Small And Captive
But small firms can benefit from going captive, as well. CenterBeam is a venture-backed company in San Jose, Calif., that offers outsourced IT services to mid-sized businesses. Even now, CenterBeam as a whole employs only 170 people, smaller than most observers recommend for a captive center.
But when Kevin Francis came in as CEO in early 2003, he needed to cut costs. At the same time, he felt it was vital not to outsource technical support, since that was a primary way his company interacted with its customers and thus was important for the brand. He looked at sites in the U.S. and in India, but ultimately decided to locate in New Brunswick, Nova Scotia, though it was not as inexpensive as India. Francis did this for several reasons: He could save 35% to 40% on his overall site costs, he had access to English-speaking, technically talented workers, and he felt that cultural and time differences were manageable.
Francis took several steps to ensure success of a center that now has more than 70 employees. First, he fully expects it will someday have 500 people in it, as CenterBeam grows. So he started with a hiring plan that included a unit president who was committed to growing the operation. That meant hiring support engineers with management track records, because they will be responsible for running teams as CenterBeam expands.
He made sure the office in New Brunswick is a mirror image of headquarters in San Jose, in part to reinforce culture and in part so customers can tour either facility and know it’s consistent across CenterBeam. Initially, all hires in Canada spent time in San Jose being steeped in CenterBeam’s culture (the firm still tries to bring Canadian new hires to San Jose, but no longer brings all of them).
He also spends a lot of time in both places, as do other top management individuals. Every Friday there’s a meeting of upper management. Francis rotates that meeting between San Jose and New Brunswick. All-hands meetings usually alternate between the two sites. While benefits are different between the U.S. and Canada, the firm creates common procedures wherever it can. It aims, for instance, to pay its employees in the 75th percentile of similar workers in the region, to help diminish pay differential between U.S. and offshore employees.
“It is critically important for a company to adhere to a common compensation philosophy,” Francis says.
Case for Captivity
CenterBeam’s internal studies show that 97% of customers are happy with the company, and 94% of its employees in Nova Scotia are content. To Francis, these numbers help confirm he made the right choice in staying in North America. The other thing he observes is the superheating of the Indian outsourcing market, which would make it very hard for CenterBeam to compete for talent there now.
