The End of Globalization?

“Have we reached the end of globalization?” Fareed Zakaria, the host of CNN’s weekly international affairs show, asked last week. He points to two factors — 3D printing and the rise in protectionist policies — as forces that combine to challenge the globalization movement of the last 30 years.

From a services perspective, we at Everest Group have similar worries.

But instead of 3D printing and protectionism, cloud and automation transform the global services world. These forces give rise to compelling possibilities that pose a threat to low-wage service models. The results could be transformative: more cost-effective and higher-quality services without having to reach across borders.

Of course, cloud and automation aren’t a complete substitution for everything companies have sent offshore during the past 30 years. There is, however, ongoing adoption for these more cost-effective models. And I’d wager we’re further along the adoption curve than in 3D printing.

Protectionism, Policy and Posturing

We also see the prospect of protectionism rearing its ugly head in the services world. It’s something we blogged about last year, focusing on immigration and H-1B visa reform. We need look no further than Senator Durbin to see one of the proponents of protectionism.

We believe this trend is far from finished, and we predict more work moving away from third-party providers as a result of the Fed’s comment about outsourcing.

These sorts of political statements and trends create a worrying backdrop that allows other protectionist statements to create more relevance.

Too Early to Worry? No.

It may be too early to call globalization to an end, but these factors certainly present challenges. We’ll continue watching both these trends carefully. Although they are in early stages, combined they can prove a substantial threat to the globalization that has driven the services model since the mid-1990s.