Our Secret for Making Outsourcing Work: Get Personal

Last Updated Jul 27, 2010 1:10 PM EDT

By Jennifer Davis, Davis Business Solutions, West Dundee, Ill.
My husband and I consider ourselves patriots. We live the American dream; we buy American cars. When we founded our company, outsourcing was not on our radar, and initially it wasn't something we'd even consider. But we realized that the world was changing, and if we didn't change with it, we'd be out of business.

Our company, Davis Business Solutions, created a software package that does everything from manage inventory and sales to payroll and customer service inquiries. Our niche is businesses with operations in service, distribution, and manufacturing. We wrote our software in the Progress programming language to run on UNIX machines. But we saw that Microsoft was taking over the world in the late 1990s, in almost all types of applications, and all of our customers were moving in that direction. We could either be run over by that locomotive or jump on it.
So we rewrote the package to work in a Microsoft environment. But there were a few problems. It's four to 10 times faster to program in Progress than its Microsoft-based equivalents. So we needed four to 10 times the resources to do the conversion, and we wouldn't magically have a commensurate increase in revenue to cover the cost. Also, there weren't many U.S.-based programmers who could do the work, and those who could were prohibitively expensive.

So we started quietly exploring our options for outsourcing. We had a few ground rules: We wanted to retain our U.S. work force, no matter what. And we wanted to keep our customer service operations here as well. Our software is complex, and our customers need to know we understand their business model, not just the software. That's not easily translated across nationalities and languages.

If you want a job done right...
In our first few attempts to offshore work, we used local agents. These were people on the ground in India or China who worked on our behalf to hire programmers, set them up in facilities, and basically get a division going for us in their country.

But we didn't know the agents. We didn't really trust that they were acting in our best interest. And we didn't know or understand the cultures we were trying to deal with. Really, the workers had no real connection to us, and we had no real connection to them. So we shouldn't have been surprised that after spending thousands of dollars, these efforts failed.

We were a bit ahead of our time -- companies our size just weren't outsourcing yet. In fact, even today there isn't another competitor our size who would even consider doing this. And we didn't have good contacts in India and China. We eventually realized that our approach was all wrong. We've succeeded in the U.S. because we've had personal connections with our employees: When they have issues, we're flexible, we cope and our employees respond in kind. Our business is a team project. We needed to bring that same mentality with us when we looked abroad.

So on our third outsourcing attempt, Dan and I decided to do everything ourselves. We went to India, which we chose because English is commonly spoken there. We secured the office space. We found out how to incorporate there, and did so. We hired the employees. And we actively worked to learn more about the culture by asking questions and just immersing ourselves in the country. Even today, we make a point of reading Indian news, listening to the news, and in general hitting any of the items on the Web that pop up regarding India.

Culture club
Taking the time to understand the culture has made all the difference. I've read that the average tech worker in India changes jobs every six months. We've had at least half of our Indian staff with us since we started the division in late 2004. Today we have 16 employees in Illinois and another 44 employees in Hyderabad. Last year we pulled in roughly $2.1 million in revenue and expect to hit roughly $2.5 million as the latest version of our software package gets its first full year on the market in 2010.

In America, part of our identity is who we work for. It means something to us to be able to say "I work for GE." In India, they feel the same way but to an exponentially greater degree. Workers can gain respect from their peers based on the perceived quality and stature of the company they work for.

The American companies operating in India are HP, Dell, Microsoft -- and us. So our operations there must exude stability if we're going to attract and retain the best staff. We have our own building. Dan typically goes to India several times a year; other employees and even one customer have traveled there as well. And we bring workers from India to the United States for training and to learn more about our operations and clients.

The time difference is huge, so either the Americans or the Indians need to work late hours to be able to talk with one another in real time. Usually the U.S. companies make their Indian employees work the odd hours, which many of them don't like, for obvious reasons. But we rotate which staff works nights -- and our willingness to do so gives us an advantage in the hiring marketplace.

We try to get to know our people as much as we can. We've made a point of inviting our Indian employees to our home. And we have been invited to multiple weddings there and have attended dinners and social gatherings with them.

Things are never perfect, of course. There's still a culture gap, and having to travel thousands of miles to meet with some of our employees can be an extraordinary challenge. But in the end, offshoring helped our company survive a difficult transition in our industry, and we've never looked back.

Jennifer and Daniel Davis founded their company when they were 17 and 22, respectively. Jennifer has been signing some of her employees' paychecks since before she was old enough to vote.
-- As told to Matt Wickenheiser