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Outsourcing: Josh Lieberman, Co-Founder of KMS Technology, Atlanta and Ho Chi Minh City (Part 2)

Posted on Tuesday, Jul 24th 2012

Sramana Mitra: Now we understand the positioning of the company. Tell us, what is the unique selling proposition (USP)? Within outsourced product development, what is your company’s USP? How do you differentiate, and what do you pitch that is compelling to your customers?

Josh Lieberman: Up to now we have had zero sales or marketing. So, in terms of having a USP, we really haven’t had to have one. Most of our customers have called us and said, “Hey, I’ve heard about you. I’ve worked with you in the past. I know you guys are good guys, and I want to work with you again.” In terms of going through that RFP process, putting together our USP, we haven’t had to do that at all thus far. We do plan to get a bit more aggressive from a sales and marketing perspective and are looking forward to getting into more competitive situations.

In terms of what our specific USP is, to answer your question more directly, it’s a couple of things. First and foremost, we’re out of Vietnam. All of the companies you mentioned are predominantly out of India. And while they are larger than KMS, in the grand scheme of India, they’re still not very large players. They’re medium sized or small fish in a big pond. We’re a very large, colorful, well-known fish in a small pond in Vietnam. So, the first USP or differentiator is that while the talent pool in Vietnam is smaller than what it is in India, we are able to attract the best talent in the country. I don’t care how big your pond is, if you can attract the best talent in the country, and you need only as many people as are needed for an engagement, your probability of success is better than if you have a mix of B players, C players, and A players.

SM: You have 600 people in Vietnam, and you are one of the more prominent employers in Vietnam. That’s your primary USP in that sense.

JL: Yes, that’s our first USP. My partner Vu pioneered outsourcing in Vietnam, so he has a strong personal brand. Second, in our world, you don’t want to talk about price too much, but one of the primary reasons people do outsourced product development is because they want to lower their price points. They want more flexibility and such. Because we’re in Vietnam, our prices are significantly lower than India’s, and even more so than what you would get out of Argentina. That is for a few reasons. One, we’re in Vietnam. Second, from the day we started the company, we knew one of our value propositions was going to be price. That goes hand in hand with being in Vietnam.

SM: What is the price comparison with India? How much cheaper are you?

JL: Our rates, on average, are about $6 less per hour than India’s and at least $12 less than rates in Argentina.

SM: That sounds about right. But India is a very big country. One major trend that we are seeing in India is the second-tier and third-tier city trend. If you’re competing with Bangalore, you’ll see one rate. If you go to the second-tier or third-tier cities, you’ll see a rate that is comparable to what you just quoted or even cheaper. India, as you said, is very big. Bangalore is out of control from an attrition point of view. But there are so many other regions.

MphasiS – you may have heard of it – is doing a large amount of work from these second-tier and third-tier cities. Granted, that’s mostly BPO work, not OPD work, but I think the dynamics are similar.

JL: Yes. I think the challenge, when you go out to the tier-three cities – because I’ve done due diligence on those over the years – is that your talent pool, your depth and breadth of talent, isn’t the same as in Bangalore.

SM: But, you know, there are several cities in India that are less competitive with deep talent pools. Calcutta, for instance, is not as competitive and does not have as high an attrition rate as Bangalore or New Delhi. And the rates are somewhat lower. Your point is well taken, that price is something that you can compete with. I think the real issue is more the competition for talent than the price.

JL: Yes. That was my next point. Our attrition rate is below 5%.

This segment is part 2 in the series : Outsourcing: Josh Lieberman, Co-Founder of KMS Technology, Atlanta and Ho Chi Minh City
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