Outlook for 2005 Whether we like it or not, globalization is here to stay. So we might as well take advantage of the benefits it offers. Recently in the December 27, 2004 issue, The Business Ledger newspaper posed the question, “What significant issue is likely to impact your industry in 2005?” Our response: Overseas outsourcing will become much more widely accepted as an aspect of international trade. In 2005 service sector outsourcing will become more common (though probably not as pervasive as outsourcing in manufacturing). Firms will use outsourcing to stay competitive and its use will increase among mid-sized and even smaller companies.

 With the inevitability of international trade in mind, we asked Mike Skarr, President of the second largest Chamber of Commerce in Illinois, to tell us what he is recommending to Chamber members. At the implementation end, we checked with Cassandra Keener of the International Trade Center (part of the Illinois Trade Office network) who daily helps suburban Chicago businesses with their international trade (both export and import) queries, to find out what she considered to be prerequisites to doing business internationally. For our final piece we took an in depth look at a hot and emerging trend in 2005 – engineering and architectural CAD outsourcing.

 As we speak to firms that are making the decision to outsource, a curious fact emerges. Firms often think that the decision to outsource is the hardest decision they make. We think this decision is perhaps the easiest. The hard part is dedicating existing staff resources to implement new processes that will accommodate outsourcing and build a relationship with the outsourcing partner. We believe putting a methodology in place that will promote clear communication, team effort, dedicated project management and upper management support goes a long way towards ensuring an on-budget, timely product delivery with the expected quality.

 What are you waiting for?  Contributed by Mike Skarr,  President and CEO, Naperville Area Chamber of Commerce. www.naperville.net.

 Do you have an e-mail address? If you do, you are an international business. It is that simple. Most businesses that I talk with never really think about that simple reality. Yet many of us communicate halfway around the world on a regular basis. So globalization is very local. And that explains why smart businesses in today’s “world theater of competition” are always examining the “international business option.” I cannot stress enough the importance of this very simple business plan ingredient – a thorough and objective review of implementing an international business option. You cannot achieve what you don’t plan for so you need to at least start with determining how that international business option might impact your business.

 Many small businesses automatically reject the notion of examining the international business option because of their size. But size is no longer the key driver - it is value. If you can add or gain increased value with an international business option, size doesn’t matter. You can’t tell the size, color, shape, gender or nationality of someone at the other end of an e-mail. The same is true of a business, so don’t let the size argument scare you off.

 The other misconception that I often encounter is a fear that a business owner has no resources for assistance. Once again, that just isn’t true. Most of the effective international business options I see flourishing are partnerships where two or more experienced partners help each other. Again, you won’t even get to this point if you haven’t explored an international business option. The world is full of brokers and agents who can easily act as a middleman in getting you started. State and local international business trade offices also have great resources to help – but only if you ask!

 The Naperville Area Chamber of Commerce’s International Business Council is a great place for you to start. You can meet businesses who have already crossed the international business bridge and are more than willing to share and help. Our February 2005 luncheon should also be on your calendar since Leslie Schweitzer, Senior Trade Advisor with the U.S. Chamber of Commerce will be speaking on the international business option. Our Committee is also planning a seminar on business outsourcing (a very hot national and international business topic) on April 14, 2005 as part of our annual Business Expo. So, come on. Jump into the “international” pool – the water is just right!

 Helping you succeed.  Contributed by Cassandra Keener,  Program Manager ITC, Business and Professional Institute, keener@cdnet.cod.edu.  The International Trade Center at the College of DuPage is a great resource center for the global minded business.

 With developments in technology as well as improved transportation and communication systems, conducting business abroad has become easier and faster than ever for small businesses.  While we continue to see an ever increasing number of small businesses jumping into the global arena we too see those retreating after declaring defeat. It begs to question then; what makes some companies find great success while others struggle? 

While doing business internationally offers great opportunity, it also requires a company to address many issues to make sure it is operating efficiently and profitably.  If this is not done before going global, the company will surely suffer and possibly fail at its efforts.  That is why before a company looks towards the horizon, it must create a business plan that considers many important aspects some of which the company may not have had to address while doing business domestically.  Language, Cultural Differences, Economic Development, Local Laws and Regulations, and Business Environment are just a few things that need to be discussed. 

