The Silent Revolution

ADC Telecommunications is remarkable for more than its dot-com era boom and bust. In 2000, the Eden Prairie–based company had 22,500 employees and sales of $3 billion. By 2003, it had a global work force of just 5,700 and sales had shriveled to less than $580 million.

There are signs of recovery. The maker of equipment for voice, video, and data networks now employs nearly 9,000 people and sales have rebounded. (But the company’s share price went down steeply this summer after a planned acquisition went sour, and ADC recently announced it would close two facilities and cut 225 jobs).

Along with the scale of its ups and downs, here’s what else is remarkable about ADC: It is one of the few local companies that talks openly about its decision to offshore not only manufacturing, but back-office operations.

Offshoring is 'the sort of thing if our clients knew we were interested in, we wouldn't have them as clients.'

In 2002, because ADC was going through a significant downturn, “the concept was, how can we take out costs and shift them to low-cost regions?” says Gokul Hemmady, the company’s chief financial officer. ADC set up a small finance unit in India that year, which has since grown. “Right now, I have about 25 to 30 percent of my global finance work force in India,” Hemmady says. The company has shifted five finance functions to Bangalore, including accounts payable and receivable for the Americas, expense reimbursement, and fixed-asset processing. In all, ADC has more than 300 employees in India, where it also does manufacturing. About 50 of those employees are in finance.

“As a $1.5 billion company, we have a lot of reporting requirements—standardized reports that come out daily, weekly, monthly, on our financials, bookings, revenue, on our profitability,” Hemmady explains. “We slice and dice it in different ways: revenue and profitability by customer, by region, by country. Much of that work is performed in Bangalore.”