Tuesday, September 11, 2007

What is a 'US' firm ?

Interesting side=point in this article concerns the question, 'what is an American company' ? (It is AT LEAST one that pays taxes, or is supposed to have some tax bill depending on write-offs and loopholes, in the US) .

The article states:

Covansys, which was headquartered in the US but had some 7,000 of its 9,000 employees based in low-cost Indian centers, immediately doubled CSC's Indian headcount to 14,000.

If the vast majority of workers are not US-based for many corporations, as is becoming more common, are they still US-based companies ?

And , are there financial or tax incentives for a company to be headquartered in the US but have most of it's employees overseas ?

When and if these incentives cease-to-be, will these companies change their headquarters elsewhere, becoming 'foreign' companies ? What effect will this have on tax revenues in the US and the ability of the various levels of gov't to maintain budgets and services at the same levels?

CSC gets serious about offshore strategy

503 words
10 September 2007
09:48 am GMT
Datamonitor News and Comment
(c) 2007 Datamonitor plc. All rights reserved

IT services giant CSC has recently made moves aimed at boosting its offshore presence, the most notable being its $1.3bn acquisition of Covansys earlier this year.

Covansys, which was headquartered in the US but had some 7,000 of its 9,000 employees based in low-cost Indian centers, immediately doubled CSC's Indian headcount to 14,000. This put the company roughly on par with fellow outsourcer EDS in terms of Indian numbers, although still far behind rivals Accenture and IBM.

Last month, CSC announced a new business group called "world sourcing services" to oversee global delivery and expansion into new geographic markets. The company appointed Mary Jo Morris, a longtime CSC manager, to become president of the new unit.

Morris told Computer Business Review that the Covansys deal rounded out CSC's offshore strategy in several ways. First, Covansys had a well defined sales channel to take its Indian services to the market. "We had the capacity to compete with the top Indian competitors, we just needed the front end for sales," Morris said. "Covansys was a perfect fit. We got our direct market channel and doubled our capacity in India with a complement of services and location."

She said Covansys brought with it a strong background in applications development and maintenance, while CSC was not only strong in applications but also in legacy outsourcing engagements. "Covansys had more of an on-demand, project-based environment and they brought testing capabilities and some complementary technology that we didn't really have," said Morris. Plus, its industry focus coincided with CSC's, including financial services, technology and consumer goods, health care, and manufacturing.

JJ Foster, vice president and CTO of world sourcing services for CSC, said that in the applications market, CSC's offshore work started with basic outsourcing services. But over the last two or three years, the company has moved much more advanced work offshore, to the point where it now has high-level architects working in India. He said that Covansys, on the other hand, actually started out with onsite project work and then moved to offshore delivery. Now CSC's offshore portfolio is split evenly between project work and annuity work under longer contracts.

Like most big outsourcers, CSC is moving more of its work to offshore centers. "There's nothing we're not putting offshore if we can," Morris said. "Anything to do with applications, including systems integration work, and anything to do with remote infrastructure. Plus all types of BPO work, especially in financial services. Now Covansys brings us capacity in claims BPO."

But she said a good part of CSC's business simply isn't eligible for offshore delivery, referring to the company's substantial work in the federal, defense, and aerospace industries. "That takes us down to about half of the company's total revenue," she said. "Of that, about 30% is done offshore, and 80% of that amount is applications work."

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