TALE OF TWO OUTSOURCERS
Architectural Firms Send Work to India, With Opposite Outcomes
By CHRIS CZIBORR
A pair of architectural firms in Orange County is reporting divergent experiences with outsourcing to India.
One, Newport Beach’s GKK Architecture and Construction Management, is happy with the practice and isn’t afraid to talk about it.
The other, Architectural Resource Consultants of Irvine, no longer outsources to India because of what it called the low quality of work there.
The differing accounts hit at what’s becoming clear about outsourcing: Preparation and pre-existing ties to India can make or break a venture there. Anything less can lead to disappointment.
GKK, which counts about 100 workers, outsources about 20% of its document production,including computer-aided design work,to India. The reason for doing so is clear, according to David Hunt, GKK’s director of design.
“Entry-level architect positions here in OC cost $18 to $22 per hour,” he said. “But the base hourly rate in India is $2 to $2.50 an hour. Everything is paperless. We’re talking about half the labor costs.”
GKK has about 10 workers in India.
India Ties
Costs aren’t the only thing that pushed GKK to start outsourcing to India five years ago.
One of the company’s employees had a wife and family from Mumbai, formerly Bombay, and had friends in India. That led the employee to go back to India and begin managing outsourced architects.
“We saw the differential in pay and thought it sounded like a real good idea,” Hunt said. “But the move also was driven by the cultural ties our firm has with India.”
Praful Kulkarni, GKK’s chief executive, got his architecture degree from the Indian Institute of Technology.
The India office was a separate company up until January, when GKK decided to turn it into a joint venture. GKK now owns 50% of the venture, which lets it bring back half of the profits to the U.S.
“Right now any profits are going into training, having staff members come over here for cross training and sending out people over there,” Hunt said. “We’re still investing.”
GKK isn’t worried about the negativity surrounding outsourcing, according to Hunt.
“The articles I read are in different industries,” he said. “Our product is more collaborative and we’ve got an efficient model. Doing computer-aided design requires minimal communication anyway.”
It’s not all easy going, Hunt said.
“Sometimes it is challenging,” he said. “The time difference can be an issue,not working in the same place at the same time. Architects like to work in groups. But we’re learning more and more how to get what we need at the end of the day through different forms of communication.”
Clients generally don’t mind that GKK outsources, Hunt said.
“Our clients are looking for an end product,” he said.
Outsourcing has turned GKK into a 24-hour operation, Hunt said.
“When we leave the office at 6 p.m., they’re just arriving at 6 a.m.,” he said. “We do teleconferencing and talk about coordination issues prior to the start of their day. We’re looking at videoconferencing as the next step.”
The backlash against outsourcing is just part of an economic evolution, Hunt said.
“If you look back throughout U.S. history, this kind of negativity has happened before in manufacturing,” he said. “Detroit accused Honda of stealing American jobs. For us, outsourcing really correlates with the use of computer-aided design software. Back in the 1980s, people were drawing by hand and didn’t want to change to software, which they claimed was slower. Outsourcing ultimately will benefit the U.S.”
India stands to benefit, too, he said. The country gets wealthier and its middle class grows from outsourcing. That means Indians have more money to buy U.S. goods and services, he contends.
“They’re buying Dell computers over there,” he said. “The country’s GDP growth rate has been topping 10%. And outsourcing lets us grow.”
GKK recently won a contract to do a river walk in the city of Pune, which is a couple of hours away from Mumbai. Pune also is the base for GKK’s outsourced division.
The firm doesn’t plan to outsource to China or any other countries, Hunt said.
GKK expects its revenue to reach $20 million this year, up about 25% from last year, Hunt said. He said he expects hiring in OC to match that revenue growth.
Architectural Resource Consultants has had a starkly different time in India.
Last year, the small firm tried to take advantage of outsourcing by shifting some of its drafting work to New Delhi-based Advance Informatics.
“We tried it and weren’t really happy with the experience, so we no longer outsource to India,” said John Russo, owner of Architectural Resource Consultants. “We thought it would be a good idea at first, believing that it would allow us to have a more flexible workforce that could expand and contract quickly during busy times and lean times. We had issues with the quality of work. We weren’t happy with what they sent us, so we had to go through multiple iterations back and forth to get it right.”
Projects Delayed
Time differences created problems, according to Russo.
“We thought it would work great in theory with the time difference, but in reality we wound up with extra days,” he said. “We would miss points of communication because they would have a question and they wouldn’t be able to get the question answered. So we would lose a day. They would not deliver stuff when they said they would. You could communicate with e-mail great, as long as someone replies to your e-mail. But if you tried to call them on the phone you’d have to be there until 7 p.m. and they would have to be coming at 7 a.m.”
Russo said he had found the company by searching on the Web. He also said the problems he encountered outweighed any cost savings.
“I didn’t even really consider it a cost savings, because we ended spending a lot more of our time resolving the quality issues,” Russo said.
