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HP¡£¡¡But¡¡some¡¡of¡¡the¡¡profits¡¡will¡¡find¡¡their¡¡way¡¡back¡¡to¡¡the¡¡mother¡¡ship¡¡in¡¡Palo¡¡Alto£»¡¡
which¡¡will¡¡be¡¡supporting¡¡the¡¡whole¡¡operation¡¡through¡¡its¡¡global¡¡knowledge¡¡supply¡¡
chain¡£¡¡
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knowledge¡¡and¡¡infrastructure¡¡teams¡¡who¡¡can¡¡put¡¡together¡¡the¡¡processes¡¡that¡¡win¡¡those¡¡
contracts¡­like¡¡running¡¡the¡¡back¡¡room¡¡of¡¡the¡¡Bank¡¡of¡¡India¡­are¡¡still¡¡in¡¡the¡¡United¡¡
States¡£¡¡
¡¨The¡¡ability¡¡to¡¡dream¡¡is¡¡here£»¡¡more¡¡than¡¡in¡¡other¡¡parts¡¡of¡¡the¡¡world£»¡¨¡¡said¡¡Conway¡£¡¡
¡¨The¡¡nucleus¡¡of¡¡creativity¡¡is¡¡here£»¡¡not¡¡because¡¡people¡¡are¡¡smarter¡­it¡¡is¡¡the¡¡
environment£»¡¡the¡¡freedom¡¡of¡¡thought¡£¡¡The¡¡dream¡¡machine¡¡is¡¡still¡¡here¡£¡¨¡¡


Rule¡¡#6£º¡¡The¡¡best¡¡companies¡¡outsource¡¡to¡¡win£»¡¡not¡¡to¡¡shrink¡£¡¡They¡¡outsource¡¡to¡¡innovate¡¡
faster¡¡and¡¡more¡¡cheaply¡¡in¡¡order¡¡to¡¡grow¡¡larger£»¡¡gain¡¡market¡¡share£»¡¡and¡¡hire¡¡more¡¡
and¡¡different¡¡specialists¡­not¡¡to¡¡save¡¡money¡¡by¡¡firing¡¡more¡¡people¡£¡¡
Dov¡¡Seidman¡¡runs¡¡LRN£»¡¡a¡¡business¡¡that¡¡provides¡¡online¡¡legal£»¡¡compliance£»¡¡and¡¡ethics¡¡
education¡¡to¡¡employees¡¡of¡¡global¡¡companies¡¡and¡¡helps¡¡executives¡¡and¡¡board¡¡members¡¡
manage¡¡corporate¡¡governance¡¡responsibilities¡£¡¡We¡¡were¡¡having¡¡lunch¡¡in¡¡the¡¡fall¡¡of¡¡
2004¡¡when¡¡Seidman¡¡casually¡¡mentioned¡¡that¡¡he¡¡had¡¡recently¡¡signed¡¡an¡¡outsourcing¡¡
contract¡¡with¡¡the¡¡Indian¡¡consulting¡¡firm¡¡MindTree¡£¡¡
¡¨Why¡¡are¡¡you¡¡cutting¡¡costs£¿¡¨¡¡I¡¡asked¡¡him¡£¡¡
¡¨I¡¡am¡¡outsourcing¡¡to¡¡win£»¡¡not¡¡to¡¡save¡¡money£»¡¨¡¡Seidman¡¡answered¡£¡¡¡¨Go¡¡to¡¡our¡¡Web¡¡site¡£¡¡
I¡¡currently¡¡have¡¡over¡¡thirty¡¡job¡¡openings£»¡¡and¡¡these¡¡are¡¡knowledge¡¡jobs¡£¡¡We're¡¡
expanding¡£¡¡We're¡¡hiring¡£¡¡I¡¡am¡¡adding¡¡people¡¡and¡¡creating¡¡new¡¡processes¡£¡¨¡¡
Seidman's¡¡experience¡¡is¡¡what¡¡most¡¡outsourcing¡¡is¡¡actually¡¡about¡­companies¡¡
outsourcing¡¡to¡¡acquire¡¡knowledge¡¡talent¡¡to¡¡grow¡¡their¡¡business¡¡faster£»¡¡not¡¡simply¡¡
to¡¡cut¡¡costs¡¡and¡¡cut¡¡back¡£¡¡Seidman's¡¡company¡¡is¡¡a¡¡leader¡¡in¡¡one¡¡of¡¡those¡¡completely¡¡
new¡¡industries¡¡that¡¡just¡¡appeared¡¡in¡¡the¡¡flat¡¡world¡­helping¡¡multinationals¡¡foster¡¡
an¡¡ethical¡¡corporate¡¡culture¡¡around¡¡an¡¡employee¡¡base¡¡spread¡¡all¡¡over¡¡the¡¡world¡£¡¡
Although¡¡LRN¡¡

is¡¡a¡¡BE¡¡company¡­founded¡¡ten¡¡years¡¡before¡¡Enron¡¡exploded¡­demand¡¡for¡¡its¡¡services¡¡surged¡¡
in¡¡the¡¡PE¡¡era¡­post¡­Enron¡£¡¡In¡¡the¡¡wake¡¡of¡¡the¡¡collapse¡¡of¡¡Enron¡¡and¡¡other¡¡corporate¡¡
governance¡¡scandals£»¡¡a¡¡lot¡¡more¡¡companies¡¡became¡¡interested¡¡in¡¡what¡¡LRN¡¡was¡¡
offering¡­online¡¡programs¡¡for¡¡companies¡¡to¡¡forge¡¡common¡¡expectations¡¡and¡¡
understandings¡¡of¡¡their¡¡legal¡¡and¡¡ethical¡¡responsibilities£»¡¡from¡¡the¡¡boardroom¡¡to¡¡
the¡¡factory¡¡floor¡£¡¡When¡¡companies¡¡sign¡¡up¡¡with¡¡LRN£»¡¡their¡¡employees¡¡are¡¡given¡¡anonline¡¡
education£»¡¡including¡¡tests¡¡that¡¡cover¡¡everything¡¡from¡¡your¡¡company's¡¡code¡¡of¡¡conduct¡¡
to¡¡when¡¡you¡¡are¡¡allowed¡¡to¡¡accept¡¡a¡¡gift¡¡to¡¡what¡¡you¡¡need¡¡to¡¡think¡¡about¡¡before¡¡hitting¡¡
Send¡¡on¡¡an¡¡e¡­mail¡¡to¡¡what¡¡constitutes¡¡a¡¡bribe¡¡of¡¡a¡¡foreign¡¡official¡£¡¡
As¡¡the¡¡whole¡¡issue¡¡of¡¡corporate¡¡governance¡¡began¡¡to¡¡mushroom¡¡in¡¡the¡¡early¡¡2000s£»¡¡
Seidman¡¡realized¡¡that¡¡his¡¡customers£»¡¡much¡¡like¡¡E*Trade£»¡¡would¡¡need¡¡a¡¡more¡¡integrated¡¡
platform¡£¡¡While¡¡it¡¡was¡¡great¡¡that¡¡he¡¡was¡¡educating¡¡their¡¡employees¡¡with¡¡one¡¡online¡¡
curriculum¡¡and¡¡advising¡¡boards¡¡on¡¡ethics¡¡issues¡¡with¡¡another£»¡¡he¡¡knew¡¡that¡¡company¡¡
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£º¡¡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¡¡
562¡¡
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¡¡
363¡¡
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£º¡¡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

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