical arguments and factual evidence to persuade a target
• consultation: seeking a target's participation in planning a strategy or activity
• inspirational appeal: arousing a target's enthusiasm by appealing to values, ideals and aspirations
• ingratiation: seeking to get a target in a good mood before asking him or her to do something
• personal appeal: appealing to a target's feeling of loyalty and friendship
• exchange: offering an exchange of favors with a target
• coalition: seeking the aid of others to persuade a target to do something
• legitimizing: establishing the legitimacy of a request by verifying that it's consistent with company policies, rules, etc.
• pressure: using demands, threats and persistent reminders to influence a target

The study involved 189 managers from more than 140 different companies across industries and confirmed that:

• Managers who scored high on extraversion were more likely to adopt influence tactics that emphasized inspirational appeal and ingratiation.
• Those scoring high on openness were less likely to use coalitions.
• Those scoring high on emotional stability were more likely to use rational persuasion and less likely to use inspirational appeal.
• Those scoring high on agreeableness were less likely to use legitimization or pressure.
• Those scoring high on conscientiousness were more likely to use rational appeal.

Managers may benefit from greater awareness of the menu of tactics available to them - learning to enact more effective tactics even if it is not their initial tendency, Cable said.

For the full paper, visit http://www3.interscience.wiley.com/cgi-bin/abstract/102521472/ABSTRACT.

Nepal Entrepreneur is Leading Supplier to Major U.S. Clothing Firms

Take a look at a T-shirt hanging on the racks at Gap and there's a good chance it will say "Made in Nepal." An interesting note the tag won't tell you is that the chief shirt maker studied business at UNC.

Harish Todi

The founder of JD Apparels, which has become a leading shirt supplier to Gap, May Department Stores and Federated Merchandising Group, is Harish Todi (MBA '92). Todi came to UNC Kenan-Flagler in search of formal business skills to build on the practical experience he had gained at home in Nepal. "I was overwhelmed by the size of the United States," Todi said. "But I remember the first thing I heard after reaching UNC was, 'We will take care of you.'"

Business Week featured Todi in a 2003 story about international entrepreneurs. "Business runs in our blood," said Todi, who was born in Nepal and attended boarding school in India beginning at age 5. "During my growing up years, a lot of business skills were imbibed by observing my family members doing business."

But the family business was a combination of processing and trading rice, oil, jute and food grains. Apparel was not a natural choice for Todi. His business developed both by chance and calculation, he said.

"After receiving my MBA at UNC, I spent some time with my cousin who was in the T-shirt business," Todi said. "It was from him that I learned that Nepal has a special status - that it has no quota restrictions to supply garments to any country."

This was a great opportunity, but not one without risk, given the regional competition due to abundant raw materials and cost efficient, highly skilled labor. Economic uncertainty, labor unrest and poor infrastructure in the region, Todi said, also have made the business skills he gained at UNC critical to planning and running his company.

JD Apparels, named for Todi's grandmother Jaidei Devi, opened its doors with his family's help in Todi's back yard in Nepal six months after his UNC graduation. "For the first two years we did contract manufacturing for exporters. Then we started getting calls from U.S. department stores looking to buy from Nepal."

At first focused on making basic men's T-shirts, the company later found a niche market in children's T-shirts, which require more detailed prints, embroidery and handiwork.

JD Apparels has grown to comprise more than 750 employees, yet it is still closely managed by family members. The main factory, where cutting, sewing and packing takes place, is still in the back yard, although it is several floors taller. Another factory has been added for washing, dyeing, printing and embroidery.

Todi counts his company's major achievement to be its standing among the top 1 percent of suppliers to its customers in terms of performance.

"I think our recipe for success has been maintaining a focused product range and small customer base, creating a production process finely tuned to balance expensive skilled labor with unskilled labor and delivering quality goods on time," he said.