Contract Watch: The Offshore SolutionBy Joseph C. Panettieri | Print
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Will offshore developers drive small solutions providers out of business? Absolutely not!
"Is my job moving to India?"
That's the question facing many solutions providers amid the current offshore outsourcing boom. If you examine companies like Cognizant Technology Solutions Corp., the boom is real and sustainable. Teaneck, N.J.-based Cognizant's year-to-date revenue has skyrocketed 60 percent, fueled by the popularity of its low-cost offshore development teams in India. And the offshore development craze isn't limited to India. There also are hotbeds in Africa, Asia, Russiaand even Halifax, Nova Scotia.
Just ask Keane Inc. The Boston-based IT consulting firm has launched a Canadian recruitment campaign for its Advanced Development Center (ADC) in Halifax. The reason: many east coast customers demand that their IT partners operate in a local time zonerather than halfway across the globe. Keane expects to create and maintain at least 175 new positions in Halifax over the next three years. In return, the local government has set up financial incentives worth up to $4 million.
Plenty of software developers have lost their jobs to foreign competitors. But I'm not panicking because I firmly believe that smart, tireless companies eventually find a way to survive market shifts.
Deal 2: Such is the case at Miller Systems, a small Boston-based IT consulting firm that manages to thrive in Keane's backyard. For instance, Miller Systems recently overhauled Acopia Network Inc.'s Web presence. The new site includes a secure portal for partners and customers to interact with the enterprise switch maker.
Even during the soft economy, Miller Systems was ranked on the 2002 Inc 500, which recognizes the nation's fastest-growing small businesses. Truth be told, I went to high school with Miller Systems CEO Seth Miller, but we really didn't know each other until we spoke briefly at our 10-year reunion in 1998. At the time, Seth spoke proudly about his New England-based startup. Now I know why.
Deal 3: Can you build an IT system that truly pays for itself? American Management Systems (AMS) Inc. says "absolutely yes." The Fairfax, Va.-based IT consulting firm has won an $11 million deal to upgrade the Missouri Department of Revenue's tax collection systems and operations. The project is expected to pay for itself, because Missouri will gain new IT systems that gather previously uncollected taxes. Sounds like Missouri's tax cheats are in for a rude awakening. The project includes a new, Web-enabled version of AMS's Computer Assisted Collection System Plus for Government (CACSPlus). Not exactly a catchy name, but plenty of customers would love to buy software that identifies $11 million in new revenue.
Deal 4: If the third time's a charm, the fourth time is icing on the cake for Affiliated Computer Services (ACS) Inc. The Dallas-based solutions provider has won a fourth-consecutive outsourcing deal with the Los Angeles County Board of Supervisors and the LA Child Support Services Department. ACS is the deal's prime contractor, providing child support receipt processing services and IT services. Over the past 12 years, ACS has processed more than 20 million child support payments totaling $3.7 billion.
Deal 5: I drive a Nissan Altima andlike any middle-aged man with a receding hairline and expanding waist linewhat I really want is a Nissan 350z sports coup. Now that I've fully disclosed my vested interested in Nissan, I'm comfortable describing Nissan South Africa's three-year outsourcing agreement with EDS Corp. Under terms of the deal, EDS provides network, server and desktop services to Nissan's truck business. Terms of the deal weren't disclosed but an EDS insider tells me it's at least a seven-figure sum. EDS, which spun out of General Motors in 1996, serves 21 of the 25 top global auto companies and 14 percent of its 2002 revenue came from the auto industry. So, unlike me, EDS doesn't play favorites in the auto industry.
About Contract Watch: Each week, this column examines customer engagements that are stirring the channel, and the solutions providers behind them. Our goal is to strip away the hype and tell you what's really sellingand what isn'tin today's IT marketplace. Send your tips to my e-mail address below.