IRELAND'S TECHNOLOGY sector should reposition itself as a location providing "near-shore" services to European companies that do not want to outsource to India or China.
Jim Champy, a best-selling author on management and outsourcing in particular, who is also chairman of consulting with US IT services firm Perot Systems, made his comments in Dublin yesterday.
But Champy is not one for grand strategies at a country level, or a believer that business strategy should come from government.
"It's about what a group of entrepreneurial companies are doing," says Champy. "The country provides the environment and education resources to support the businesses."
Given Ireland's strength in the technology sector, he suggests there is a massive opportunity for Irish service providers to win business in Europe.
He says that much of this work is going to Romania, but by focusing on higher value services such as architecture, design and engineering, Irish firms can win business over locations whose main advantage is the availability of low-cost programmers.
"In a recession, companies are not going to want to own all of their own engineering and design capabilities," says Champy. "Because those services are central to the survival of their business, they want to give them to someone they can trust. This is an opportunity not just in IT, but broader than that."
He admits that both outsourcing and near-shoring are "unfortunate" terms that can lead to emotive reactions from staff.
"If you are growing your business, outsourcing doesn't have to mean you are cutting local jobs," says Champy.
"You can still add locally while you add offshore."
Champy speaks here today to clients of Original Solutions, the Irish professional IT services firm, which Perot Systems acquired last May for an undisclosed sum. He says his message to them will be that it is a great time to invest and innovate.
"Don't adopt a bunker mentality - you can't shrink yourself to greatness," says Champy. "You will be forced to become more lean, but that can be a good thing. The companies that come out of this will be those who have changed their business model."
He says he recently received a phone call from a client who said "the bottom has fallen out of my business". His response would be to cut all lines of business that weren't making money - a strategy that Champy proposes as a way to fund investment in technology and innovation.
Champy has some knowledge of the Irish market. Perot Systems has long been a supplier to Bank of Ireland, which extended to an ill-fated joint venture in the late 1990s. He's also on the board of Analog Devices - the semi-conductor firm that has a significant operation in Limerick and is a major recruiter of graduates from Limerick's colleges.
Although Perot had a number of false starts growing its business outside the US, he believes the acquisition approach is the best way to crack local markets.
"You need to have local talent who understand the local market," he says. "Ireland is potentially a great base to provide services into the UK from."
Champy also finds time to write management books - Reengineering the Corporation, the book he wrote with Michael Hammer in the early 1990s, went on to sell more than three million copies.
His latest, Outsmart!, provides a series of case studies, many from the technology and internet world, of how "smart" businesses have managed to grow faster than their competitors.
