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Sunday, June 11, 2006

Outsourcing the CEO

NYT makes a case for the CEO of US Corporations to be outsourced to Bangalore / Beijing. CEO compensation has been a issue of intense debate in the US and that is one of the key reasons cited by Lawrence Orlowski and Florian Lengyel in this NYT piece.

China, India and other emerging markets offer shareholders a virtually unlimited talent pool from which to draw chief executives. With an increased supply of candidates, a truly independent corporate compensation committee would be easily able to hire superior leaders at salaries and benefits that are a small fraction of what their American counterparts in those fancy corner offices demand.

Also, given the importance placed on performing well in science and math in countries like China and India, it would be more likely that an offshored chief executive would have had a rigorous technical education instead of degrees in the "softer" management disciplines that are common at American business schools. Critics may question whether it is wise for an American company to have its chief executive in Bangalore or Beijing. But this is the thinking of a bygone era. More and more corporate chiefs say that they do not want their companies to be seen as American anymore. Cisco's chief executive, John Chambers, has declared, "What we're trying to do is outline an entire strategy of becoming a Chinese company."

5 Comments:

  • Sure. Why not?

    By Blogger ChinaLawBlog, at 1:11 AM  

  • If I remember, there is a dilbert strip about this story.

    By Blogger Venky Krishnamoorthy, at 11:48 AM  

  • No sense whatsoever.

    There are a few reasons to outsourcing. Among them are:
    1. Outsourcing reduces costs
    2. Keeps the non core activities away from the functioning of the company

    If you are hiring a CEO, you are hiring him based on worth, and not thinking too much about his salary. And since the CEO is definitely a core person to the activities of the company, it makes even little sense. Im thinking its a nice theoritical concept, but practically, it makes little sense. But thanks kaps, it makes for good coffee table conversation.

    By Blogger shravan, at 3:08 PM  

  • im seriously thinking of speaking chinese tamil malay.
    that way spore is such a nice place.i am tempted .

    By Anonymous Anonymous, at 11:18 PM  

  • @Shravan,
    The article suggests that outsourcing the CEO could result in far greater savings that the outsourcing of non-core activities.

    By Blogger Kaps, at 10:52 AM  

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