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Building A Nearshore Outsourcing Company In Ann Arbor, Michigan: Systems In Motion CEO Neeraj Gupta (Part 6)

Posted on Wednesday, Apr 6th 2011

Sramana: In the nearshore industry, what dynamics are you seeing and who are your primary competitors?

Neeraj Gupta: Clearly, companies are still trying to figure out what to do. They are cognizant of [what is going on in] Argentina and what is going on in Mexico. We have seen most of the Indian service providers establish U.S.-based centers. The fundamental issue they have is determining the purpose of the center. They have built them to accommodate work that could not be taken offshore. Nobody is really thinking about it in the same terms we are. I don’t think any of them are committed to building operations in the U.S.

If you don’t have the ability to build the bottom of the pyramid in the U.S., then you are missing something. Today’s Java engineer is tomorrow’s CIO. Those companies are not thinking about that. IBM and Accenture have global centers and they are not looking to build the bottom of the pyramid in the U.S. I think a lot of staffing companies do not have the wherewithal to build staffing centers here. They may have centers of excellence in the US but they only have small centers here.

Sramana: What are 10 regions where you could support thousand-person centers as in Michigan?

Neeraj Gupta: There are three places in Michigan alone where we could do it. Ann Arbor, Lansing, and an area north of Ann Arbor. In Ohio, you have the Cincinnati to Columbus belt which would support good-sized centers. In Florida, you could do it in Jacksonville or Ft. Lauderdale. I think Texas is possible, but I am not sure the economics will work out there because Austin is growing quite rapidly. You could do some lower-scale stuff in San Antonio, but we saw that the level of skill in San Antonio is lower. You could probably build a center of excellence around support and testing there. I see Salt Lake City as a real possibility. There are also several areas outside of Seattle, Washington. We have had folks in California talk to us as well, but my take there is that a California workforce is too mobile and will wind up in Silicon Valley.

Sramana: I did not hear you mention Madison, Wisconsin, or Eugene, Oregon. Those are both large university towns.

Neeraj Gupta: You are right. There are a lot of other places in the U.S. that could support these centers as well. There are enough locations that our model is feasible. The highly specialized skills will have disproportionate inflation. Most of the work that we do will be in areas where companies are outsourcing their work.

Sramana: You can also develop those skills over time. It does not have to happen overnight.

Neeraj Gupta: I was talking about that with one of my delivery heads this morning. He felt that he could go back to his previous employer where he knows 10 people in middle-level positions who would happily move over to our company if I created jobs for them. The point is that the U.S. has a large pull for a global workforce.

This segment is part 6 in the series : Building A Nearshore Outsourcing Company In Ann Arbor, Michigan: Systems In Motion CEO Neeraj Gupta
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