Microsoft builds up operations in North Dakota

FARGO, N.D. (AP)-- Another company is shipping jobs to a remote land to find good workers for less money. In this case, the company is Microsoft Corp. But the faraway land is only two time zones away.

Six years after Microsoft acquired North Dakota's Great Plains Software for $1.1 billion, its acquired Fargo operations are growing. Besides building on Great Plains' software for businesses, Microsoft has built an executive briefing center and moved its payroll operations for the United States and Canada to the Roughrider State.

Dave Coulombe was born and raised in Montreal and spent most of his life in major metropolitan areas. He moved to Fargo 14 years ago and joined Great Plains. He stayed in the Red River Valley after Microsoft bought the company.

"And we're still here," said Coulombe, 48, a general manager at the Fargo campus. "It's the best thing we've ever done as a family. I could move to Redmond (Wash.), but we've got great things going on at this site."

The campus of more than 1,200 employees is planning to expand from two buildings to three. New hires are coming from warm-weather areas to a place where subzero temperatures are common in the winter.

One reason for the growth, the company says, is the Fargo branch's ability to find talented employees who work for less money than those in Seattle and other cities -- despite some reservations about moving to North Dakota. They come mostly from the Midwest.

"We compensate our people very well, but you don't have to compensate at the same level as you do on the East Coast and the West Coast," said Don Morton, the Fargo campus' site leader.

Microsoft has even looked outside the country to fill some positions, recently hiring five engineers from India who are admittedly "scared of winter," Morton said.

The world's largest software maker -- whose chairman, Bill Gates, is the richest man in the world -- pays competitively at all its locations, said company spokeswoman Katie Hasbargen. In North Dakota, Microsoft software engineers usually start at about $50,000 a year.

"Microsoft is definitely competitive in Fargo," Hasbargen said.

A $50,000-a-year job in Fargo is equivalent to a $62,000 salary in Seattle, Bankrate.com numbers show. The cost of living index published by Sperling Best Places lists the Fargo area at 86.4, compared to the U.S. average of 100. Seattle is listed at 144.4. And Bankrate.com figures show a house costing $240,439 in Fargo would sell for $410,540 in Seattle. The average monthly rent for an apartment is $660 in Fargo and $1,037 in Seattle.

"Very, very rarely are we outbid," Coulombe said.

Michael Ford, 40, is an Alabama native who was recruited from Florida to take over the group that includes payroll. He said the stability persuaded him and other employees to stay in Fargo rather than move to Microsoft's Redmond headquarters, or to other computer technology hotbeds.

"People will jump around jobs in Redmond. Here, they get in their jobs, they stay in their roles, they're happy," Ford said.

In 2001, Microsoft acquired Great Plains, which at the time had 1,112 workers. Now, there are 1,245 Microsoft employees and vendors in North Dakota.

The first year of the acquisition, Microsoft ran the Fargo company as an independent subsidiary known as Microsoft-Great Plains, to develop business and financial software for small- and medium-sized companies and divisions of larger corporations. At first there was confusion among customers and, some analysts said, a lack of direction.

The unit later became Microsoft Business Solutions and in 2001 started shipping the software line now known as Dynamics. It's aimed at providing "less of a learning curve" for businesses, Hasbargen said. The Fargo campus also supports business customers of Microsoft Office products.

Microsoft Business Solutions didn't become profitable until the 2006 fiscal year, when the company reported earnings of $24 million on sales of $919 million. That compared with a loss of $171 million on sales of $784 million for the previous fiscal year. Company officials said they expected the Business Solutions unit would take time to develop.

Separately, Ford said moving payroll to Fargo paid instant dividends for Microsoft.

"We had a 30 percent savings right off the bat," he said. "The payback was within a year's time. Normally, payback is going to take three to five years."

Joel Hensley, a senior at the University of Nebraska, has signed on to join the Fargo company at the end of July.

"To be honest, I wasn't too certain about Fargo. I had never been to North Dakota my entire life," Hensley said. "The big turning point for me was seeing the atmosphere at the Fargo campus. Work hard, play hard. That's what I like."

Ford, the Alabama transplant, gave up warm weather -- and an hour-long one-way trek to work each day -- to come to Fargo.

"It's a 10-minute commute here," he said. "I can go watch my kids play basketball and come back to work. It works for me."