November 30, 2016 11:48 am | Updated 9 months ago.
With an economy of approximately $ 2.5 Trillion and with $ 78 Billion in venture capital money invested in California companies over last 3 years, California clearly, presents immense opportunities for IT outsourcing companies. In addition, with over 50 Fortune 500 companies in the state and with people from a multi-ethnic background, California also is a state that the offshore IT Outsourcing companies can look forward to for their business growth. In addition to being the entertainment and technology capital of the USA, California is home to a large number of entrepreneurs that have built companies like Qualcomm, Cisco, Apple, Google, Facebook, Netflix, Salesforce and we can go on.
While the above scenario clearly presents immense opportunities for IT outsourcing companies and Offshore IT Outsourcing companies, what then are the barriers that the Outsourcing companies need to deal with for their business operations in the state of California? In D2E’ opinion, there are essentially three factors that the IT Outsourcing companies, especially the offshore IT Outsourcing companies needed to watch out for:
- Impending minimum wage hike
- High taxes and complex tax structure
- Wealth varies geographically, much of the wealth clustering around the Bay Area, the Silicon Valley, Los Angeles and the coastal counties.
While the above factors can cause some impediments to business unless carefully planned, there are numerous factors that can be of help to boost the business of the IT Outsourcing companies:
- Availability of talent, especially in technology
- Mobility of people and
- Entrepreneurial spirit
In D2E’ opinion, the offshore IT Outsourcing companies need to take the following steps to further stimulate their growth in the state of California:
- Talent Management: Given the abundance of talent, especially technical talent, available in the state, the offshore IT outsourcing companies will be well advised to hire local talent from the state to the extent possible. This will not only make superior talent available but will also help in wider integration with the technology community in the state.
- Compliance Management: It is also advisable to have the local experts from the state in the Company’ Board and other critical functions so that adherence to the somewhat complex tax structure and other Labor laws can be assured.
- Cost Management: Irrespective of availability of opportunities and talent, the cost is always a factor that is important both to the customers and the IT Outsourcing companies. It is, therefore, advisable to look at offshore resources for the areas where local talent from the state is not easily available.
- Engagement Management: For the offshore IT Outsourcing companies, it may be advisable to have a local high-end Program Management company either from the state of California or from other states in the USA to manage the client engagements, not only to ensure quality of delivery meeting client expectations but also to ensure adherence to local expectations and also the expectations of the customers relating to what work and how much work should be done using offshore resources and then do appropriate boundary management.
- Offshore Program Management: For the offshore IT Outsourcing companies, it may be advisable to have an experienced offshore program management company program manage the offshore activities to ensure seamless integration with activities being carried out on site in the state of California.