Perot Systems, founded by an offshoring foe, increases offshoring

Computerworld - IT outsourcing company Perot Systems Inc., which was founded by Ross Perot, the 1992 presidential candidate who warned that the North American Free Trade Agreement (NAFTA) would lead to a "giant sucking sound" of U.S. jobs over the border, is operating in a way similar to many outsourcing firms and is increasing use of overseas labor.

The company's outsourcing outlook was detailed in a Reuter's report this week out of Mumbai, India, in an interview with James Champy, Perot's chairman of consulting. Champy said that he sees the company's offshoring mix rising to 50% in the next five years.

"We will move more work to locations like India. Many of our clients who have resisted offshoring before will be more receptive now," Champy said, according to the report.

In an interview with Computerworld, Russell Freeman, Perot's chief operating officer, said he had not spoken with Champy, but said the company did not "specifically have" strategic plans in place to grow offshore headcount to 50% of its workforce. The company, however, is planning to increase its associate headcount in every jurisdiction it is in, he said. "It's our full intent to grow our U.S. headcount," he said.

Freeman said that clients "are looking for globalized delivery," and that "I think where people are located will be much less important to the clients."

Freeman said Perot's U.S. workforce has been growing even as it expands overseas. The company has 23,000 employees, 65% of whom are based in the U.S. The company expects offshore operations to grow as a result of business with clients based in India, China and other countries, but also because of new clients, he said.

But the importance of offshoring to Perot is clear in its financial reports. In early 2008,the company wrote in one U.S. Securities and Exchange Commission filing that "emerging offshore development capacity in countries such as India and China is increasing the degree of competition for our software development services." Its consulting and applications solutions line of business "is located primarily in India."

As it increases its overseas effort, most of Perot's revenue comes from its U.S. customers. By the end of 2007, Perot finished with $2.6 billion, with $2.3 billion earned domestically, or about 88%.

Freeman cited a number of ways that Perot will add employees in the U.S. and keep costs down as well, such as using lower cost areas for some of its work, including Lincoln, Neb., and Bowling Green, Ky.

The company also believes that the federal stimulus bill and its mandated health care improvements will boost Perot's bottom line, Freeman said. Approximately 47% of the company's revenue is from health care, and that's principally from U.S.-based hospitals and other health care providers. The stimulus is being finalizedin Congress.