Indian firm sets up shop in Fargo, N.D.

Cargill is anchor customer of new Mahindra Satyam IT delivery center

Like many other India-based IT services providers, Mahindra Satyam is expanding its presence in the U.S.

In its case, Mahindra Satyam is opening an IT delivery center in Fargo, N.D., with the help of anchor client Cargill, a privately held food and agricultural company that claims nearly $120 billion in annual revenue and is one of the largest companies in the U.S.

The Indian company is initially operating the delivery center out of Cargill's global business center.

Under an agreement that the two companies recently reached, about 200 Cargill business services employees are already working in the Mahindra Satyam delivery center as employees of Cargill.

"To keep our Fargo service center competitive, we needed to add new skills and we needed a partner with global experience," said a Cargill spokesman when asked about the agreement.

Some Cargill employees in the service center will remain employees of the U.S. company and will work on its projects, the spokesman said.

Other employees may transfer to Mahindra Satyam to work on projects for Cargill or other clients that contract with the Indian company, according to the spokesman.

In some cases, when a company hires an outsourcer for projects, its employees are transferred immediately. That's what happened last year after Xerox and HCL Technologies signed an outsourcing contract. Some of the transferred workers have since been laid off.

Fargo may seem like an unlikely place for a service delivery center, but the area has a technology legacy.

The city was the home Great Plains Software, an ERP vendor that Microsoft acquired for $1.1 billion in 2001. Today, Microsoft runs operations in Fargo to develop and support its Dynamics ERP and CRM software, as well as some other products.

Along with Cargill, the delivery center has signed up a telecommunications company as a customer, said Lakshmanan Chidambaram, senior vice president for sales and operations at Americas Mahindra Satyam.

"There are certain types of work that need to be done in the same time zone and at lower cost," said Chidambaram, in explaining why Mahindra Satyam needed to expand its presence in North America.

It is often less expensive to do business in a rural location than it is in a metropolitan area -- a fact that both U.S.-based IT companies and overseas services providers have taken advantage of.

The Mahindra Satyam center in Fargo will deliver business process outsourcing, infrastructure management and other IT services.

The maximum prevailing annual salary for computer systems analysts in the Fargo area is just over $60,150. In New Jersey, near Edison, the pay for that same job is $88,155, according to government data.

Jimit Arora, a practice director at Everest Group, an outsourcing consulting and research firm, said there is increasing interest by Indian firms to expand in the U.S., in part to meet customer needs but also to address political and visa issues.

Customers of the service providers, meanwhile, are interested in outsourcing work to domestic locales that are outside of their main bases of operation; that helps mitigate the risks associated with having too much work done in one area, said Arora.

A number of offshore outsourcers have opened, or have announced plans to open, local delivery centers. "The objective is to try to make them broad-based, full delivery centers, but I think there is some ways to go before we get there," Arora said.

Mahindra Satyam gets 51% of its revenue from customers in the Americas, 24% from European customers, and the balance from customers in other parts of the world.

The company employs more than 33,000 people worldwide, including about 3,000 in the U.S. Its largest vertical is manufacturing, which accounts for 32% of its business, following by technology, media and entertainment at 21%.

Indian companies tend to recruit recent college graduates and put their new hires through extensive training, said Arora.

Indeed, Chidambaram said that one of the appealing things about Fargo is its educational resources. He said that Mahindra Satyam has already begun talking to local colleges about its needs and plans.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His email address is pthibodeau@computerworld.com.

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