DETROIT, MI – It is hard to miss the gigantic “Outsource to Detroit” banner draped down the side of the 1001 Woodward building in the city’s core.
The unfurled message is especially poignant in a city that has lost thousands of jobs to outsourcing. But the chief executive of the company responsible for the banner says that, for information technology, this trend can and is being reversed.
As proof, GalaxE Solution chairman and CEO Tim Bryan points to the company’s latest executive move, which brings Suresh Pande from the company’s bureau in Bangalore to Detroit, where he will be responsible for doing what he did in India: There, Pande grew the company’s presence from scratch to three locations and more than 1,000 IT professionals, Bryan said. Pande most recently oversaw the all international operations of GalaxE Solutions’ software delivery unit.
“We felt and he felt that his skills and expertise would be best applied here in Detroit, considering the investment that we have made and are making in growing this facility,” Bryan said. “His relocation to Detroit from Bangalore represents a new development in my mind of executives and workers moving back to companies’ domestic markets.”
The shift comes with the desire by software development customers to have better service, Bryan said; the closer the software firm is to its clients, the more successful the collaboration. Bryan noted that India, which has been a popular destination for U.S. tech firms to outsource work, has a 10.5-hour time difference with Detroit, is about an 18-hour flight away.
if you’re collaborating to innovate, or build something that is highly complex, you run a greater risk if that collaboration is across time zones and multiple countries, not to mention cultural difference,” Bryan said. “So at GalaxE our solutions have a significantly higher onshore team presence.”
That onshore-offshore ratio amounts to about a 50-50 split of its personnel, Bryan said, adding that competitors’ typically have 20-80 or 10-90 onshore-offshore balance of employees.
But beyond that, the software engineering work itself is becoming more complex. Health systems, which GalaxE is involved with, are at the mercy of continued developments with the Affordable Care Act, the details of which are mostly unknown outside of the U.S.High-profile software failures are also causing software firms and their clients to weigh bringing their operations closer to home, Bryan said. “If you look at the airline industry, the brokerage and finance industries, and most recently the IRS, there have been software failures where there have been very unpleasant results, and that means there are firms willing to spend more to avoid those kind of catastrophic events,” Bryan said.
Since the latest U.S. financial crisis took hold in 2008, some of the rhetoric in Washington has called for U.S. companies to ebb their tide of outsourcing their workforce in search of cheap labor, But so far, IT firms’ revenues from India, for example, have shown no sign of slowing.
According to the Wall Street Journal, revenues generated offshore by Indian IT services are expected to hit $48 billion this year, up from about $41 billion in 2012, $33 billion in 2011 and $26 billion in 2010. In 2005, less than $10 billion in revenues was generated from offshore Indian IT services.
Still, Bryan remains undeterred in his insistence that software development remain closer to home. GalaxE Solutions currently has about 150 employees in Detroit, and Bryan said the company plans to hire another 500 personnel here over the next two and half years.
“I think we are on the forefront,” Bryan said. “There is a lot of evidence of work that has previously been done offshore being done in the United States. I think you’re seeing an increase of customers looking for value over cost, and an increased focus on quality.”
