The national unemployment rate currently stands at 9.6 percent (September – October 2010), one of the highest rates seen in over 25 years (see Figure 1). As the U.S. population grows, so does the number of unemployed persons. The more unemployed persons we have, the more talent and resources we have going unused and being essentially wasted.
Figure 1: United States Unemployment Rate (January 1985 – October 2010)
Source: Bureau of Labor Statistics
As of September 2010, California is experiencing unemployment rates of 12.4 percent (well above the national average) and only second to Michigan at 13.0 percent (see Figure 2). According to the 2009 IRS Data Book, the IRS collected over $2.3 trillion in total from all 50 states, including the District of Columbia. Of that total, California constituted approximately 11%, the highest percentage between the states. The same goes for business income taxes. Of the total business income taxes collected in 2009, California represented 12%, again the highest state. So why is it that the U.S. has such a high unemployment rate and the state that generates the most revenue through commerce and services has the highest rate?
Figure 2: United States Unemployment Rates by State (September 2010)
Source: Bureau of Labor Statistics
It has been long known that the tech industry has provided the United States with tremendous revenue and continues to be a leader in the world in terms of innovation. With so much creation and tech generation, it would be assumed that the United States’ unemployment rate, and especially California’s rate, would be relatively low. However, this is not the case. Companies have been outsourcing tech work internationally to countries such as China and India for many years.
In the beginning, cost was the key determinant to accepting outsourcing. However, through decades of employing this phenomenon, the U.S. has lost its hold on talent and certain technologies. In an article (Andy Grove: How America Can Create Jobs) written by Andy Grove, former CEO of Intel, he mentions that not only are domestic jobs at risk, but with some technologies, both scaling and innovation take place overseas. Jobs have been lost as well as the chain of experience, which is vital to technological evolution. If experience, talent and resources continue to be outsourced, the U.S. will eventually find itself at the back-end of technological advancement.
Systems In Motion (SIM) (http://www.systemsinmotion.com/) is trying to change that. Pioneering what has come to be called “onshoring” or “inshoring”, the company has set up their innovation office in Fremont, California near the heart of the tech industry and its ever-growing delivery center in Ann Arbor, Michigan where unemployment rates have increased dramatically and are the highest in the nation currently.
It is SIM’s belief that tech services can be performed domestically for approximately the same cost structure as overseas without the obstacles and hassles that accompany working with foreign employees in different time-zones. This “inshore” domestic service model has been proven time and time again with the Company’s customers and has led to better scalability, quality and flexibility. SIM’s customers range from F-500 companies (lThomson Reuters, Best Buy) to mid-sized enterprises (Leap Frog, Matson, Abercrombie & Kent) to high-performing growth companies (Chegg, Yodlee, Nextag & Zephyr).
Systems In Motion has created over 100 jobs in Ann Arbor in less than a year with expectation to expand to 1,000 in the next few years. Showcased in articles by ComputerWorld, The Economic Times, InformationWeek, The Michigan Daily and others (SIM Newsroom), the Company has received much praise and support for their efforts.
Global outsourcing presents itself with numerous challenges that can be either completely eradicated, or at the very least, reduced by utilizing the domestic “inshore” model (see Figure 3). A domestic resource pool, appropriately trained, organized and managed, can be significantly more productive than a globally distributed team. Furthermore, the cost of ‘bridging the value gap’, with additional resources, greater governance, and increasing levels of infrastructure spend, can be so expensive that it negates the expected savings from globalization.
Figure 3: The Value Delivery Gap in Globally Distributed Service Models
Systems In Motion offers excellent expertise in numerous fields such as mobility, e-commerce, social media and business intelligence, to name a few. The Company is able to dedicate a team to a client with on-site architects and managers that gather requirements and conduct a one-on-one relationship with the client at their offices and act as a liaison to the coders and developers in Ann Arbor. The “inshore” model and its structure and benefits, as well accounts of domestic versus offshore services, are outlined in the Company’s whitepapers.
By utilizing domestic resources and talents, Systems In Motion is not only providing U.S. residents with jobs, but keeping the skill set, experience and learning process onshore. In order to achieve future success and advancement, it is required that we have the talent pool and infrastructure set up onshore to support innovation. Otherwise, we will continue see jobs and talent move to and be fostered in overseas countries.
To learn more about SIM and its “inshore” model and how the Company can help you, please visit the Company’s website and fill out the contact form or e-mail Debashish Sinha (CMO) at dsinha@systemsinmotion.com.
We are always looking to hire exceptional talent and resources. If you are interested in career opportunities with Systems In Motion, please visit the SIM Careers page or send your resume to jobs@systemsinmotion.com.