Channel 2.0

In his book "The World Is Flat," Thomas Friedman describes how technology has leveled the competitive playing field between first- and third-world countries. Outsourcing to India and China, product sourcing through Southeast Asia, and the emergence of Russia and former Soviet satellites as development centers are evidence of world flattening.

A flat world works in both directions. American technology vendors see tremendous growth potential in emerging markets--China, India, Russia, Brazil and Eastern Europe. To reach them, they need the solution providers--native and U.S.-based--to capitalize on these potentially rich markets.

"We're looking at the world in an opportunistic fashion. The view of the world is fast-growing opportunities in fast-growing markets," says Lori Cook, vice president of worldwide services channels and emerging growth at BMC Software. "We want solution providers who can help us gain access and opportunities in these dynamic new environments because they're faster moving and less risk-adverse than we are."

Globalization may force solution providers to rethink their growth strategies and target markets. A VARBusiness globalization survey conducted last spring found that 18 percent of U.S. solution providers are doing business internationally, the majority in Western Europe. At the time, 54 percent said they had no plans to expand internationally, but that may change over time.

For instance, IBM is investing heavily in pairing partners across its different international regions to build solutions and facilitate growth. And an increasing number of solution providers are establishing development offices overseas to cut costs. Perficient (VARBusiness 500 No. 233) acquired a custom software lab in Macedonia that employs 50 engineers and will grow to more than 150 over the next 12 to 18 months.

"To do offshoring right, you have to have a scale that provides full end-to-end solutions," says Jack McDonald, Perficient's chairman and CEO.

And some international growth will be driven by distribution. Over the past several years, the major distributors have seen tremendous organic and acquisition growth in overseas markets. As distributors expand in Asia-Pacific, Europe and the Middle East, they'll bring VARs with them.

"The bigger value-added distributors are becoming bigger and starting to reach out into the global community, and we're seeing the same things with the VARs," says Doug Kennedy, Oracle's vice president of worldwide alliances and channels.

NEXT: End of the middle class?