Q&A: Want to Cut Labor Costs 50-75%? Move Your NOC to India
MSPmentor caught up recently with Dimitri Blondeel, senior director of PowerAssurance services at managed “Skype for Business” provider Unify Square, to discuss the Bellevue, Wash., firm’s thinking and experience in launching and operating an offshore Network Operations Center in tech-friendly Gurgaon, India, outside of New Delhi.
MSPM: Describe the process that led to the decision to set up the NOC offshore.
Dimitry Blondeel: When setting up our Smart Remote Managed Services Business (which we call PowerAssurance™) we decided that a central NOC would be the most optimized model versus a follow-the-sun model for many reasons. First, it provides consistent quality 24×7. Second, we wanted to avoid complicated and error-prone hand-off processes (we currently overlap shifts and there’s a one-hour overlap to facilitate smooth transition). Third, we wanted to work with dedicated service specialists and not with consultants who “masquerade” as NOC personnel providing support.
We decided to set the NOC offshore for many reasons:
- It is increasingly hard to find qualified Skype for Business (SfB) staff in the US or EMEA who have the proper amount of skills and experience;
- It is even harder to retain staff specializing in SfB in the US or EMEA;
- Having an NOC offshore gives us a competitive advantage through more cost-efficient labor;
- We like the mentality of the India workforce (hard working, dependable, smart);
- We found that the old “stereotype” of an off-shore workforce having poor and/or unintelligible English language skill sets could be easily offset by a more rigorous interview process.
We decided on India (and eventually, more specifically, Gurgaon – more on that later) for the reasons described above and because we had an existing professional relationship with the people who later became our local management team.
Because of the automation power of our PowerSuite™ software, which is the backbone of our PowerAssurance operations, we determined that we would be able to very effectively create a “SMART” remote managed service which lent itself quite well to an offshore orientation.
MSPM: Was there an existing NOC elsewhere that was closed down to set up the NOC in India?
DB: No, at the time this was a new line of business for Unify Square and we wanted to be aggressive and innovative by starting it out from Day One as a remote NOC from India.
MSPM: When did you set up that NOC?
DB: We started in a shared facility with a skeleton team in late 2012, and we had a fully operational and fully staffed NOC by the middle of 2013.
MSPM: Describe the process for setting up the NOC.
DB: First, we hired the local management team. With their help and our US operations team with roots in India, we found the following partners:
- Real estate consultant
- Accountant/fiscal/legal advisor
- Payroll agency
- Recruitment agency
We first moved into a business center facility that was customized for 24×7 operations and adequately secured. We hired our first five service engineers and acquired our first three PowerAssurance customers in 2013. At the time, we already had one of the largest and most successful global Skype for Business consulting businesses. We grew our customer base and increased smart remote managed services headcount over the next two years (to 24 Service Engineers), while doubling the surface rented in the business center to accommodate for the growth. Around September 2015, we decided to rent our own facility and outfit it to meet our needs. We worked with our local real estate consultant to deal with the owner of the building and close the leasing contract. We selected an outfitting company that did an excellent job designing the place and project managing the contractors (we personally selected the vendor by talking to all of them in person). Then we moved in. We are now staffed at 50 plus people in our NOC, which is designed to house 100.
MSPM: How did you identify and engage the real estate?
DB: We identified the campus where we wanted to be through many visits to the area over the years. We wanted an attractive address that appealed both to (prospective) customers and employees, so we chose the most prestigious campus in Northern India (DLF Cyber City in Gurgaon, located just south of downtown New Delhi). This campus is also used by most of the other recognizable high-tech companies in the world – Dell, IBM, Accenture, etc. We worked with our real estate agent (trusted advisor through existing personal relationship with our leadership team) to secure the deal.
MSPM: How did you go about finding, hiring and training the workforce?
DB: Our initial team was hired through personal recommendation by our local management team. We have a very attractive referral bonus system in place and many of the team members were introduced to us by their future colleagues. We work with a very capable recruitment agency.
MSPM: How did you go about equipping the facility?
DB: Furniture, etc. was handled by the outfitter. IT Equipment and installation was handled by our own internal IT. We usually buy our equipment locally, quite frequently from Dell.
MSPM: Describe the nature of the work being done there?
DB: Our teams in India manage the newest version of our smart remote managed service offering for Skype for Business, PowerAssurance. Different from traditional managed services, which are manual and reactive, PowerAssurance combines the power of human expertise with our PowerSuite software automation to proactively audit the total health and system availability of Skype for Business. The result is a significant reduction in costs associated with managing Skype for Business. PowerAssurance reduces required headcount to manage Skype for Business by an average of 88 percent and increases efficiency scores by at least 30 percent.
MSPM: How does communication work between the domestic and the remote locations? What is the frequency and what are the circumstances of phone calls, video conferences and physical travel?
DB: I travel to India four times per year. The service delivery personnel who are based in the US and EMEA as key project manager/liason between customers, and our NOC travel one to two times per month. India NOC personnel fly from India to the US for advanced PowerSuite trainings and as required.
We utilize our SfB technology to have multiple conference calls per day between the service delivery team and India. We also have a daily standing one on one SfB call with the local India manager of the NOC operation.
MSPM: Can you describe the tariffs, taxes or other similar costs associated with being a foreign entity trading in India.
DB: We do not invoice from India – our NOC is a pure cost center and depends on internal transfers. Internal transfers are “cost+” – we take the entire cost of the India operation (salaries, real estate, etc.) and add a cost percentage. Indian tax authorities tax us on the resulting “gross profit.” This is a very common practice. The cost for business licenses, etc. are negligible. We did spend some money on consultants when we set up the local business.
MSPM: Please characterize the CAPEX and OPEX savings of the NOC in India, as compared to a similar operation in the US. As part of this, can you compare wages?
DB: CAPEX was pretty similar to what we would expect in the US. Real estate is on par with a lower cost location in the US, but that is only because of the prime location we have chosen. Wages are somewhere between 25-50 percent of US wages.
MSPM: Is that NOC operation adequate to meet your near-term needs or do you anticipate outgrowing it in the future?
DB: We anticipate outgrowing our current NOC in the next 12 months, at which time we will likely scale out to a secondary NOC in Southern India in order to diversify and capture another rich labor market of SfB expertise.
MSPM: To your knowledge, how pervasive are MSPs with NOCs or SOCs in India?
DB: The abundance of cost-effective talent overseas will drive more and more MSPs to offshore in India. We could not have set up our business to have become so quickly cost effective and reputable elsewhere, for lack of available talent and/or talent that was too expensive to procure in the US or EMEA. We definitely view our set-up in India as a huge competitive advantage.
MSPM: Is there anything else noteworthy about your efforts in India from which you think the broader MSP community might benefit?
DB: In spite of how easy my answers to these questions perhaps make it sound, it is not easy to do business in India. Although the government is making real efforts, it is still difficult to transfer money to India to do the necessary investments. Additionally, there is still a lot of corruption in local agencies, travel from the US to India is hard (Visas are regularly refused for no clear reason, the flights are very long, poverty may shock many travelers, and the climate is rough). There is a different business culture to deal with, and you have to be ready for that.
CORRECTION: An earlier version of this story misidentified the Unify Square executive who responded to written questions from MSPmentor.
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