Tata Consultancy Services America, says the software-development company opened a Missoula branch because it considers Missoula an excellent place to do business.

Missoula’s educated, diverse labor market drove an international software company to take a chance on opening a branch here

By the Missoulian news staff

Tata Consultancy Services http://www.tcs.com/ is a western Montana oddball. A globally distributed information technology (IT) consultancy and software-development firm based in India, TCS runs offices in 50 countries and rakes in more than a billion dollars in annual revenues. The company ended up with a Missoula branch after it purchased Apollo Innovative Systems, a local software development firm formerly associated with Combined Benefits Insurance Company and Blue Cross Blue Shield of Montana.

John Riley, the founder of Apollo Innovative Systems, is now a TCS America vice president. Riley’s local division of the company, which employs about 30 people, develops software that aims to automate billing, claims, and regulatory compliance for insurance companies. With offices located on Palmer Street, between Reserve and Brooks Street, TCS finds itself comfortably situated amidst a cluster of insurance, health care management and software firms, including Western States Insurance, Blue Cross Blue Shield of Montana, APS Healthcare, and Logisys Systems, Inc.

Missoulian reporter Joe Nickell spoke with Riley about the ups and downs of doing business in western Montana, and the real-world effects of working within a cluster of similarly focused businesses.

Missoulian: First things first – why did you pick Missoula to headquarter Apollo Innovative Systems?

John Riley: I was involved with Western States Insurance for several years prior, and we became affiliated with Blue Cross Blue Shield of Montana. I had also started a small insurance company prior to that which worked out very well. So I was already here and I knew the local market.

Missoulian: TCS seems like an unlikely company to end up with a Missoula software-development office. How did that come about?

Riley: In the most basic sense, they liked our application and our business model and expertise here; and they were looking for a way to get into the market (of insurance industry business-process software). They felt it made good sense to leave everything in place here. We have a great quality of life here; Forbes Magazine recently rated us the 11th best small city to do business in. There’s a great work ethic here, good labor quality, Missoula’s an outstanding community. We’ve got some great technical expertise among the local labor pool, and a business school that’s outstanding. We also do a lot of IT development work, and both the University of Montana, Montana State University, and Montana Tech have great IT and computer science programs. So we’re really fortunate to have all those resources here.

Missoulian: Here in Missoula, TCS is located in a cluster with other insurance-related companies, as well as one of the biggest software development firms in the state. The governor’s office has really been pushing this idea of identifying and supporting business clusters in Montana. Do you find that geographical proximity to other businesses in your general field has something to do with your ability to succeed in your market?

Riley: Clearly, having educated and quality and experienced insurance people in the local labor pool is very important to us. Being able to tap into the computer science expertise out of the universities has proven more important to us (than proximity to other software firms).

Missoulian: Have you been able to completely fill your staff from the local labor pool – or, at least, do you believe you could do so?

Riley: We think so. We adhere to very high quality control standards, which are driven and developed by the Software Engineering Institute. There aren’t many organizations in the world, maybe 50 or 60, that have the kind of quality-control certification that we have. So we can’t suddenly get somebody straight out of a curriculum or another software company and expect them to have the same mindset or additional training that our existing employees possess. So we’ll always probably augment our staff from outside the state and have some of our people going over to India for additional training; or bring some of them (TCS employees from India) here to Missoula.

Missoulian: Obviously there are plenty of things you can boast of, when you interview prospective employees and try to coax them to come here to Missoula. Are there any aspects of Missoula that you feel a bit hesitant to tell people when they’re considering coming here?

Riley: Housing certainly isn’t cheap in Missoula. It’s a very difficult issue to address, but I would say that’s one of the few areas from an employee standpoint. From a business standpoint it’s different issues that we have to deal with on a day-to-day basis.

Missoulian: Such as?

Riley: From an impediment standpoint, we travel a lot, and transportation is probably the number one issue we have to deal with. You don’t have access to major airlines and hubs that’ll take you cross-country, so we have to deal with not only the additional travel because we’re not located next door to our clients, but also the cost of travel is extremely high out of Missoula. I think the other issue might be the communication issue with regards to the adequate pipelines and backups that we’ve got. Those tend to take a long time to get installed when we need more capacity.

Missoulian: For your business and for the local software and insurance industries, would it be good for everybody if the cluster grew?

Riley: Absolutely. The size and scope of the industry drives a lot of what the universities need to produce to fill our needs. The university is really a resource we have, and their job is to provide employment for their students. The more we can create the need for those workers, the more and better candidates we’ll get from the university. It (the local cluster of insurance-related businesses) also allows us to collaborate on issues and have the expertise in the local community that you might not have otherwise. I think it’s very important to keep that in mind. You look at what the trucking industry has done for Missoula, creating a lot of other businesses in Montana as a result of them being here.

Missoulian: Are a large portion of your clients located here?

Riley: No; very few.

Missoulian: That begs a certain question in my mind. Being in the software industry – or, for that matter, simply by living in America – you heard the pre-millennial hype about how the Internet would make geography an obsolete factor in doing business. But now, people are talking up this idea of business clusters, and how important it is for like-focused businesses to be in close physical proximity to one another. How do the "Cluster" hype and the "Global Village" hype square with one another?

Riley: Our overriding goal as a company is, of course, to create value for our customers. The driving force in that effort is the cost of doing business. We have to be able to have a better model, do it more effectively and do it at a cheaper cost. We do business for companies that may be located in New York or Chicago or Los Angeles. The cost of doing business from here compared to if we were located in one of those cities is definitely cheaper in terms of office space and other factors. But of course, we need a local labor pool that is strong enough, so that we can truly take advantage of those other advantages. Having a cluster and having other organizations that we may be able to collaborate with, while also having TCS sales and marketing and service and development offices all over the country, really gives us the best of both worlds. We can reap the advantages of being in Missoula, while capitalizing on the Internet and our other offices to allow us to do business anywhere.

http://missoulian.com/articles/2003/07/07/business/bus01.txt