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& DESIGN Home Page Architecture Brand Equity Auto Design Game Room SMALLBIZ Smart Answers Success Stories Today's Tip FINANCE Investing: Europe Annual Reports Bloomberg BW50 SCOREBOARDS Hot Growth Companies: 2008 Mutual Funds Info Tech 100 B-SCHOOLS Undergrad Programs Rankings & Profiles | | APRIL 25, 2003 KENTON'S CORNER By Christopher Kenton Grasping, Greedy, Unpatriotic? Not Me Readers branded me all those things and worse for hiring an offshore programmer. So here's an explanation, one straight from the heart
After speaking to a number of my critics, I found out why they were angry. Most were laid-off U.S. technology workers unable to find new jobs in the current economic environment. They lumped me together with the huge companies lopping off departments to make quarterly budget targets by cutting costs -- and they didn't pull any punches. A number of interesting discussions came up that cut to the heart of the issues facing our economy, and I think it's worthwhile to air some of those debates here. ON THE BRINK. Most of the angry letters accused me of displacing American workers. They're right. In the case of the project I outsourced to Argentina, the American worker I displaced is named Nik. He's worked for my company for more than four years and has been a phenomenal employee and a good friend. We were forced to lay him off when my company was decimated by the economy -- but not before I, and my my partners, went a year without pay so we could continue to cover his salary, medical benefits, and those of his co-workers. As a skilled programmer, Nik was making $80,000 a year -- but it cost my company $120,000 a year to pay his salary, benefits, taxes, and to keep him sitting at a desk with the equipment to do his job. That means he had to do $120,000 worth of billable work just to stay in his chair. With the flagging economy, his contribution to overhead -- down to about $50,000 at the end -- went underwater almost two years ago. That means our loss on just one employee was approaching $70,000 a year, and that was money out of our profits, our operating revenue, and, eventually, even out of the equity in our homes. However noble our notion of giving up our own salaries to sustain our employees might have been, it was a bad business decision. All it achieved was to postpone the inevitable layoffs and ignore the necessary adjustments while draining the resources we had to continue operating. In the end, we came to the brink of bankruptcy before making the radical changes needed to bring our company around. THE TURNING POINT. For me, reality hit home one day last October, when I was perched on the bed of a pickup truck unloading 15 years of our company's history at the local recycling depot. As part of our reorganization, we had to give up our beautiful high-rent offices to pare down expenses. I can't describe the feeling, but it would be something like taking the entire contents of your house to the dump. For me, it signaled for me a major shift, both in attitude and approach to business.
 Christopher Kenton is president of the marketing agency Cymbic and a director of Touchpoint Metrics. He can be reached at ckenton@cymbic.com Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | APRIL |
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