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Thomas L Friedman

To Matt and Kay and to Ron

Contents

How the World Became Flat

One: While I Was Sleeping / 3

Two: The Ten Forces That Flattened the World / 48

Flattener#l. 11/9/89

Flattener #2. 8/9/95

Flattener #3. Work Flow Software

Flattener #4. Open-Sourcing

Flattener #5. Outsourcing

Flattener #6. Offshoring

Flattener #7. Supply-Chaining

Flattener #8. Insourcing

Flattener #9. In-forming

Flattener #10.

The Steroids Three: The Triple Convergence / 173

Four: The Great Sorting Out / 201

America and the Flat World

Five: America and Free Trade / 225

Six: The Untouchables / 237

Seven: The Quiet Crisis / 250

Eight: This Is Not a Test / 276

Developing Countries and the Flat World

Nine: The Virgin of Guadalupe / 309

Companies and the Flat World

Geopolitics and the Flat World

Eleven: The Unflat World / 371

Twelve: The Dell Theory of Conflict Prevention / 414

Conclusion: Imagination

Thirteen: 11/9 Versus 9/11 / 441

Acknowledgments I 471 Index I 475

:::::How the World Became Flat

::::: ONE

While I Was Sleeping

Your Highnesses, as Catholic Christians, and princes who love and promote the holy

Christian faith, and are enemies of the doctrine of Mahomet, and of all idolatry and

heresy, determined to send me, Christopher Columbus, tothe above-mentioned countries

of India, to see the said princes, people, and territories, and to learn their

disposition and the proper method of converting them to our holy faith; and

furthermore directed that I should not proceed by land to the East, as is customary,

but by a Westerly route, in which direction we have hitherto no certain evidence that

anyone has gone.

- Entry from the journal of Christopher Columbus on his voyage of 1492

No one ever gave me directions like this on a golf course before: "Aim at either

Microsoft or IBM." I was standing on the first tee at the KGA Golf Club in downtown

Bangalore, in southern India, when my playing partner pointed at two shiny

glass-and-steel buildings off in the distance, just behind the first green. The

Goldman Sachs building wasn't done yet; otherwise he could have pointed that out as

well and made it a threesome. HP and Texas Instruments had their offices on the back

nine, along the tenth hole. That wasn't all. The tee markers were from Epson, the

printer company, and one of our caddies was wearing a hat from 3M. Outside, some of

the traffic signs were also sponsored by Texas Instruments, and the Pizza Hut

billboard on the way over showed a steaming pizza, under the headline "Gigabites of

Taste!"

No, this definitely wasn't Kansas. It didn't even seem like India. Was this the New

World, the Old World, or the Next World?

I had come to Bangalore, India's Silicon Valley, on my own Columbus-like journey of

exploration. Columbus sailed with the Nina, the Pinta, and the Santa Maria in an effort

to discover a shorter, more direct route toIndia by heading west, across the Atlantic,

on what he presumed to be an open sea route to the East Indies-rather than going south

and east around Africa, as Portuguese explorers of his day were trying to do. India

and the magical Spice Islands of the East were famed at the time for their gold, pearls,

gems, and silk-a source of untold riches. Finding this shortcut by sea to India, at

a time when the Muslim powers of the day had blocked the overland routes from Europe,

was a way for both Columbus and the Spanish monarchy to become wealthy and powerful.

When Columbus set sail, he apparently assumed the Earth was round, which was why he

was convinced that he could get to India by going west. He miscalculated the distance,

though. He thought the Earth was a smaller sphere than it is. He also did not anticipate

running into a landmass before he reached the East Indies. Nevertheless, he called

the aboriginal peoples he encountered in the new world "Indians." Returning home,

though, Columbus was able to tell his patrons, King Ferdinand and Queen Isabella,

that although he never did find India, he could confirm that the world was indeed

round.

I set out for India by going due east, via Frankfurt. I had Lufthansa business class.

I knew exactly which direction I was going thanks to the GPS map displayed on the

screen that popped out of the armrest of my airline seat. I landed safely and on

schedule. I too encountered people called Indians. I too was searching for the source

of India's riches. Columbus was searching for hardware-precious metals, silk, and

spices-the source of wealth in his day. I was searching for software, brainpower,

complex algorithms, knowledge workers, call centers, transmission protocols,

breakthroughs in optical engineering-the sources of wealth in our day. Columbus was

happy to make the Indians he met his slaves, a pool of free manual labor.

I just wanted to understand why the Indians I met were taking our work, why they had

become such an important pool for the outsourcing

of service and information technology work from America and other industrialized

countries. Columbus had more than one hundred men on his three ships; I had a small

crew from the Discovery Times channel that fit comfortably into two banged-up vans,

with Indian drivers who drove barefoot. When I set sail, so to speak, I too assumed

that the world was round, but what I encountered in the real India profoundly shook

my faith in that notion. Columbus accidentally ran into America but thought he had

discovered part of India. I actually found India and thought many of the people I

met there were Americans. Some had actually taken American names, and others were

doing great imitations of American accents at call centers and American business

techniques at software labs.

Columbus reported to his king and queen that the world was round, and he went down

in history as the man who first made this discovery. I returned home and shared my

discover)' only with my wife, and only in a whisper.

"Honey," I confided, "I think the world is flat."

