This article by Doug Bruhnke of Growth Nation was published in the May 9th Phoenix Business Journal www.bizjournals.com/phoenix/.
Arizona-based companies that honestly face the realities of ever-increasing global outsourcing can reap significant rewards. Some Arizona-based businesses have adjusted their business model to take advantage of outsourcing trends. Companies ignoring reality do so at their own peril.
Phil Harrington, CEO and President of ICM Conversions (www.icmconv.com), has stayed ahead of a trend by some customers to outsource low-end document scanning to India. He has converted his 20-year old Phoenix-based document scanning company into a national, ISO-certified, document solutions company.
“In manufacturing and government we must continually demonstrate clear value with our technology, quality and local presence,” says Harrington. “We’ve become more competitive on cost and shifted our emphasis to total document solutions that allow customers to improve their productivity. The total-value formula has made us tough to beat.”
The approach has paid off as ICM grew revenue and earnings by over 25% in 2007, and they expect to grow by 40% in 2008. Rather than compete only on cents-per-page scanning projects, they’re selling complete solutions and higher-value products and services. Current customers like Honeywell, Boeing and the State of Arizona are reaping the benefits, and buying more.
Omar Sayed, Founder and CEO of Mesa-based Succeed Corporation (www.succeed.com) has been using a team of programmers in the Ukraine since 1995. Succeed is pumping many more dollars into Arizona than they’re spending on outsourced programming. They are the Inc. 500 number 50 fastest growing company in the United States, with hundreds of thousands of customers in North America for their eCommerce web sites.
“In the beginning we experienced a particular technical program that we had spent months trying to fix,” says Sayed. “I handed the problem to developers in the Ukraine and within a couple days they had solved it. It opened my eyes to the possibilities, especially when they sent me the bill: $28. We’ve been using them ever since because they’ve been a less-expensive investment that has provided the engine for our growth.”
Global outsourcing will be up another 8.1% in 2008 according to Business Week. In Information Technology, that means more programming jobs will be sent overseas to India, Ukraine and even less expensive countries. Rather than fight the trend, Leanne Kinnard of Phoenix-based Tech One (www.techonestaff.com) has grown her business with it.
“We’ve shifted our business from supplying mostly programmers in 1999 to a staff of 70% project managers and business analysts,” says Kinnard. “These highly skilled professionals are typically closer to the business than the programmers. They have soft skills to successfully integrate technology into local business solutions, no matter what the programming language.”
That shift was exciting to Kinnard because she herself has a background in Business Systems Analysis.
“Our project managers are the glue that keeps our clients’ technical solutions together, even when the programmers are far away. Our consultants are trusted advisors so that our clients can focus on their business and take advantage of their market opportunities – making them more competitive.”
Rod Miller, Vice President of International Economic Development for the Greater Phoenix Economic Council (www.gpec.org) concurs. He is a leader in attracting international companies to Arizona, and has a firm grasp on what it will take to continue making Arizona competitive with other states.
“Like the need to attract foreign direct investment to Arizona, we see global outsourcing as a business reality that can support our growth,” says Miller. “Companies here that see the opportunities and that embrace change will help us win in the global marketplace.”
When it came time for Phoenix-based Miller Lighting Products (www.lightingparts.com) to choose the manufacturing sites for their new line of green lighting, they chose plants in Asia. Brothers David and Gil Miller took over the 33 year old family business in 1998 and have since then seen a need to outsource even their highest tech products.
“Our customers demand high quality and good pricing,” says President Gil Miller. “Our new Miller Eco Lighting products represent cutting-edge technologies and yet few choices existed for supply other than from overseas. Global outsourcing allows us to market green products that save energy and benefit the economy of Arizona.”
By focusing on building expertise in lighting technologies, Miller Lighting Products is growing with a supply base from all over the world. “We’re staying ahead by offering local, consultative selling that gets customers the right cost-effective green products for their particular application, no matter where the lighting part is manufactured.”
Industries are radically changing as suggested by Thomas Friedman is his 2005 book The World is Flat. Companies must embrace the new reality or risk extinction. Here are suggestions for any Arizona-based company looking to be more competitive in today’s global environment.
- Strategize with a clear view. Work hard to see what’s ahead, not just what’s behind. The past is not always the best indicator of how to proceed in the future.
- Bring in outside perspectives. You know your business perhaps too well. Outsiders will be able to help you see the reality of the market more clearly.
- Take action. Sometimes business owners need to say “no” to the way they’ve always done things. Break free, and reap the benefits.
Doug Bruhnke is CEO/Founder of Growth Nation and President/Founder of the Arizona International Growth Group (AZIGG)