Wednesday, July 20, 2005

Innovative in-house outsourcing

I’ve always liked Swedish Global IP Sound. I wrote an article about them when I worked at the SF Chronicle. It’s a spin-off from Ericsson Research that develops embedded voice processing solutions for real-time communications on packet networks specifically for PC or Pocket PC applications. They just recently reported that they have licensed their VoiceEngine package to Microsoft’s MSN service to Microsoft improve VoIP functionality in MSN Messenger and MS real-time messaging and collaboration tools. Microsoft will license Global IP Sound’s Acoustic Echo Cancellation and Auto Gain Control software to improve real-time collaboration within Microsoft Office applications. Congrats!

Global IP Sound have organized the company a very simple, but in these off-shoring/outsourcing days interesting form. Research and Development is based in Stockholm, and sales and marketing in San Francisco. It's a sort of in-house outsourcing to put development where it’s cheap and sales where the market is, but within the company. (I know the big ones always have done this, but this is a 25 people company).

In general salaries for experienced high-tech personnel in the Bay Area are between twice and three times as high as in Sweden. And not only are the US salaries much higher. One can also note that the pay differentials are much higher in the US salaries. The Swedish pay differential is virtually insignificant. Bay Area today is struggling with high labor costs, very high and increasing costs for real estate and very high insurance costs. Even if the US basic taxes are low compared to Sweden, the total labor costs in Sweden, social charges and taxes included, are much lower, especially for engineers.


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