How did I come to this conclusion? I guess you could say it all started in Nandan

Nilekani's conference room at Infosys Technologies Limited. Infosys is one of the

jewels of the Indian information technology world, and Nilekani, the company's CEO,

is one of the most thoughtful and respected captains of Indian industry. I drove with

the Discovery Times crew out to the Infosys campus, about forty minutes from the heart

of Bangalore, to tour the facility and interview Nilekani. The Infosys campus is

reached by a pockmarked road, with sacred cows, horse-drawn carts, and motorized

rickshaws all jostling alongside our vans. Once you enter the gates of Infosys, though,

you are in a different world. A massive resort-size swimming pool nestles amid

boulders and manicured lawns, adjacent to a huge putting green. There are multiple

restaurants and a fabulous health club. Glass-and-steel buildings seem to sprout up

like weeds each week. In some of those buildings, Infosys employees are writing

specific software programs for American or European companies; in others, they are

running the back rooms of major

American- and European-based multinationals-everything from computer maintenance to

specific research projects to answering customer calls routed there from all over

the world. Security is tight, cameras monitor the doors, and if you are working for

American Express, you cannot get into the building that is managing services and

research for General Electric. Young Indian engineers, men and women, walk briskly

from building to building, dangling ID badges. One looked like he could do my taxes.

Another looked like she could take my computer apart. And a third looked like she

designed it!

After sitting for an interview, Nilekani gave our TV crew a tour of Info-sys's global

conferencing center-ground zero of the Indian outsourcing industry. It was a

cavernous wood-paneled room that looked like a tiered classroom from an Ivy League

law school. On one end was a massive wall-size screen and overhead there were cameras

in the ceiling for teleconferencing. "So this is our conference room, probably the

largest screen in Asia-this is forty digital screens [put together]," Nilekani

explained proudly, pointing to the biggest flat-screen TV I had ever seen. Infosys,

he said, can hold a virtual meeting of the key players from its entire global supply

chain for any project at any time on that supersize screen. So their American designers

could be on the screen speaking with their Indian software writers and their Asian

manufacturers all at once. "We could be sitting here, somebody from New York, London,

Boston, San Francisco, all live. And maybe the implementation is in Singapore, so

the Singapore person could also be live here . . . That's globalization," said Nilekani.

Above the screen there were eight clocks that pretty well summed upthe Infosys workday:

24/7/365. The clocks were labeled US West, US East, GMT, India, Singapore, Hong Kong,

Japan, Australia.

"Outsourcing is just one dimension of a much more fundamental thing happening today

in the world," Nilekani explained. "What happened over the last [few] years is that

there was a massive investment in technology, especially in the bubble era, when

hundreds of millions of dollars were invested in putting broadband connectivity

around the world, undersea cables, all those things." At the same time, he added,

computers became cheaper and dispersed all over the world, and there was an explosion

of software-e-mail, search engines like Google, and

proprietary software that can chop up any piece of work and send one part to Boston,

one part to Bangalore, and one part to Beijing, making it easy for anyone to do remote

development. When all of these things suddenly came together around 2000, added

Nilekani, they "created a platform where intellectual work, intellectual capital,

could be delivered from anywhere. It could be disaggregated, delivered, distributed,

produced, and put back together again-and this gave a whole new degree of freedom

to the way we do work, especially work of an intellectual nature . . . And what you

are seeing in Bangalore today is really the culmination of all these things coming

together."

We were sitting on the couch outside of Nilekani's office, waiting for the TV crew

to set up its cameras. At one point, summing up the implications of all this, Nilekani

uttered a phrase that rang in my ear. He said to me, "Tom, the playing field is being

leveled." He meant that countries like India are now able to compete for global

knowledge work as never before-and that America had better get ready for this. America

was going to be challenged, but, he insisted, the challenge would be good for America

because we are always at our best when we are being challenged. As I left the Infosys

campus that evening and bounced along the road back to Bangalore, I kept chewing on

that phrase: "The playing field is being leveled."

What Nandan is saying, I thought, is that the playing field is being flattened .. .

Flattened? Flattened? My God, he's telling me the world is flat!

Here I was in Bangalore-more than five hundred years after Columbus sailed over the

horizon, using the rudimentary navigational technologies of his day, and returned

safely to prove definitively that the world was round-and one of India's smartest

engineers, trained at his country's top technical institute and backed by the most

modern technologies of his day, was essentially telling me that the world was flat-as

flat as that screen on which he can host a meeting of his whole global supply chain.

Even more interesting, he was citing this development as a good thing, as a new

milestone in human progress and a great opportunity for India and the world-the fact

that we had made our world flat!

In the back of that van, I scribbled down four words in my notebook: "The world is

flat." As soon as I wrote them, I realized that this was the

underlying message of everything that I had seen and heard in Bangalore in two weeks

of filming. The global competitive playing field was being leveled. The world was

being flattened.

As I came to this realization, I was filled with both excitement and dread. The

journalist in me was excited at having found a framework to better understand the

morning headlines and to explain what was happening in the world today. Clearly, it

is now possible for more people than ever to collaborate and compete in real time

with more other people on more different kinds of work from more different corners

of the planet and on a more equal footing than at any previous time in the history

of the world-using computers, e-mail, networks, teleconferencing, and dynamic new

software. That is what Nandan was telling me. That was what I discovered on my journey

to India and beyond. And that is what this book is about. When you start to think

of the world as flat, a lot of things make sense in ways they did not before. But

I was also excited personally, because what the flattening of the world means is that

we are now connecting all the knowledge centers on the planet together into a single

global network, which-if politics and terrorism do not get in the way-could usher

in an amazing era of prosperity and innovation.

But contemplating the flat world also left me filled with dread, professional and

personal. My personal dread derived from the obvious fact that it's not only the

software writers and computer geeks who get empowered to collaborate on work in a

flat world. It's also al-Qaeda and other terrorist networks. The playing field is