According to a recent Business week article, rural outsourcing is fast growing in the US. This is keeping in view the growing availability of skilled workforce in US and the near similarity in costs. There are quite a few companies in the US that are positioning themselves as alternatives to offshore outsourcing. But, this would not completely replace off-shorers. Countries like India have $50 billion outsourcing revenue that will triple by 2020. But, hopes are high as pressures on companies are set to increase as workers in India and China are demanding higher wages and cost is rising.
Cayuse Technologies, an outsourcing 200-employee firm, witnessed $7.7 million sales the previous year. Cayuse revenue with Accenture is expected to cross $11 million next year and the company is planning to hire 75 more workers. Mac Benoist, general manager, Cayuse, says, “We still have capacity here at our facility, so we have plenty of room for growth.” This IT company is a rural outsourcer in the US. Duluth Systems, an Ascensus undertaking, is a similar kind of IT firm. It has 35 employees and Ascensus spends $175,000 of its outsourcing budget on the firm. Saturn costs 2.5 times more than offshorers in India and Russia. Rick Fitzer, vice President, Ascensus, says, “On the surface, offshore outsourcing may appear more cost-effective. However, there can be added costs to consider with regard to managing staffing, training, and geographic logistics.” There are about 20 such companies now and companies like Rural Sourcing, Saturn Systems, Onshore Technology services have reported double-triple revenue growth in past few years.
The Rural Outsourcers cost 10 percent to 150 percent more than their overseas rivals. Mary Lacity, professor at the University of Missouri in St. Louis, however, contends that rates are comparable and rural outsourcers rate are better than their domestic counterparts in big cities. The reason is places where they operate have lower living costs. Lacity says, ‘We cost less than the East and West Coast, and we’re easier to deal with than India.” In a report of IT research firm Gartner, it is mentioned that “rural outsourcing” is an attractive alternative to offshore outsourcers because of the benefits of language, culture and the ease of complying with U.S. data privacy regulations.
Shane Mayes, founder of Onshore Technology Services, says that the challenge lies in training enough workers. “We take underemployed and dislocated workers who’ve lost manufacturing jobs and put them through a bootcamp-style training program. We make software developers out of them.”
Critics oppose the idea as they believe that it will remain a niche and won’t be able to become significantly big for lack of skilled workforce. Lacity points out that there are 61 million US population who are rural. Randy Willis, Cayuse Technologies conceiver, agrees to making of larger skilled workforce. He says, “To meet the cost structure, you pretty much have to build the skills from scratch.”
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to