Thought Leaders in Outsourcing: Interview with David Schnitt, CEO of IQ BackOffice (Part 3)

Sramana Mitra: What does the technology infrastructure look like, and how do you charge your clients?

David Schnitt: We feel very strongly that our clients’ systems are systems of record. If they are on Oracle or Quickbooks, for example, those systems remain intact. We have built a system called Archimedes, after the Greek philosopher, and it is a web-based tool that sits on top of the client’s system. >>>

Thought Leaders in Outsourcing: Interview with David Schnitt, CEO of IQ BackOffice (Part 2)

Sramana Mitra: Where in India is your operation?

David Schnitt: We are in Chennai. We also have a small development group in Mumbai.

SM: In building this business, where have you found the traction? How have you gone to market with this value proposition? >>>

Thought Leaders in Outsourcing: Interview with David Schnitt, CEO of IQ BackOffice (Part 1)

David Schnitt is the chief executive officer of IQ BackOffice, a company that provides full accounting, payroll, and human resources services for companies that decide to outsource those services. The company is focused on mid-sized businesses. David has a BA from Cornell University and an MBA from the University of Michigan. He previously served as CEO of HrMail and as CEO and president of Ledgent. In this interview he gives us a detailed overview of how IQ BackOffice helps customers with their accounting needs and provides us with insights into the outsourcing industry.

Sramana Mitra: David, let’s start with setting some context about IQ BackOffice and about you.

David Schnitt: I spent most of my career at Deloitte, on the consulting side. I did a lot of work there. I started out setting up ERP [enterprise resource planning] systems for clients. That led into re-engineering. I started a re-engineering practice in Deloitte’s L.A. office. At the time, which was the early to mid 1990s, we started working with a lot of clients, re-engineering their processes and setting up service centers. >>>

Outsourcing: Interview with Roop Singh, VP and Head for North America, Europe and JAPAC at Wipro Consulting Services (Part 7)

Sramana Mitra: You describe a bit of the insourcing trend in the UK. Is that not happening elsewhere in Europe?

Roop Singh: I recall three to four years ago there was a lot of discussion around the Eastern European countries, whether it is Romania or Poland, for example. A lot of companies in Germany specifically used those locations because of the language and low cost capabilities. What we find is that the Eastern Block’s society became more transient, in the sense that they got a license to travel through the European Community, the attrition factor became very high in those locations. Somebody who can easily move to the UK or Germany, rather than working in Poland for £1,000 or £2,000 a month, would rather earn double that money living in Germany or the UK. That caused some concern for companies that were using near shore facilities, especially in the Eastern European market. >>>

Outsourcing: Interview with Roop Singh, VP and Head for North America, Europe and JAPAC at Wipro Consulting Services (Part 6)

Sramana Mitra: And the risk is also built into that, because I suppose you do that across a portfolio product so the risk is mitigated by working on multiple products like that and not just one. You mentioned there was an acquisition you made in New Jersey. Can you talk a little bit about that? What is happening in the industry in terms of acquisitions? What is your strategy? What is the industry thinking about it, and what are you thinking about it?

Roop Singh: Wipro has always looked at acquisitions as way to build capability that we don’t have in-house. We have never done acquisitions from an aggregation point of view. I think that is the wrong model, and that way the return diminishes very quickly. >>>

Outsourcing: Interview with Roop Singh, VP and Head for North America, Europe and JAPAC at Wipro Consulting Services (Part 5)

Sramana Mitra: This is for outsourced product development projects, correct?

Roop Singh: I will give you an example. A large telecom company wanted to launch a certain service on the smartphone. They wanted us to do the development for them. We worked with them, we did the development, and we did not charge them anything upfront. Each time they sold a unit of that work and a consumer bought it, we got paid. It is based on a transaction fee. >>>

Outsourcing: Interview with Roop Singh, VP and Head for North America, Europe and JAPAC at Wipro Consulting Services (Part 4)

Sramana Mitra: There are also time zone advantages, communication advantages, and a bunch of other advantages in near shoring that are now well known.

Roop Singh: And you are actually recruiting from the region, so the need to move is less. We are finding those as advantages that we get with our customers. The result is that we as an organization need to change. In the past, a typical client engagement manager just sold an outsourcing strategy. An organization now really needs to think through other locations. What is the procurement for becoming a lobbyist nowadays? Immigration pressures, financial pressures or intra-regional pressures are also other factors to be considered. Organizations that understand that and capture the nuance of what is happening will be successful. Others will lose very quickly. >>>

Outsourcing: Interview with Roop Singh, VP and Head for North America, Europe and JAPAC at Wipro Consulting Services (Part 3)

Sramana Mitra: Especially if you can take the community college population, who is looking to retrain, or the youth population that is trying to find the path … if you have the capabilities to train them and make them productive. I almost feel that the retention rate in North America would be a lot higher than in India.

Roop Singh: That is correct. A community college can also be an active player in business process outsourcing for call centers or for knowledge processing. There are mechanisms to bring them in and train them during their careers in terms of the directions they want to take. There are options. >>>