Start-up Offers 'Inshoring' in Michigan

A start-up IT services firm -- headed by veteran offshoring executives -- has opened up an offshoring alternative in Michigan, a state with a 17.5% unemployment rate and a well-educated labor pool.

Fremont, Calif.-based Systems In Motion Inc. (SIM) has 35 IT workers in Ann Arbor and hopes to employ about 1,100 in Michigan within five years.

SIM's plans for the state were cited by Michigan Gov. Jennifer Granholm in her State of the State address earlier this month.

SIM's business approach, which it calls "inshoring," emphasizes streamlined processes and an intensive worker training program to keep costs 30% below those of in-house IT departments.

The executive team includes CEO Neeraj Gupta, previously an executive at Patni Computer System Ltd. in Mumbai, India; and Chief Marketing Officer Debashish Sinha, who held a similar post at HCL America Inc., a division of HCL Technologies in Noida, India.

Michael Parks, the chief delivery officer, is a former IT executive from Virgin Mobile USA and Wells Fargo & Co.

The team could easily have created an outsourcing company based offshore with offices in the U.S. While such a strategy has proved successful for many IT services firms, "I don't think the world needs another offshore company," Sinha said.

SIM, formed last summer, is still running on start-up funding. In September, the state government awarded it a $7.4 million credit to build in Michigan.

Salaries range from the $30,000 for recent college graduates to $80,000 for more experienced engineers, Sinha said.He wouldn't identify the five customers that have signed on with SIM so far.

Low real estate prices resulting from the downturn in Michigan's economy are helping SIM get started there. The cost of infrastructure, overall, is now lower in the U.S. than in Bangalore, Sinha noted.

This version of this story was originally published in Computerworld's print edition. It's an edited version of an article that first appeared on Computerworld.com.

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