"It's a way to expand the (global) talent pool ... to give customers the best value and contain costs. I think it's an inevitability."

Indeed, offshoring is something virtually all the Twin Cities' largest architecture firms already use, though just for illustration-type work. Ellerbe Becket, Durrant and the Cuningham Group, for example, all outsource either rendering or 3D modelling work to service providers in China.

The price is one-third to even a fifth the U.S. rate, the work is completed quickly and the finished product insures repeat business.

Yet the experience hasn't prompted any local firm so far to begin offshoring design or construction document production work for U.S. projects.
Why? Might that work follow too in time? Or do U.S. firms conclude from even limited experience that offshoring is only suitable for certain, simpler tasks? So far there's evidence of both.

"We actually use companies out of China for renderings," says Jon Buggy, managing principal of the Minneapolis office of Ellerbe Becket, with about 400 employees and $42 million in annual revenue one of the largest Twin Cities-based architecture firms. "It allows us to provide very high-quality renderings to customers very quickly and affordably."

Ellerbe also once looked at offshoring construction documentation production work, possibly to Egypt. Since document production accounts for roughly 40% of total fees, "that's an area some firms have looked into, to leverage lower wage costs," Buggy says.

"We test drove a couple of projects involving offshoring documentation (in the late 1990s-2001). We were fairly bullish about it."

But Buggy adds: "Ellerbe Becket is not doing that (now). We made a very clear decision not to," though he indicates the Ellerbe board keeps the issue on its radar screen.

The fundamental problem with offshoring production work, Buggy says, is the quality of work is inconsistent and often inferior, creating a financial risk and to the reputation of a U.S. firm certifying the work.

"There are differences in soils, in building materials, in building technologies and techniques, in building regulations," Buggy explains. "The better the team designing a building understands local means and materials, the better the value of the design documents."

"Only after wrestling with it and trying it did we understand where it doesn't work."

Buggy says offshoring documentation work is particularly unsuited to large, complex projects "with lots of detail and specific knowledge, like hospitals."
"It's very, very difficult to get that level of communication translated into drawings that can be used by American builders."

Conversely, though, Buggy believes it might be possible to offshore very repetitive design and document work.

"If we were doing McDonalds -- very prototypical, if you do one you can do 100 -- I might be talking very differently. Offshoring might work very well for that sort of work," Buggy allows.

Minneapolis-based Durrant outsources renderings and models to Chinese and Korean firms. "We've done this about 20 to 30 times," says office principal Francis Bulbulian.

"The cost (here) can vary from $10,000 to $20,000 for a big project, and it can be done in China for a quarter to a fifth that cost," he says
Over the past 12 years, all construction document production work for Durrant's many Asian projects has been done by its South Korean associated architects office. Durrant has worked on over 30 projects in South Korea since 1987, and projects in Vietnam and China more recently.

But Bulbulian says Durrant so far hasn't offshored any North American design and document work. "Even though we've been doing work back and forth, we haven't been tempted because the cost savings isn't sufficient" between the U.S. and South Korea.

Yet Bulbulian adds the firm was pressured while bidding recently for two projects in Asia to outsource work to a Chinese partner to win the business.
In one case, Durrant was approached by a prominent family in Qatar to design two 40-story towers. Presented with the cost estimate for the architectural services for the first design, Bulbulian says the client "said we must be more creative, and suggested contracting work out to a Chinese firm."
And to "keep our fees in line" while bidding to design a 5-star hotel in Hangzhou, 100 miles southwest of Shanghai, Bulbulian says Durrant felt compelled to consider subcontracting the document production work out to a local firm.
The Cuningham Group has also "tried offshoring to a very limited extent," says John Quiter, president of the firm with about $20 million in 2005 architectural fees and 200 employees.

"We offshored some 3D modelling to China, very successfully," Quiter says, adding "we may do it again: certainly the speed and prices are attractive."
But he declares, "If we're looking for quality, we don't offshore," explaining 3D work is produced domestically when circumstances necessitate a top-notch product.

Quiter says Cuningham has never offshored production work because it "doesn't fit our business model," which requires close and frequent client contact.
But he adds that's "not to say we never would," and explains the firm even looked into doing so for one project that never went ahead.
"We continue to explore the idea, and may do it some day," Quiter says. "There could be projects where it may be suitable."

One possibility is a project where "we do the design and a foreign firm does the production work." Quiter says that could work because the firm doing the actual construction documents must be licensed to do business in that country, as it is legally responsible for the work.

Bill Conway, co-founder of the Minneapolis firm Conway & Schulte, says offshoring is a "version of what firms have been doing for years: stratifying work."
Conway worked for years for Cesar Pelli & Associates, which regularly outsourced the drafting of construction documents.

"It's long been the practice in large firms on some projects," says Conway, who also teaches architecture at the University of Minnesota.

Nationwide one in nine U.S. architecture firms, or 11%, report trying offshoring, according to a 2004 survey by the American Institute of Architects. Another 14% reported seriously considering it.

In addition to China, India and the Philippines are home to a rapidly growing number of architectural service providers set up to serve clients in affluent Western nations.

Their main appeal is the project cost savings made possible by subcontracting work out to design and construction document production houses employing very competent architects and draftsmen paid a fraction of U.S. wage levels.
Starting salaries paid to architects and engineers working for offshore-oriented service providers range from 15,000 to 20,000 rupees per month (about $4,000-5,333 per year), according to Nishi Chandhok, the managing partner of Arcides, one such company in Delhi, India.

Experienced architects and engineers in India can make $14,000 to $18,000 a year working for an offshore service provider -- or three times more than working for a firm serving purely domestic clients.

Billing rates charged by Indian service providers vary according to type of work. For low-end work like tracing and drafting, Indian firms charge $6 per hour. For high-end design work, rates can go as high as $45 per hour.

But India's success in attracting so much business for its booming business process outsourcing or BPO industry is putting strong upward pressure on wages, rents and other business operating costs there, diverting some attention and business to the Philippines, which now offers lower service rates.

"The base salary rate for architects in India is currently rising at 8-11% per year, versus 3-4% in the U.S.," says Alan Baldwin, president of FreemanWhite, a big American architecture firm that has set up a major operation in India.

About the writer: Robin Elsham is writing a book about the rapid growth of the global business process outsourcing or BPO industry. He is a business/finance journalist who worked the past 16 years in Asia, including a recent two-year stint running corporate news coverage in India for Reuters. He can be contacted at ergastra@yahoo.com