VISIONIT URBAN ONSHORE TM CENTER

VISIONIT URBAN ONSHORE TM CENTER

URBAN OUTSOURCING IN DETROIT American companies have historically turned to offshoring, the practice of outsourcing operations to foreign countries, as a way to curb operating costs. For the information technology industry this practice has had some particular limitations and hidden costs. There are some operations that due to regulations or logistics cannot be sent offshore and some legacy and highly specialized skill sets can be hard to find in foreign labor markets. In addition, some companies have experienced issues with quality of work and increasing labor costs due to currency fluctuations, high turnover, time zone challenges and language barriers. While proponents and practitioners of offshoring place the cost of labor savings at between 50 and 60%, the research firm Gartner concludes that after hidden costs, companies are actually only saving between 20 and 30% over Tier One US Cities and in some cases, actually no savings due to project delays and/or rework. In spite of some challenges offshoring is likely to be continued as a viable practice; however the recent economic crisis has illuminated opportunities to shift some operations back to the United States while continuing to see significant savings in cost of labor (COL) and overall operating cost, as companies outsource work to lower tier urban locations within the United States. Tier Two and Three US cities typically have a work force that is either already trained in the occupations an IT company requires, or has demonstrated an aptitude for highly technical occupations and are willing to work at rates up to 30% lower than those found in more prosperous cities. URBAN OUTSOURCING CONSIDERATIONS Companies that decide to domestically outsource IT services or projects, as opposed to sending them offshore or onsite, are rightfully still concerned with quality, productivity and keeping costs low. VisionIT has addressed these concerns by extensively researching and creating best in class solutions to the following key items: Segmentation Consider the services and projects the company is looking to outsource, it is necessary to know what talents are required in order to determine if Urban Onshore makes sense and where the best available pool of low cost talent will be found. Ask the following questions: a. What skills are needed most? b. What level of skill and experience is required? c. How can the operations be grouped by skills and experience? Site Selection Site selection is perhaps the biggest driving factor in the success of an onshore outsourcing. There must be a population, with the required skills and experience that can support the current incoming job opportunities and projected growth, without total resource saturation, but must also have nearby education facilities that can continuously replenish the labor supply. Otherwise labor costs will rise. There are several key factors to examine when considering a location for onshore outsourcing: 1. What is the Population size? 2. What is the availability of talent matching the needs of the proposed operation? 3. How many nearby universities and colleges are producing new talent? Will they outpace projected job growth? 4. What is the site s cost of labor for the talent required? Is this on par with the 30% consistent average? 5. Are there any State or local government incentives and programs providing financial assistance? Will we find help from government agencies or NGO s (Non Government Organizations) pushing urban renewal and cooperating with incoming business? 6. Are there the physical facilities and resources there to support the proposed operations? WHY DETROIT IS AN IDEAL LOCATION FOR OUR URBAN OUTSOURCING When considering the critical factors for the success of urban outsourcing, Detroit stands out as an ideal location. The challenging automotive industry, occupational demographics, proximity to well ranked Universities and energetic push toward urban renewal make it great choice. Detroit may be known for its ties to the auto industry, but more than 22% of the labor force in the Metro Statistical Area (MSA) is in professional occupations, with 14% of the population being in IT and IT related fields i. Just over 400,000 IT professionals are already employed in the metro area; however the city of Detroit has a population of just under 1 million people, according to adjusted census numbers, with the metro areas providing an additional 4 million people. The recent economic downturn and nearly two decades of ups and downs for the auto industry has left Detroit with an abundance of skilled and experienced professionals seeking employment. With conservative estimates placing the unemployment rate at around 22% ii, Detroit continues to provide fresh supplies of experienced IT talent from the shrinking of the automotive workforce. In addition to being available

