By Eric Hochstein
Last spring, Stephanie Moore was busy working as a Forrester Research analyst on Sourcing and Vendor Management, advising companies on outsourcing and offshoring strategies. Today, from the opposite vantage point, the former pundit is now President of Ameritas Technologies, a fledgling startup that delivers outsourced services from domestic centers, bucking the offshore trend that she so heavily engaged in just a few years ago.
On April 24, she’ll tell the audience at Nearshore Nexus about her company’s plans to create “a very large, 15-20,000 employee company with networked operations centers in key metropolitan areas across the United States” and her hopes that the rebirth of domestic outsourcing will lead to “young people clamoring to get into technology in this country”. She will participate in a panel on “Sourcing Domestic or Sourcing Foreign: Where’s the Smart Money Going?” which will compare offshore, nearshore, and onshore options for companies considering outsourcing locations in today’s business and political environment.
“Sending work offshore doesn’t work for all classes of development. And offshore is getting more expensive. But if you don’t want to go offshore, there are few options today because so many providers are relying almost exclusively on their offshore centers.”
Ameritas Technologies, based in Boston, MA, believes that many IT projects are better suited to US delivery where time zone proximity facilitates communications during highly iterative and collaborative software development projects. The company founder, Brian Keane, hired Moore to establish Ameritas as a leader in the IT services industry by focusing on US-based software development as a superior alternative to offshore delivery.
They are betting that domestic outsourcing is on the rebound after almost a decade in which most outsourcing decisions resulted in the offshoring of IT services, business process, and applications development to centers in India, China, the Philippines and other low-cost nations. They feel that companies like Ameritas can lead young Americans back to careers in technology. As a result of the dramatic growth in offshoring of technology services, says Moore, “there is a void in the workforce where there should be a mid-level pool of experienced professionals.”
As a result, the company is focusing its initial efforts on locating in cities with an available pool of talented college graduates, who can be trained to be successful technology consultants and software engineers. The company’s first center, in Baton Rouge, Louisiana, opened recently with its first 64 employees, many of whom are recent Louisiana State University graduates.
When the site was announced in July 2012, the company said it would partner with state government and local colleges and technical schools to “employ and train a new generation of skilled IT workers to support innovation and technology leadership in Louisiana.” They said it would eventually house 300 employees with an average salary of $63,000.
Keane, who formerly was CEO of Keane, Inc., a technology services firm that pioneered global delivery models more than a decade ago, and grew to employ more than 12,500, has said that his new company will be “focusing on jobs that have gone offshore but should have never gone offshore.”
Moore feels that some software applications are strategic to a company and require extensive interaction with users. “Sending work offshore doesn’t work for all classes of development. And offshore is getting more expensive. But if you don’t want to go offshore, there are few options today because so many providers are relying almost exclusively on their offshore centers.”
As they studied the potential opportunity for creating a domestic-based resource pool, the company considered a number of options before settling on their current strategy. “We began to look at rural sourcing, but we saw that we would have difficulty scaling up our resources.”
The university town-based strategy, which involves the company working closely with local government and university officials for training support and coordination, addresses the workforce issue directly. “There are a whole bunch of people in the USA who are educated and there aren’t a lot of jobs for them these days,” said Moore. “But they understand context and they can be more productive than Indian and Chinese workers who may understand JAVA and HTML, but who don’t know how American banks or health care systems work.” She said that her work as an industry analyst taught her that one person in the United States is generally more productive than three people in India.
She feels that Ameritas Technology, along with other outsourcing companies pursuing a domestic metropolitan area strategy, such as Systems in Motion (Ann Arbor, MI) and Galaxe.Solutions (Detroit, MI), are at the leading edge of a movement that is going to grow rapidly.
“IBM, Accenture and the other major outsourcers don’t want the model to change now that they’ve invested so much offshore,” Moore proclaimed, returning to her past life as an industry analyst. “Its going to take entrepreneurs to get the critical mass required and who understand how important it is for the United States to maintain our technical advantage.”
At the same time, she acknowledged that the larger players won’t leave the domestic market to smaller entrepreneurs. In fact, she said, IBM just announced that they would be building an 800-person technology center in Baton Rouge, not far from Ameritas’ newly opened center. “They’re moving just down the street from us,” she said. “I welcome them and am encouraged by their initiative. It helps all of us legitimize being onshore.”
Eric Hochstein is Managing Director of Highstone Associates, Inc., a Barrington, IL-based business and economic development consulting firm, focused on strategy and business development, site selection, and marketing for public and private sector organizations involved in technology and knowledge-based commerce. (Meet Eric at Nearshore Nexus, April 24 at the Jersey City where he will moderate a session with Stephanie Moore on “Sourcing Domestic vs. Sourcing Foreign”)