 Support from upper management is essential and designating responsibilities is even more important.  This is a company wide commitment and without full support, the mission will surely fail. Market research is a great starting point followed by a discussion on how your business will be structured. Two important aspects to focus on would be operation and marketing. You should have a designated area for your foreign operations and know that you are going to be dealing in a different legal jurisdiction so be sure to have an international attorney as well as an accountant versed in international dealings available to you. If all goes as planned, you also will be facing increased sales so be prepared to vamp up your production and be prepared financially to support these increases.  As for marketing, language and culture will be your main challenges followed by the economics of the country you are selling into.  By first doing the market research, your answer to the economics of the market you are looking to sell into will be answered.  As for language and culture, you may have to be prepared to change packaging, literature, as well as possibly changing the name (brand) as it may be misunderstood by another culture.  Be sure to investigate all these possibilities before jumping in with both feet.

 If this seems to be more than your business is able to handle at this time, the internet is a tremendous tool you can use to reach the global market. Track your selling via the internet to obtain an insight as to what region will be a good beginning for your international dealings.  Keep focused, keep communicating and regularly review the impact of the strategic directives you have developed in pursuing the global market place.

Outsourcing CAD services is an emerging trend as companies see this to be a way to reduce costs. Contributed by Kumkum Dalal, Global Reach Consulting, Inc “Your Guide to Sourcing and Doing Business in India”.

 Outsourcing of Computer Aided Design/Drafting (CAD) services is an emerging trend among design professionals looking for ways to reduce the costs associated with production of contract documents.

Why are US design firms outsourcing?  The primary reason for outsourcing is financial. Overseas outsourcing provides advantages to large and small architecture firms alike.

• Firms can now reduce the high labor costs associated with people who do CAD work.
• Small firms are now able to take on the larger projects (in a cost effective way) that only a larger firm could take on just a few years ago.
• There is also the production time issue. As design and construction schedules become compressed due to client demand, preparation of design documents must speed up in order to deliver projects on time and within budget. Having access to reliable low cost helping hands give small and large firms an added competitive advantage.
• Finally, there is a trend towards on-line collaboration where the design firm, owner, general contractor, manufacturers and sub-contractors can all look over each other's shoulders electronically.....making economically-produced CAD drawings even more important.

Who is benefiting from this trend? Any firm currently using an in-house CAD system can benefit.  This would include architecture firms doing costly drafting work, civil engineering firms doing mass grading as part of land development projects and even mechanical engineering firms doing machine design.

Where are the service providers located and what do they do?  Some are located in the US, but an increasing number are in overseas locations such as Eastern Europe and India.  Indian firms are aggressively pursuing this market sector providing such tasks as

• Digitization of legacy graphics through raster to vector conversion of existing images and drawings
• Production of detailed working drawings from the designer’s schematics and design development drawings
• 3D visualization: modelling /rendering of civil/architectural drawings
• Customization of in-house architectural and engineering design detail libraries for use in preparation of working drawings

How does a US firm with in-house CAD operations explore outsourcing CAD work? We suggest the following low risk path:

• Start with a sample of work already done just to assess the service provider’s competence and strengths.
• If you are satisfied with the results of the sample project, continue with a small project to further assess quality, on-time delivery and competence.
• Continue with larger projects.

To get the maximum benefit with minimum risk, outsource work that is standardized and repetitive. Also, choose work that is low profile but has high production cost such as drafting and detailing.

General assessment: The next major trend in architectural and engineering design services outsourcing is some level of design automation using CAD.  CAD tasks are well suited to the model of outsourcing standardized and repetitive activities, associated with high headcount costs and low in intellectual property concerns. Engineering and architectural design firms are benefiting from outsourcing of CAD, 2D, 3D and CAE work. As CAD tools are generic, engineering firms and CAD managers will have to answer the question, “How do I improve my design efficiency and differentiate the services I provide to my clients?” As cost containment becomes an increasing concern for maintaining the competitive edge, outsourcing becomes a vital business strategy.