The big news at this year’s International Consumer Electronics Show in Las Vegas was all of the plasma televisions, digital music players, and other crossover gadgets that Dell, Gateway, Hewlett-Packard, and other computer giants are using to challenge consumer electronics stalwarts such as Philips, Samsung, and Sony. Behind the trade show buzz, however, lies a bigger story—one that goes well beyond home entertainment.
That story tells how Dell and its fellow computer manufacturers, along with leading US companies in the financial-services and other industries, are using offshore partnerships to do more than just cut costs. Indeed, they are taking advantage of the distinctive skills and high performance offered by companies in Asia’s developing economies1 to enhance their own operating performance, to outsource vital business activities (such as the design of components), and to accelerate their entry into adjacent product markets. US computer companies, for example, are relying heavily on original-design manufacturers, primarily based in Taiwan, to storm the consumer electronics market. A leading US financial-services firm has transferred increasingly sophisticated aspects of its interactions with customers to eTelecare, a call-center provider based in the Philippines. The result has been greatly improved performance at lower cost.
While it is...