Location, Location, Location

Opinion: Outsourcing companies put down roots in low-cost U.S. areas.

For the past couple of years, weve been told that location doesnt matter—the world is flat, and, in a global market, you can be anywhere and do anything, anytime for a customer. With a little perspective, its becoming clear that although there is plenty of truth to the notion of global flatness—the theory has limits.

The fact is: Time zones matter. You can take advantage of them to perform round-the-clock, tag-team-style development. Or you can use time differences to provide help desk support at night from another country in which it is daytime. But there are plenty of cases where you dont want to be separated by time, where closeness to corporate headquarters, not cost, is most important.

"Its helpful if the work is done within two or three time zones of where we are. It becomes much more difficult for communications otherwise," said Tom Miller, senior director of IT at FoxHollow Technologies, in Redwood City, Calif., and an eWEEK Corporate Partner. Miller is not alone. All things being equal, plenty of IT pros would just as soon work with a service provider they can get on the phone without having to wake them up in the middle of the night.

With that in mind, outsourcers and systems integrators are setting up shop in low-cost areas of the United States. Williams Lea, a BPO (business process outsourcing) provider with 7,000 employees in several countries and with headquarters in New York and London, has set up a small but growing outpost in Wheeling, W.Va. In October 2005, Williams Lea signed a deal with Orrick, Herrington & Sutcliffe to handle all the international law firms word processing, transcription and document work at Williams Leas Wheeling facility.

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"There is a significant amount of federal and state interest and support in promoting Wheeling as an outsourcing center in North America. [West Virginia] Sen. [John] Rockefeller is espousing the area as an alternative to India," said John Snowdon, vice president of document production services for Williams Lea.

Williams Lea also is working with West Virginia Northern Community College in building the curriculum for a course to train its future employees at the Wheeling office. The course, called Legal Office, is a one-year certificate program within the colleges business career studies curriculum.

Snowdon said that all cost factors taken together, including wages and real estate, give West Virginia a cost of doing business thats 25 to 35 percent lower than other U.S. locations. "The cost arbitrage is significant, but there is a significant labor pool that is well-educated and has a strong work ethic," said Snowdon. Williams Leas office now has 35 people and is looking to hire 25 more.

So far, annual turnover is at zero, he said.

Ciber, an outsourcing company in Greenwood Village, Colo., set up shop in Oklahoma City in January 2005 and now has 30 employees there doing application development in new technologies.

Tim Boehm, president of Cibers Cibersites division, said costs there are 15 to 30 percent below other locations in the United States, although he admitted Ciber was hoping for a better price differential. "Pricing points were higher than we expected," he said.

Ciber is moving into other locations for other types of work. The company is tapping the mainframe skills of a significant labor pool of senior programmers at a center in Tampa, Fla., and has 100 workers at its office there, which was set up in April 2005. The company also has established a help desk center in Dallas.

"Customers want to talk about countries first, but you really need to think about the work you want done. If you need to be working closely with the developers on a real-time basis, then offshore is tough," said Boehm.

Both Ciber and Williams Lea have significant operations in India and could have built out their facilities there rather than "onshoring" in the United States, but, they found, location does matter.

Stan Gibson can be reached at stan_gibson@ziffdavis.com.

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