Indian firm sets up shop in Fargo, N.D.

Cargill is anchor customer of new Mahindra Satyam IT delivery center

Mahindra Satyam, like many other India-based offshore firms in recent years, is expanding its presence in the U.S.

In its case, Mahindra Satyam is opening an IT delivery center in Fargo, N.D., with the help of anchor client Cargill, one of the largest companies in the U.S.

The Indian firm is initially operating the delivery center out of the Global Business center of Cargill, a privately held food and agricultural company that claims nearly $120 billion in annual revenue.

Under an agreement recently reached by these two firms, about 200 Cargill business services employees are already working in the Mahindra Satyam delivery center as employees of Cargill.

"To keep our Fargo service center competitive, we needed to add new skills and we needed a partner with global experience," said a Cargill spokesman when asked about the agreement.

Some Cargill employees in the service center will remain employees of the American company and will work on its projects, the spokesman said.

Other employees may transfer to Mahindra Satyam to work on projects for Cargill or other clients that contract with the Indian firm, the spokesman said.

In some cases when a company hires an outsourcer for projects, its employees are transferred immediately, which occurred last year after Xerox and HCL Technologies signed an outsourcing contract. Some of the transferred workers have since been laid off.

Fargo may seem like an unlikely place for a service delivery center, but the area has a technology legacy.

The city was the home Great Plains Software, an ERP provider, until it was acquired by Microsoft in 2001 for $1.1 billion. Today, Microsoft runs operations in Fargo to develop and support its Dynamics ERP and CRM software, as well as some other products.

Along with Cargill, the delivery center has signed up a telecom customer, said Lakshmanan Chidambaram, senior vice president, sales and operations at Americas Mahindra Satyam.

"There are certain types of work that need to be done in the same time zone and at lower cost," said Chidambaram, in explaining the need for an expanded Mahindra Satyam presence in North America.

The rural location helps to lower cost, something U.S. based IT firms as well as overseas providers have taken advantage of.

The Mahindra Satyam center in Fargo will deliver business processes outsourcing, infrastructure management and other IT services.

The maximum prevailing wage for computer systems analysts in the Fargo area is just over $60,150. In New Jersey, near Edison, the pay for that same job is $88,155, according to government data.

Jimit Arora, a practice director at Everest Group, an outsourcing consulting and research firm, said there is increasing interest by Indian firms to expand in the U.S., in part to meet customer needs but also to address political and visa issues.

Customers of the outsourcing firms, meanwhile, are interested in onshore operations in locations that help manage the risk of having too much work done in one location, said Arora.

A number of offshore outsourcing firms have opened or announced plans for local delivery centers. "The objective is to try to make them broad-based, full delivery centers, but I think there is some ways to go before we get there," Arora said.

Mahindra Satyam gets 51% of its revenue from customers in the Americas, 24% from European customers, and the balance from other parts of the world.

The firm employs more than 33,000 worldwide, including some 3,000 in the U.S. The company's largest vertical is manufacturing at 32%, following by technology, media and entertainment at 21%.

The Indian firms tend to recruit out of colleges and then put these new hires through an extensive training program, said Arora.

Indeed, Chidambaram said that one of the appealing things about Fargo is its educational resources, and he said the company has already begun talking to local colleges about its needs and plans.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His e-mail address is pthibodeau@computerworld.com.

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