Cost-cutting companies don't always look abroad

By Kris Maher

January 26, 2004 12:00 PM ET

CareerJournal - When an IT company in Palo Alto, Calif., wanted to set up a new office recently, it first considered going offshore, where it could have realized the greatest cost savings. But after the chief software architect at the company vetoed such a move, the company decided to settle on a U.S. city that could provide the next best option.

"Phoenix was the answer," says Manoj Jain, CEO of Pipal Research Corp., a research and consulting firm in Chicago that was hired by the company to evaluate a number of U.S. cities on various costs, including labor.

According to Jain, his client could have realized a savings of 30% to 40% of the total project cost by choosing India. But the company settled for a cost savings of roughly 20% in Phoenix, largely at the urging of the one company executive. "He said he wants people under his nose for quality control and just the overall implementation schedule," Jain says.

While many companies are sending jobs offshore to take advantage of huge labor cost savings, some employers uncomfortable with overseas operations are looking to reap savings in the U.S. by shifting from one city to another.

Read the complete article on CareerJournal.com.

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