For many global companies, “the main heart of their business is now supported here,” said N. Krishnakumar, president of MindTree, another leading Indian knowledge outsourcing firm based in Bangalore. “It can cause chaos if there is a disruption.” While not trying to meddle in foreign affairs, he added, “What we explained to our government, through the Confederation of Indian Industry, is that providing a stable, predictable operating environment is now the key to India's development.” This was a real education for India's elderly leaders in New Delhi, who had not fully absorbed how critical India had become to the world's knowledge supply chain. When you are managing vital backroom operations for American Express or General Electric or Avis, or are responsible for tracing all the lost luggage on British Airways or Delta, you cannot take a month, a week, or even a day off for war without causing major disruptions for those companies. Once those companies have made a commitment to outsource business operations or research to India, they expect it to stay there. That is a major commitment. And if geopolitics causes a serious disruption, they will leave, and they will not come back very easily. When you lose this kind of service trade, you can lose it for good.
“What ends up happening in the flat world you described,” explained Paul, “is that you have only one opportunity to make it right if something [goes] wrong. Because the disadvantage of being in a flat world is that despite all the nice engagements and stuff and the exit barriers that you have, every customer has multiple options, and so the sense of responsibility you have is not just out of a desire to do good by your customers, but also a desire for self-preservation.”
The Indian government got the message. Was India's central place in the world's services supply chain the only factor in getting Prime Minister Vajpayee to tone down his rhetoric and step back from the brink? Of course not. There were other factors, to be sure-most notably the deterrent effect of Pakistan's own nuclear arsenal. But clearly, India's role in global services was an important additional source of restraint on its behavior, and it was taken into account by New Delhi. “I think it sobered a lot of people,” said Jerry Rao, who, as noted earlier, heads the Indian high-tech trade association. “We engaged very seriously, and we tried to make the point that this was very bad for Indian business. It was very bad for the Indian economy... [Many people] didn't realize till then how suddenly we had become integrated into the rest of the world. We are now partners in a twenty-four by seven by three-sixty-five supply chain.”
Vivek Kulkami, then information technology secretary for Bangalore's regional government, told me back in 2002, “We don't get involved in politics, but we did bring to the government's attention the problems the Indian IT industry might face if there were a war.” And this was an altogether new factor for New Delhi to take into consideration. “Ten years ago, [a lobby of IT ministers from different Indian states] never existed,” said Kulkarni. Now it is one of the most important business lobbies in India and a coalition that no Indian government can ignore.
“With all due respect, the McDonald's [shutting] down doesn't hurt anything,” said Vivek Paul, “but if Wipro had to shut down we would affect the day-to-day operations of many, many companies.” No one would answer the phones in call centers. Many e-commerce sites that are supported from Bangalore would shut down. Many major companies that rely on India to maintain their key computer applications or handle their human resources departments or billings would seize up. And these companies did not want to find alternatives, said Paul. Switching is very difficult, because taking over mission-critical day-to-day backroom operations of a global company takes a great deal of training and experience. It's not like opening a fast-food restaurant. That was why, said Paul, Wipro's clients were telling him, “'I have made an investment in you. I need you to be very responsible with the trust I have reposed in you.' And I think that created an enormous amount of back pressure on us that said we have to act in a responsible fashion... All of a sudden it became even clearer that there's more to gain by economic gains than by geopolitical gains. [We had more to gain from building] a vibrant, richer middle class able to create an export industry than we possibly could by having an ego-satisfying war with Pakistan.” The Indian government also looked around and realized that the vast majority of India's billion people were saying, “I want a better future, not more territory.” Over and over again, when I asked young Indians working at call centers how they felt about Kashmir or a war with Pakistan, they waved me off with the same answer: “We have better things to do.” And they do. America needs to keep this in mind as it weighs its overall approach to outsourcing. I would never advocate shipping some American's job overseas just so it will keep Indians and Pakistanis at peace with each other. But I would say that to the extent that this process happens, driven by its own internal economic logic, it will have a net positive geopolitical effect. It will absolutely make the world safer for American kids.
Each of the Indian business leaders I interviewed noted that in the event of some outrageous act of terrorism or aggression from Pakistan, India would do whatever it takes to defend itself, and they would be the first to support that-the Dell Theory be damned. Sometimes war is unavoidable. It is imposed on you by the reckless behavior of others, and you have to just pay the price. But the more India and, one hopes, soon Pakistan get enmeshed in global service supply chains, the greater disincentive they have to fight anything but a border skirmish or a war of words.
The example of the 2002 India-Pakistan nuclear crisis at least gives us some hope. That cease-fire was brought to us not by General Powell but by General Electric.
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Infosys Versus al-Qaeda
Unfortunately, even GE can do only so much. Because, alas, a new source for geopolitical instability has emerged only in recent years, for which even the updated Dell Theory can provide no restraint. It is the emergence of mutant global supply chains -that is, nonstate actors, be they criminals or terrorists, who learn to use all the elements of the flat world to advance a highly destabilizing, even nihilistic agenda. I first started thinking about this when Nandan Nilekani, the Infosys CEO, was giving me that tour I referred to in Chapter 1 of his company's global videoconferencing center at its Bangalore headquarters. As Nandan explained to me how Infosys could get its global supply chain together at once for a virtual conference in that room, a thought popped into my head: Who else uses open-sourcing and supply-chaining so imaginatively? The answer, of course, is al-Qaeda.
Al-Qaeda has learned to use many of the same instruments for global collaboration that Infosys uses, but instead of producing products and profits with them, it has produced mayhem and murder. This is a particularly difficult problem. In fact, it may be the most vexing geopolitical problem for flat-world countries that want to focus on the future. The flat world-unfortunately-is a friend of both Infosys and al-Qaeda. The Dell Theory will not work at all against these informal Islamo-Leninist terror networks, because they are not a state with a population that will hold its leaders accountable or with a domestic business lobby that might restrain them. These mutant global supply chains are formed for the purpose of destruction, not profit. They don't need investors, only recruits, donors, and victims. Yet these mobile, self-financing mutant supply chains use all the tools of collaboration offered by the flat world-open-sourcing to raise money, to recruit followers, and to stimulate and disseminate ideas; outsourcing to train recruits; and supply-chaining to distribute the tools and the suicide bombers to undertake operations. The U.S. Central Command has a name for this whole underground network: the Virtual Caliphate. And its leaders and innovators understand the flat world almost as well as Wal-Mart, Dell, and Infosys do.
In the previous chapter, I tried to explain that you cannot understand the rise of al-Qaeda emotionally and politically without reference to the flattening of the world. What I am arguing here is that you cannot understand the rise of al-Qaeda technically without reference to the flattening of the world, either. Globalization in general has been al-Qaeda's friend in that it has helped to solidify a revival of Muslim identity and solidarity, with Muslims in one country much better able to see and sympathize with the struggles of their brethren in another country-thanks to the Internet and satellite television. At the same time, as pointed out in the previous chapter, this flattening process has intensified the feelings of humiliation in some quarters of the Muslim world over the fact that
