As a Detroiter, you are probably all too familiar with the term "outsourced." Maybe you or someone you know had a decent job, but the company decided to hire outside contractors to do the identical thing because they cost less. You have also likely heard about "offshoring," which is basically the same idea, except that the company hires employees overseas (usually in places like China or India) because the cost of labor is so much cheaper. In either case, if you or your friend has been let go because of these market forces, it doesn’t much matter if the job went across state lines or across the ocean. You’re still out of a job.
But what if some of the same economic forces shifted the balance back for certain industries? What if the cost of labor in a place like Detroit became competitive again? Well if you’re a skilled IT worker, you just may be in luck, and your job may be coming home again. In fact, you may be on the leading edge of a new trend that economists are calling by a variety of names: "homeshoring," "reshoring," "onshoring," or "insourcing." Whatever they eventually decide to call it, there is reason to believe that the trend may just centered in dear old Detroit.
At least that’s what IT service provider GalaxE Solutions
banked on with its move downtown in 2010 and with its announcement that it would be hiring 500 skilled IT professionals. In fact, GalaxE is so bullish on Detroit that it recently unveiled a huge "Outsource to Detroit" banner, at the top of 1001 Woodward Ave. where GalaxE has offices. With over 20 years of experience, and offices all over the world, from Detroit, to Toronto, to Bangalore, GalaxE’s bread and butter is providing software services and IT business support systems to healthcare, retail and financial industries.
Besides learning some fancy new words, you should also know that the White House officially recognized GalaxE’s move this month, when Chairman and President Tim Bryan participated in the "Insourcing American Jobs" forum at the White House, hosted by President Obama and Vice President Biden. Bryan introduced the President for his remarks to government and private sector leaders encouraging companies to "insource" in America to help rebuild the economy.
The President, Vice President, members of the Cabinet and other Senior Administration Officials met with GalaxE and other business leaders to discuss how they have brought jobs back to and/or made additional investments in the United States. Other topics included why locating a business within the United States is a competitive advantage and ideas to motivate other companies to take similar steps to homeshore American jobs.
Bryan focused his remarks on GalaxE Solutions' business model, "Outsource to Detroit," (a play on the terminology) which positions Detroit as a viable alternative for the next-generation of high-level IT, as opposed to sending IT work offshore, as the need for IT solutions becomes more sophisticated. In the forum, Bryan explained how homeshoring in Detroit helps ensure cost, and importantly, quality benefits and innovation, while repatriating jobs to the United States.
Eric Hochstein, an economic and business growth consultant, well versed in these issues and part of a team studying Metro Detroit and Windsor for the local Global Detroit initiative, offered his analysis. According to Hochstein, GalaxE’s growth and success in Detroit demonstrates the region’s potential as a leading location for technology service providers. In fact, GalaxE and other regional companies demonstrate that local companies can do the same work that is being outsourced at competitive prices and with comparable or better quality. Interestingly, much of the offshore work that has come back to the US is landing in smaller Tier II and III cities. Detroit’s cost structure compares favorably with those locations, its workforce is stronger, and the quality of life is world class.
Moreover, Detroit’s strengths as at Tier I destination for homeshoring and reshoring include a large available well educated professionals with diverse work experience, and a talented workforce with technical skills. In addition, a strong annual feeder pool of graduates from universities, colleges, and technical institutions with excellent technology and business training make Detroit even more appealing.
Finally, Hochstein stresses the idea that Metro Detroit also benefits from a relatively low cost of doing business:
"We have relatively low wage rates compared to other Tier I U.S. business centers. We also have a competitive corporate tax structure, a large amount of available commercial real estate for rental or sale at low rates, and well-established communication and transportation infrastructure, including our international airport, Detroit Metro."
And despite our tendencies to not cooperate as a region as well as we should, we still offer prospective employees a good quality of life with low housing costs, excellent education, sports and recreation, and big city amenities.
Global Detroit director, Steve Tobocman, sums it up this way: "GalaxE Solutions represents a part of the Detroit solution as the region repositions itself as a center for highly skilled employment opportunities. We hope to see many more of these types of businesses choose Detroit because it make sense economically, which is consistent with our overall vision for Global Detroit. We want to find ways to not only make the region more welcoming to people from around the globe, but also for business that competes on a global stage."
Global Detroit is hosting an event Thursday, Feb. 9, 5-7 p.m.: Immigrant Economic Impact: Dayton’s plan for Rust Belt revitalization by welcoming immigrants.
There will be a Presentation by Tom Wahlrab of the Dayton Human Rights Commission and Sherri Wierzba of the Dayton Downtown Development Partnership, on how the city of Dayton came together to create a more welcoming city. The presentation will be followed by cocktails and networking. It will take place in the offices of Miller Canfield, 150 W. Jefferson.
Registration to the event is mandatory. If you are interested, please email [email protected]
and include your name and number in your party.
Francis Grunow works at New Solutions Group, a public policy consulting firm, which serves, in part, as staff for Global Detroit, a set of 11 programs funded by the New Economy Initiative.