In a recent article in the NY Times, SAP CEO Henning Kagermann, speaks about reaching out for global talent in the software industry. In a short Q&A forum, he illustrates what it means to be a ‘global’ (vs. multi-national) company in terms of sourcing talent. It’s all about comparative advantage - some of the best innovation in the world in software comes from Silicon Valley, so you had better have an innovation strategy that involves being in Silicon Valley as a global software company.

Here are a few of the relevant Q&A points from the article - emphasis mine:

Q. Why did you necessarily have to globalize your work?

A. There really is no alternative, for two reasons. Its foolish to believe today that the smartest people are in one nation. The second is sourcing, at least if you are a big company. If you are smaller, and have a team of 100 or 200 engineers you can stay in one country and try to attract the best guys. But if you are a big company, you need to tap into the global talent pool. In Germany, we now have this big public debate about there being a shortage of engineers in the country. Well, I dont care, or at least not as the chief executive of SAP.

Q. How does the global division of labor work? For example, what stays in Germany?

A. If it comes to deep application integration, we go to Germany. Its where we have many people with deep knowledge of finance, manufacturing, human relations those kinds of things, and knowledge of those functions in specific industries, the domain specific knowledge. That kind of deep knowledge is essential to platform work, designing the basic architecture of the core product.

Q. How about Silicon Valley?

A. In Palo Alto, we leverage the kind of innovation and creativity that is in Silicon Valley. Its a place where a lot of new companies and technologies pop up and you can more easily integrate those new things into your thinking and your products. A lot of the Internet work has been done there, the technologies that open our products to others.

Q. And India?

A. India is mixed. But we do a lot of implementation of the design work in India. Our intent was to go there for the large talent pool. But weve been in Bangalore for seven years and weve grown somewhat gradually there. You cannot go in and hire 2,000 in a year and believe they are going to be ready to develop high-quality integrated software applications.

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