Easy access, low costs seen as keys to luring tech jobs
Published: Sunday, December 9, 2012 at 6:02 p.m.
Last Modified: Sunday, December 9, 2012 at 6:02 p.m.
India-based Mindtree Limited decided to open software development centers in the United States because its Fortune 2000 clients here needed more immediate access and support for their digital offerings.
The company chose Gainesville for its first center in large part because of the access to computer science talent coming out of the University of Florida and the low cost of doing business compared with technology hubs in major metropolitan areas.
Now, other companies have taken notice and are considering the Gainesville area for their expansion plans for the same reasons.
As many as 10 prospects from the Fortune 100 to very small companies have sent senior executives to look at Gainesville in recent months, said Erik Sander, director of the Engineering Innovation Institute at the University of Florida.
He is part of a team of people representing various organizations that responds to prospects scouting the area.
“On a national and international stage, a lot of companies have taken notice of what Mindtree has done, so it's safe to say the inquiries we're getting have accelerated,” he said.
Sander said he can't name names, but the prospects include other businesses in computer sciences, as well as biotechnology and materials sciences companies.
Mindtree earlier this year opened the U.S. development center in the Ayers Medical Plaza in what is being called Innovation Square and plans to hire 400 people over five years.
While in town for a ceremony last month, CEO Krishnakumar “KK” Natarajan from Mindtree headquarters in Bangalore, India, said during an interview that the U.S. center is a response to the evolution of information technology that is bringing work that had been outsourced to India back to the United States.
In the past, clients would have applications on a mainframe or other legacy technology and outsource part of the work to maintain it to cheaper operators overseas with some local presence.
Now, clients are using applications that are more critical to their businesses that need real-time feedback and support, Natarajan said. They need someone in the same time zone or a short plane trip away rather than having to wait eight to 10 hours for a response.
General Motors Co. announced earlier this year that it is bringing its IT work back to the United States, citing the need to be more efficient, and Detroit and Austin, Texas, are getting the first two of four planned centers.
John Williams is senior vice president of Collaborative Consulting, an information technology consulting firm based in the Boston area.
He said the “onshoring” model can be hard to justify from a cost-per-hour perspective until factoring in the inefficiencies of long-distance collaboration, particularly for more complex, high-touch projects that are typical of app development.
Key to the cost equation is bringing those U.S. jobs to low-cost markets. Collaborative Consulting, for example, opened an IT services center in Wausau, Wis.
Compared with Boston and New York City, Williams said the right market could save a company 30-50 percent on labor while spending a third of the cost on real estate.
Other keys to the equation are the availability of talent ready to hire and the educational infrastructure to train additional talent, Williams said.
SumTotal Systems has grown from 40 local employees to more than 200 since moving its headquarters from Silicon Valley to Gainesville in 2010.
CEO John Borgerding said the company has hired a lot of people out of UF and Santa Fe College, while recruiting also has benefited from Gainesville's proximity to larger cities.
The company provides employee evaluation and training software. It first established a presence in Gainesville when it bought MindSolve Technologies in 2006.
The move allowed the company to save on labor as a result of the lower cost of living and less competition for IT workers, Borgerding said.
Instead of seeing Mindtree's presence as increased competition for IT workers, he said it will help solidify Gainesville's reputation as a tech center that will attract more workers, particularly mid- and senior-level employees who like to have other options.
Sander said the companies looking at Gainesville also are interested in recruiting out of multiple colleges at UF — not just computer sciences but engineering, medicine, food and agricultural sciences, business and law — and in recruiting students who have experience in more than one discipline.
“There are less than you can count on one hand the number of universities that have that in a single campus,” he said.
That also was attractive to SumTotal, which has hired people for business, legal and marketing functions out of UF as well as technical fields.
“The fact they've got all of the schools is a huge benefit for us,” Borgerding said.