Startup tech company will invest $15M to expand in Ann Arbor area
A Silicon Valley-based information technology services company plans to hire more than 1,000 employees at a new operation in the Ann Arbor region that - when fully staffed - would be the largest IT-related company in the area.
The Fremont, Calif.-based Systems In Motion plans to set up an IT services “delivery center” in Pittsfield Township. The firm is a startup, but its leaders have experience in leading massive IT firms in India.
Ann Arbor beat out Austin, Texas, and Columbus, Ohio, to land the facility, which will employ services providers in infrastructure support, testing, network monitoring and software development. Local officials are billing the announcement as "in-shoring" of jobs - the reverse of off-shoring, or relocating to another country.
“It’s management of systems, not taking phone calls,” said chief marketing officer Debashish Sinha, who previously led marketing at $1.8 billion Indian IT services firm HCL Technologies. “It does require resources who are more skilled in technology in various new and legacy technologies.”
Systems in Motion, backed by $5 million in venture capital funding, plans to hire 1,085 workers within five years, according to the Michigan Economic Development Corp., which is providing a tax credit.
The company expects to invest $15 million in the expansion. Officials would not reveal the location of the company’s future office in Pittsfield Township.Â
The announcement marks the biggest economic
development victory for the region since General Electric announced in
June it would establish a $100 million engineering center in Van Buren Township.
The company’s decision to locate the IT services center in Michigan is a reflection of its confidence that the state’s 15.2 percent unemployment rate would produce plenty of applicants.
The firm also collaborated with local officials to secure $1.5 million in workforce development funding to train future workers at Eastern Michigan University. EMU and the Washtenaw County operation of Michigan Works! are collaborating to provide classes.
“It’s pretty well known that, over the last year or two, things aren’t working quite as well as everybody anticipated in India with offshoring these software development jobs,” said David Mielke, dean of EMU’s College of Business.
“It’s great to see that the jobs are coming back," he said. "It’s an innovative program that they can take good people and provide the training to get them up to speed to do the kind of software development that they need.”
Sinha acknowledged that India-based IT services providers would maintain a cost advantage over operations in the U.S.
“The service factory model that we’re building will make it such that we are at least cost comparable,” he said. “We might not be directly competitive but we will definitely be comparable.”
Systems in Motion is targeting a variety of sectors for its services, including health care, government, aerospace, energy and defense.
The firm’s chief executive, Neeraj Gupta, was previously an executive with a $700 million India-based IT services company, according to the company.
“The leadership of Systems In Motion has been in this business for well over 20 years,” Sinha said. “We’ve done this several times before. We’ve grown businesses from zero to a thousand people in two or three years. We’re very well-funded and our services are actually very in demand.”
Elizabeth Parkinson, director of marketing and public relations for Ann Arbor SPARK, said Systems In Motion recognized that it could quickly train and hire talented workers in the Ann Arbor region.
“What we’re hearing from Systems In Motion is that it’s the level and quality of talent and it’s the superior combination of available educational institutions,” Parkinson said. “They know that there’s good quality folks and students that are going to be looking for jobs. (And) they are very well aware of the lower cost of living in a state like Michigan compared to a state like California or Texas.”
Mielke said Michigan has a chance to help create a new business model for IT services that makes financial sense in the U.S.
“I would like to be on the forefront of recapturing the markets that we lost,” Mielke said. “This is a demonstration that, yes, Michigan can be competitive.”
Contact AnnArbor.com’s Nathan Bomey at nathanbomey@annarbor.com or (734) 623-2587 or follow him on Twitter.
Comments
abt
Fri, Sep 25, 2009 : 4:12 p.m.
Wow sounds good. This is exactly what our state needed glad someone is taking a initiative. Now we can finally take our jobs back from India and China
Alan Benard
Wed, Sep 23, 2009 : 10:46 p.m.
Good work, Larry, not taking the bait. Can we have a daily taxes thread for the five posters who must relate every single story thread to the very onerous taxation in Ann Arbor?
InsideTheHall
Wed, Sep 23, 2009 : 6:14 p.m.
Larry K our County Clerk is skeptical. Well Larry many of us are skeptical of you that you have your PT Barnum hat on and selling us a new tax hike for human services. This is right out of the NEA playbook of threatening to cut band and sports to pass a school millage. Sorry Larry, that will not sell in Peoria nor Washtenaw County. Cut the budget pal.
bunnyabbot
Tue, Sep 22, 2009 : 11:42 p.m.
I'm glad to see that Debashish Sinha responded with a post so quickly, all I can say is hurry up, people want to work and I want them to buy stuff before I have to close up shop :(
Debashish Sinha
Tue, Sep 22, 2009 : 10:11 p.m.
