Washington Post reporter Ellen McCarthy hosted BearingPoint CEO Rand Blazer for a discussion of the state of the Washington region's technology sector.
Read the related article: "Tech Sector Shows a Pulse" (Post, March 15).
Rand Blazer, CEO of McLean, Va.-based BearingPoint Inc.
(Courtesy BearingPoint)
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McLean, Va.-based BearingPoint is one of the world's largest consulting and systems integration firms. It was formerly the consulting arm of the "Big Five" accounting firm KPMG. Rand Blazer started working for KPMG in 1977. Under his leadership, BearingPoint has grown through a series of targeted acquisitions. The company boasts a 98 percent retention rate for top clients.
A transcript is below:
Editor's Note: Washingtonpost.com moderators retain editorial control over Live Online discussions and choose the most relevant questions for guests and hosts; guests and hosts can decline to answer questions.
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Ellen McCarthy:
Welcome, thanks for taking time to talk with us about the local tech economy today. The last few years have been tough for a lot of people and companies in our area. In some pockets it seems dramatically improved, others still seem to be struggling. We'd love to hear your stories, thoughts and questions about what's happening out there....
Rand Blazer has a great view of the local and national landscape in technology. Rand, what do you think is the biggest catalyst for commercial tech spending today?
Rand Blazer: There are several. One, of course, is interest rates, and for the foreseeable future it appears as though they will remain where they are at least through the election. There's no way to overestimate the effect that has on business spending. Another, less noticeable influence is what I call the compliance issues. Companies have to be in compliance with a host of new requirements as a result of Sarbanes-Oxley, the Patriot Act and other areas as a result of 9/11 and the corporate governance issues. To the extent that those new rules require systems and software to ensure compliance, that also acts as a catalyst. Finally, the rebound in corporate profits will allow many companies to spend on initiatives such as tech spending when that spending has an ROI component to it.
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Manassas, Va.:
Eighteen months ago, Northern Virginians soundly rejected a tax plan aimed at improving the region's critical transportation infrastructure. Last year, a move to extend Metro to Dulles Airport was derailed (pun intended) by some of the local jurisdictions through which the rail route would pass.
Has the voters' unwillingness to deal with this very important issue -- transportation -- hurt the economy in general and the tech sector specifically?
Rand Blazer: In the short term, the economy in this region is performing relatively well, and the tech sector in this region seems to also be performing better, paced by government contractors, biomedical firms, and selected other companies that are on the move. With this in mind, it is hard to think that the transportation issues are hurting the local economy. Clearly, traffic is a nuisance factor to all of us who live here, and long-term there have to be solutions, but a direct negative impact to the regional economy today -- I just don't see it.
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Dulles, Va.:
What is your view of the outsourcing issue? In today's article, it says Enterworks has sent a sizeable number of jobs overseas. As a local tech worker, that makes me fear a bit for my job.
Rand Blazer: There's no doubt an impact from offshore companies performing work for U.S. companies with their offshore resources and centers. Generally, I believe there is about 10 percent of a company's tech spending that could go offshore. I think the percent of spending that has already moved offshore is less than that number now, so more could come. Those of us in the industry need to stay focused on the value-add from our services to our clients, our productivity and our costs.
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Alexandria, Va.:
With local firms' reliance on U.S. Government contracts for revenue increasing every day, do you feel that the region is setting up for a huge crash when Government tech spending slows?
Rand Blazer: I think you raise a good question and one that CEOs of tech firms and government contractors have to continually assess. Those companies involved in the commercial sector for the past two years have felt the pain of the strong growth in the late '90s and the downturn more recently. Government spending will not always be up. Having said that, what we might see is less growth in government tech spending as opposed to declining spending such as we saw in the commercial sectors.
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Vienna, VA:
With significant Outsourcing happening in the tech sector, What is your companies approach to get into markets like India, China, Russia and other countries and compete with the companies their on a country/regional/international market approach?
Rand Blazer: At BearingPoint, we believe in an "Anyshore" capability to serve our clients. Anyshore implies that different offshore areas will have different strengths, which we can leverage for our clients. India clearly has strengths in software development. China has strengths in software development and price. Eastern Europe has strengths in certain functional areas like HR, which can be leveraged. Companies like ours need to recognize these relative strengths and take advantage of them for our clients.
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Hyattsville, Md.:
There is continued concern/interest in information warfare and biological attacks. How do you expect the two to affect the IT sector in the short-term/long-term?
Rand Blazer: Let's put this question into the context of Homeland Security and the need to link data and information across multiple areas to achieve an end. The need for IT to correlate data across multiple domains - to identify threats, trends, to isolate the magnitude of issues or incidents and/or to use information to "triangulate" onto a solution - is critical to our security. We need to build and connect data systems with this in mind. We need to think through the scenarios where an information response may be required, and then make sure we can act quickly to implement the use of IT. I expect our work here is just beginning and will go on for a long time. The key is to spend the money on the highest priority areas and get real results with each spend.
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Arlington, Va.:
Does Northern Virginia's lack of a major research university hurt its ability to lure new employers to the area? What, if anything, can the state do to boost George Mason University in this area?
Rand Blazer: I like your question. I think there is a long-term impact on the region from not having a major research university in the area. We do have a number of top-flight schools generating a workforce that is skilled in the management sciences and law. This has certainly helped the region and provided a base of talent for companies locating here. Having a research university in chip technology, for example, would impact the area too. I think the leaders of our universities have to think through and evaluate these possibilities. Business and government leaders need to respond when asked. George Mason could certainly play a role.
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Ellen McCarthy:
Hey Rand, How does the tech economy feel different to you than it did a year ago? Two years ago? Any predictions for what we'll be seeing a year from now?
Rand Blazer: Ellen, it certainly feels better today than it did a year or two ago. But it's steady as we go. I think your piece today did a good job of re-capping the mood. One thing for sure: clients, investors and employees are looking for the real deal. They are smarter and more discerning than before, and in general, the marketplace is more sophisticated and deliberate in their decisions. All of this is good, not bad.
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Ellen McCarthy:
Thanks for chatting today Rand. And thanks to you all for the good questions. Please e-mail me with tips and stories and gossip from the front lines: mccarthye@washpost.com.
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