Ebrahim Moshiri has seen first-hand how work by information technology specialists in St. Louis is being shipped to countries such as India, China and the Philippines, where labor costs are lower.
The practice, known as offshoring, has cost thousands of jobs across the country. Now Moshiri, founder and chief executive of the specialized software company Object Computing, Inc. in Creve Coeur, is backing a Missouri business he said will provide local companies a low-cost alternative for outsourcing information technology work in their own backyard.
by Rick Desloge
Moshiri took a majority stake in Onshore Technologies this spring, forming a partnership with Shane Mayes, Onshore's president. Mayes launched the company last March in Macon, MO, about 180 miles from St. Louis in north central Missouri. Mayes is a former technology worker in St. Louis County with Elsevier, an international health-care technology company. Elsevier was among the businesses sending technology work overseas, and Mayes said he knew he could save the company money by keeping the business in the state.
Onshore is starting small, about a dozen employees, but the business has the ear of the Missouri Department of Economic Development. The department is in discussions with Mayes and Moshiri to potentially establish as many as five rural technology centers, each employing between 500 and 1,000 within five years. So far, Onshore's setup costs have run roughly $250,000, including a $36,800 training grant from the state of Missouri.
All small technology companies face pressure from their big customers to develop a low-cost alternative for much of the basic IT coding. That usually means shipping the work to an offshore business, said Moshiri, whose Object Computing, Inc. (OCI) has 80 software developers. So far that push has not hit OCI, which provides higher-level software engineering services to Boeing and other aerospace, defense and financial firms. Moshiri said he plans for Onshore to target Anheuser-Busch, Monsanto, Express Scripts and other major corporations that have shifted some IT work out of the country.
"Our clients need to lower IT costs, while at the same time minimize the risk and uncertainty of going offshore," he said. "I didn't have a strategy, and I wanted to stay in the neighborhood. OCI's low-cost strategy is in Macon."
Onshore is able to keep prices low because of its rural location. The company is cost effective for smaller projects, for which it charges $40 to $50 an hour, Mayes said. "For larger, fixed contract projects, we can go from $35 to $40 an hour," and for bigger IT projects with multi-year contracts, Onshore can go even lower, he said. Those rates are still higher than the under-$30-an-hour figure charged for technology workers in countries such as India and China, but lower than the roughly $120 an hour information technology workers receive in major metropolitan areas in the United States.
Moshiri said low-priced information technology work from overseas doesn't take into account factors that push the true cost higher, such as cultural and language differences, higher staff turnover, lower government regulation on software infrastructure and political risks in some countries.
Mayes has been meeting with businesses in St. Louis that need the service. Onshore's first St. Louis-area client is CEM Lending, a small Internet mortgage company in Jefferson County.
Onshore graduated its first class of eight software workers in May and plans two more training classes this fall. A key for the business is to train workers as Microsoft Certified Application Developers in six weeks. That process usually takes a year.
"Everyone was telling me it wasn't possible to train people so quickly, but we did it," Mayes said.
Onshore's method was an intense boot camp that ran from 8 a.m. to 1 a.m, including weekends. The company applied with the state for two more training grants, said Kristi Jameson, a spokeswoman for the Missouri Department of Economic Development. She said the state is interested in working with the business, because Onshore's plan keeps IT jobs from leaving the state and creates jobs in rural Missouri.
Originally published at: http://www.bizjournals.com/stlouis/stories/2005/08/01/smallb2.html