Folks - read the comments to our news release with great interest. Thanks for the feedback. Please keep it coming. Let me clarify a couple of things about Systems In Motion and respond specifically to a few individual comments. You can also visit us at www.systemsinmotion.com for more information. 1. I appreciate the skepticism about our ability to actually generate a 1000 jobs in Ann Arbor over the next 5 years. We've all seen companies over promise and under deliver. But, I'm confident that we'll live up to our commitment, and I think the continued support of folks from the Greater Detroit Area will go a long way to make that happen. 2. It's important to understand who we are, and what we're trying to achieve here. The leadership of Systems In Motion comes from a deep background in Global IT Services. In fact, Neeraj, Mike and I have each spent decades in the global IT environment, so it's not surprising to see people assume that we're either an offshore IT shop, or somehow involved in setting up offshore capabilities. We're not. Systems In Motion's executive team, after spending decades involved in global IT services, and having held executive leadership positions in the largest offshore service companies, has developed a business model that takes the best practices of offshore IT services delivery, and implements it in college towns in the US, thereby creating a fundamentally more efficient model for US domestic IT services that can compete globally. There's no 'offshore' component to our business. We're building a US based globally competitive IT services company, and looking forward to hiring hard working, fire-in-the-belly, A2 folks to help us get there. Cheers all. Debashish Sinha Chief Marketing Officer Systems In Motion
Steve Feinman
Tue, Sep 22, 2009 : 6:45 p.m.
When the leases are signed and the investment is made than applause is due not before. And the tax credit applies before the jobs actually happen. Google was going to hire how many?
Moose
Tue, Sep 22, 2009 : 6:07 p.m.
Other than the Pfizer property, where in AnnArbor, much less downtown is there enough space for a business that seeks to employ 1000 people? Get real. Downtown is a restaurant and entertainment district not an R&D district. They're moving to Pittsfield because of the space to build a new building. Taxes are rising quickly in the townships. Indeed this belies many of the reasons for more density downtown. Who's going to live downtown and commute 20 minutes to work in the townships? Cheaper housing will follow the business in the townships. they'll come downtown to eat, drink and be merry.
Ben
Tue, Sep 22, 2009 : 3:49 p.m.
I agree with Macabre Sunset that it's significant that the business will be in Pittsfield Twp. Though this is great news for the area, it would be really great to see more startups in downtown A2.
CynicA2
Tue, Sep 22, 2009 : 3:39 p.m.
Yeah, well... it sounds nice - but, as others have noted - we've seen all this before with others who've over-promised and under-delivered. Also, unless things in Texas have changed radically, I doubt there are any cities with a higher cost of living than Ann Arbor in the Lone Star State. I will believe a thousand new jobs when I see them. I wonder how many locals they will actually hire, as opposed to shipping new workers in from elsewhere (like India, for instance.)?!
bhall
Tue, Sep 22, 2009 : 11:44 a.m.
Good news, but before we get hysterical, it's important to note that companies seem to inflate their job creation potential to obtain tax incentives. Remember Google's pledge to create 1,000 jobs in Ann Arbor. How's that going?
Larry Kestenbaum
Tue, Sep 22, 2009 : 11:17 a.m.
Oops -- should have checked out those links. I see the Reuters story gives the conversion: revenue of US $ 1.8 billion (Rs. 7083 crores). 7083 crores of rupees equals 70.83 billion rupees equals $1.8 billion. Okay, I'm satisfied now.
Macabre Sunset
Tue, Sep 22, 2009 : 11:13 a.m.
Great news. But notice how they're locating outside of city limits. Ann Arbor's aggressive tax policies and nutty attitudes toward new business have made those township lines significant barriers. Definitely related to the recent story showing all of Ann Arbor's most traveled intersections lie on the roads headed toward the townships' business and retail centers.
Larry Kestenbaum
Tue, Sep 22, 2009 : 11:11 a.m.
I'm skeptical about the references to billions of dollars. U.S. reporters often misread large numbers from sources in India. That part of the world (including India, Pakistan, and some other countries) uses a different system for expressing large numbers, and the comma separators go in different places. One lakh is equal to one hundred thousand; one crore is ten million. Without confirmation, I don't trust these numbers to have been converted properly.
aareader
Tue, Sep 22, 2009 : 10:42 a.m.
Great to read about this good news
jeremy
Tue, Sep 22, 2009 : 10:30 a.m.
probably the only time I am not disappointed that columbus lost to ann arbor in something.....lord does this community need more jobs like this