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Telamon on the rebound: Diversification puts Carmel technology firm back on fast track, prevents layoffs

March 10, 2008

In 2003, Carmel-based Telamon Corp. hit rock bottom. So, founder Albert Chen returned to his roots.

Taiwanese native Chen, 63, had spent two decades building his firm to serve telecommunications giants. But when the dot-com bubble burst, the telecom industry tanked along with it. Telamon-then Indiana's largest minority-owned business-saw its annual revenue plummet $300 million, down from $456 million in 2001.

Most managers would have chosen to shrink Telamon to reflect its new reality. But Chen doesn't do mass layoffs. He moved to Indianapolis in 1979 to become a logistics manager for GTE Corp., then abruptly quit that job in 1984, when GTE downsized and asked him to cut 200 of his 700 employees. With the help of his wife, he founded Telamon shortly thereafter.

When push came to shove again in 2003, Chen made a similar choice. Rather than fire any of Telamon's 350 employees, he offered a deal. He asked them to accept salary reductions until the firm regained its footing. And he promised to repay the reduction sometime down the line.

"It was a wakeup call," Chen said. "We can't just depend on one industry."

Four out of five Telamon employees agreed to Chen's terms. And he began a quest to diversify the company. Chen said the employees were all repaid within two years. And by 2007, Telamon was back on its feet, earning $465 million in annual revenue.

The company got there by branching into brand new turf. These days, Telamon still customizes and ships complicated server equipment for telecom giants. But it also helps Columbus-based Cummins Inc. assemble complex auto parts. And late last year, Telamon launched a fast-growing new division: Telamon Global Services, which aims to become the high-tech business consultant of choice for medium-size Indiana corporations.

"I knew we had a skill set, but a new business was too much investment. I knew we could do inventory management for supply chains. But before that, I'd never done business locally," Chen said. "I talked to [Eli] Lilly. I talked to Cummins about doing some of their assembly. We said, 'Give us a chance, we'll perform. And if we don't, you can kick us out.'"

Finding trouble spots

These days, about half of Telamon's 400 employees still provide just-in-time configuration of telephone switching equipment for companies like AT&T. Telamon buys the hardware in bulk from original equipment manufacturers, warehouses it, then adds software to customer specifications before shipping.

Using a similar skill set, Telamon now does the same thing with diesel engine parts for Cummins. It stores components from various auto-parts makers in its warehouse, then, on demand, assembles and ships them. Telamon uses the same Six Sigma quality assurance techniques to prevent defects-once a big problem for Cummins, which endured finger-pointing from each original-equipment manufacturer whenever problems emerged.

Attorney David Millard, who has represented Telamon since 1986, said Chen has always had a knack for discovering a customer's trouble spot and building business models around the solution.

"Albert, from Day One, has been one of the most opportunistic people I've ever met. He's very good at taking advantage of whatever the market gives," said Millard, a partner at Indianapolis-based Barnes & Thornburg LLP. "He works more on the business than in the business now. He'll just go from opportunity to opportunity, get it sprung up, and then go on to the next thing and circle back once in a while."

That's how Telamon Global Services originated. The division is led by Caleb Ho, 33, a former consultant for IBM and Deloitte. It specializes in business-process outsourcing.

Customers sublet their most repetitive, time-intensive non-core business functions to Telamon-tasks such as bankstatement and billing reconciliation or sales order entry and management. Telamon's employees on the other side of the globe in Shanghai China handle the tasks overnight. Then Telamon Global Services locally double-checks the work for quality assurance.

"We're very good at taking the grunt work-anything that's repetitive or lowvalue-add-and jumping in and helping with that," Ho said.

Wishard Health Services is now a Telamon customer, for example. Mary Robbins-Nierste, director of Wishard's Wellness/Health Connection, said Telamon has taken over the hospital's referrals, which used to be done by hand.

Last year, instead of a paper-based process, Telamon electronically handled 15,000 referrals from physicians to specialists. Now, referrals are processed much more quickly, with far fewer errors. And Robbins-Nierste said it's only the beginning. Wishard hopes to eventually improve other processes with Telamon's help.

"It's really in its infancy right now. We've only tapped into an eighth of what we need to tap into," she said. "The fact that they were able to come in and customize it to our health care needs, that was the difference."

Tackling 'tedious stuff'

Carmel-based Kipp Brothers Toys and Novelties is also a Telamon customer. Director David Glenn said Telamon began by redesigning Kipp Brothers' Web site, tying it to a state-of-the-art warehouse order-fulfillment system. Every other consultant Kipp Brothers had approached rejected the job, claiming Kipp Brothers' accounting software was too outdated for integration into any new system.

"[Telamon] said if I could think of a process, they could make it happen. That's exactly what they did," Glenn said. "Now we're at a point where a customer can place an order through the Web site, know immediately-real-time-whether it's available in inventory or not, and the order goes straight to the warehouse for fulfillment the same day."

"A lot of the tedious stuff has been automated," Glenn added. "It definitely pays for itself."

Indianapolis-based Allegiant Global Services LLC is in the waste-management business. It contracts with third parties to dispose of industrial byproducts. Many of its customers are global firms that have manufacturing operations in multiple states. But waste disposal is primarily handled on a local basis, so Allegiant negotiates on its clients' behalf and consolidates their bills.

Allegiant's services require it to constantly track individual trash-disposal transactions, then consolidate them to a simplified bill. With Telamon's help, the company introduced a new bar-code-scanning process that allows it to quickly track those transactions electronically, rather than by hand.

Allegiant Vice President of Finance Jane Hicks said she's particularly pleased with the accuracy of Telamon's work.

"I was shocked at how high the quality was, to tell you the truth," she said. "They're very diligent in making sure what they do is correct. If there's an exception, it's usually something we did."
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