The mission of Going Global is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.
CHICAGO – Overseeing all operations of the organization, David Weinstein is president of the Chicagoland Entrepreneurial Center. Kapil Chaudhary is a director with the Chicagoland Entrepreneurial Center.
In part two of a two-part Q&A, ePrairie international expert Michael Muth sat down with Weinstein and Chaudhary to discuss the CEC’s international experience as well as local programs to assist companies in going international.
Michael Muth: I understand you made a trip to Russia recently. How did that trip come about?
Chicagoland Entrepreneurial Center: I was blown away there and met with four prospects. I went for two reasons. I try to go out of the country every year with friends from college. When we were evaluating cities, I realized we could do some business in St. Petersburg, which is the largest outsourcing destination in eastern Europe.
They control the Swedish rim. It’s known as the hot spot for all of Scandanavia.
MM commentary: There are other offshoring destinations in addition to St. Petersburg which merit consideration for outsourcing in Eastern Europe, such as Moscow & Kiev, Ukraine (see prior Going Global interviews with Terry Howerton of FastRoot).
MM: What did you learn as a result of making that trip?
CEC: In Russia, the average age of the developers is 28 and 50 percent are women and 50 percent have their doctorates. They do front-end, client-facing applications. There are many people coming out of aerospace and defense.
I was blown away in Russia. I met with four companies. I watched their methodologies. They’re taking old weapons facilities and developing them into software hotels. They’re getting traction. Their greatest challenge is getting access to our markets.
MM commentary: There are advantages and disadvantages of outsourcing to each location. Each outsourcing decision will have to be evaluated on its own merits.
MM: How can you use what you learned there?
CEC: Our clients can benefit from the relationships I developed over there.
MM: Did you develop any relationships there that will be useful for the CEC?
CEC: We have four companies in Russia. We’ve had conference calls. We’ll make some introductions for our clients.
MM: How do you and will you address the diverse technology needs of your varied client base?
CEC: Our connections in Russia focus on front-end, client-facing applications like CRM and EAI (specifically around wireless). They were further upstream. One is strictly focused on back-office solutions like in India and one was a pure .NET shop. I found some specialties.
MM commentary: If you have application development needs in these areas, you can contact the CEC to determine if these resources are beneficial to you.
MM: How should and do local entrepreneurs participate?
CEC: Contact Kapil Chaudhary.
MM: Under which program does and will this fall?
CEC: Capacity building, which will appear on our redesigned Web site. It will be unveiled in the next few months.
MM: Will you be offering or do you offer consulting and experts for free in this area?
MM: Do you and will you be seeking partners and sponsors for this program? If so, which ones?
CEC: Like our other programs, constituents of emerging companies (such as accounting firms, law firms and other service providers to small businesses). Chicago-based global companies are also potential sponsors. We’ll also be working with the international trade offices, world trade centers, the Chicago Council on Foreign Relations, etc.
MM commentary: If you work for an emerging company and are interested in exploring international opportunities for your company either on the sourcing or distribution sides, it would be a good investment of your time to get involved directly with these organizations in addition to letting the CEC do it for you.
MM: Are any EC grants available for these programs?
CEC: No. Those grants won’t fit for these programs.
MM: When was or will this program be up and running?
CEC: The capacity on our side is there now. We’ll market this more aggressively in the second quarter if we can get demand verified.
MM: How many clients have come to you asking for international assistance in the last year?
CEC: I’d say about 10.
CEC: We do not feel comfortable divulging the names of our clients.
MM: What percentage of your clients has the potential to benefit from internationalization?
CEC: We think about 50 percent. We’ll also provide access to foreign markets. We’re figuring out how to make international connections.
MM commentary: The thing is, this 50 percent is a very nebulous figure because there could be a large percentage that are affected without even realizing it. While even more could benefit by being proactive, I’d be happily surprised if 50 percent will take advantage.
MM: Do you have any international success stories you can relate?
CEC: There are two companies we are working with – Maddie Powers and Neuros – which are both great examples. Neuros is a developer of digital media players and Maddie Powers is a retailer of purses and accessories. Neuros manufacturers very sophisticated products offshore. That’s a core competency of their business.
Both of these clients take advantage of outsourcing their entire product development to China. We’ve watched and learned from these two companies. One of the things they taught us was how to set up those relationships. We’re learning the pieces of the puzzle. What is the first step? A lot of it has to do with finding the right brokers that can help you.
MM: How would you assess their resources available to “go international?”
CEC: If a company is limping locally, I’d never recommend going international to solve those problems. We always suggest getting your home market in order first. If a company is experiencing steady growth and is efficient, then they’re in good shape. This is not one size fits all.
MM commentary: “Going International” can be somewhat resource intensive in terms of time, thought and dollars. It’s usually a long-term strategic decision. There are no quick and easy solutions. Though cheap phone service, airfare and e-mail have made the ability to make these connections much faster, it still takes multiples of what it takes to do the same domestically.
MM: Have you studied international business?
CEC: Weinstein studied at Kellogg, which has an international curriculum, and Chaudhary studied at the London School of Economics and has lived in India.
MM commentary: The London School of Economics is one of the great international business schools in the world and now has a presence in India.
MM: What’s your international experience?
CEC: Weinstein has made about 20 international trips and Chaudhary has made between 15 and 20 trips.
MM commentary: The principals of some of the outsourcing firms mentioned above have far more experience in the country (in some cases having lived and worked there) and thus should be better resources in those areas.
MM: How have you worked with the state of Illinois, the U.S. Department of Commerce and World Business Chicago?
CEC: We have established relationships with them.
MM: What’s your opinion of Chicago as an international business city?
CEC: It’s a great international city. We have such a huge advantage because of O’Hare being located here. It continues Chicago’s history as a transportation hub and many of the city’s major corporations are multi-national companies.
MM commentary: Given O’Hare’s on-time arrival rate, I’m not sure it is always such an advantage for us.
Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at email@example.com.
Click here for Muth’s full biography.
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