in a growing abundance, according to surveys conducted by the US Bureau of Labor statistics, IT professionals in Metro Detroit are 35% cheaper to employ than those in the Silicon Valley area of California, placing Metro Detroit above the 30% average savings on cost of labor delivered by other tier two American cities. In addition, the flow of available IT talent in Detroit is sustainable, as the wealth of Universities and Colleges in the metro area and the state of Michigan as a whole will continue to supply bright new IT professionals for the future. Michigan has approximately 200 universities and colleges, many of which have top ranking IT programs. The state of Michigan boasts a retention rate of 67% for IT professionals that graduate from Michigan schools. Even with the challenges that face Detroit and the state overall, of the 37% that leave the state 53% cite that they are only leaving for a job opportunity iii, indicating that they would return if opportunities for employment improved in Michigan. Most of the Universities and Colleges have set up organizations to collaborate with local businesses to ensure the proper curriculum, experience and job placement opportunities exist to supply the job market with skilled and employable graduates, Detroit s own Wayne State University. Detroit beats out California s major cities on all indexes ranking cities according to overall cost of doing business iv. This is due to the combination of low cost labor, commercial real estate values and the availability of incentives from both city and state governments available to businesses operating in Detroit. The physical facilities and resources required to run an IT business exist in both midtown and downtown areas of Detroit at rates far lower than those in Tier One cities. In some cases these are sitting empty in areas referred to as Renaissance Zones. Companies offering to occupy these facilities can reap great benefits from the incentives being offered by local, state and federal governments. These include cost reductions, subsidized loans and tax credits and deductions for everything from site location to employing workers with qualifying characteristics. There are few cities in the United State that are as well situated as Detroit to serve the IT industry as a sustainable low cost center of operation. Detroit has the requisite population, volume of talented IT professionals and the universities to sustain its talent pool going forward. What is more, Detroit labor and operations come at a savings when compared to traditional IT cities like San Francisco and San Jose. DETROIT: VISIONIT S URBAN ONSHORE CENTER Seizing an opportunity to improve service offerings and cost structure while having a positive impact on its founding city of Detroit, VisionIT developed their Urban Onshore concept and made Detroit the location for their first Urban Onshore Center. VisionIT s Urban Onshore Center is housed in midtown Detroit, where we run IT operations for our own company and several clients. The Urban Onshore Center provides a low cost labor pool for the legacy and specialized skills sets that are hard to find or develop in foreign markets. In fact, we have found that Detroit has an available pool of talent with specialized skill sets that are in the highest demand in the industry, including application development, infrastructure management and maintenance for both legacy and newer IT solutions. VisionIT s Urban Onshore Center benefits from the lowered costs of labor and operations in Detroit. A key part of our ability to continue growing as a company, even during the recent global economic downturn, our Urban Onshore vision is successfully generating revenue for the company, jobs for our community and savings for our clients. We believe that VisionIT s Urban Onshore Center can benefit any company considering outsourcing operations to Detroit, adding additional value through our core competency, our experience and our ties to the community. We have already taken home the lessons learned and garnered the knowledge and relationships required to provide an out-of-the-box streamlined operation as an alternative to companies that would rather outsource part or all of their IT services tasks instead of venturing themselves into a new location. As a Detroit based, minority owned business and active participant of numerous local business organizations we have the community knowledge and ties needed to see maximum benefit from Detroit s urban environment and access the existing pools of talent while working with universities like Wayne State to ensure that future IT professionals are leaving local universities prepared with the right skills. VisionIT has an active candidate pool of 25,000 IT professionals that are seeking work, live the Metro Detroit area and can draw additional talent from any of the major job portals, such as Career Builder. Career Builder estimates that approximately 20% of the available talent pool signs up for their site. They claim active accounts for some 4,000 v IT professionals living the Detroit city limits and seeking employment for 4 of the most in demand IT jobs, like Application Developers, Business Analyst, Help Desk and Engineer. This does not include other specialized job titles, or the professionals living in the nearby suburbs. Given the number of available professionals, VisionIT s experience and ties to community we are confident that

we can staff any project without fear of over-saturating the market. Because we know our business and our founding city, VisionIT already has a proven track record of reducing client costs. Aside from our own streamlined operations, VisionIT and the Urban Onshore Center in Detroit have delivered millions in annual savings to clients in the public and private sectors, through our lower cost structures and competence as a service provider. To find out more about VisionIT and our Urban Onshore Center contact Christine Rice, President of VisionIT: crice@visionit.com i Statistics taken from the 2010 US Census ii Statistics taken from the United States Bureau of Labor Statistics ABOUT VISIONIT, INC. Headquartered in Detroit, VisionIT, Inc. has become a global leader in the areas of information technology managed services, staffing, and vendor management. Now in its 14th year, VisionIT has established a proven track record of delivering outstanding IT solutions to many Fortune 500 corporations, large government agencies and public school districts. With 20 offices nationwide, VisionIT boasts a national reach in every major U.S. market, managing more than 3,500 of the nation s most talented professionals. VisionIT also provides services in Mexico and leverages resources in India. For the past six years VisionIT has been rated as one of the top 50 fastest growing diversity-owned firms in the U.S. and has been listed three times in the last five years (2004, 2005, 2008) as part of the prestigious Inc. 500 as one of the fastest growing privately-held companies in North America by Inc. magazine. iii Michigan Economic Development Corporation Study: Attracting and Retaining the Best Talent In Michigan iv Both Forbes and US Weekly Publish these Indexes. KPMG Publishes Competitive Alternatives a guide international business location indexing world cities based on average cost of doing business v Career Builder statistics provided directly to VisionIT by Career Builder

VisionIT 3031 W. Grand Blvd. Suite 600 Detroit, MI 48202 Ph: 877.768.7222