September 22, 2014

Ruralsourcing: A Win-Win Idea for Small Businesses

Ruralsourcing: A Win-Win Idea for Small BusinessesFor years we’ve been hearing about offshoring and outsourcing—indeed, the practice of hiring work out to people in India and Asia has changed the way of life for many U.S. small businesses (and not always for the better).

Now, a new trend—and one that’s more positive for the millions of unemployed U.S. workers—is taking hold: ruralsourcing.

Also called “rural outsourcing” and “onshoring,” CNNMoney.com reports, ruralsourcing outsources work to small, rural towns where the cost of living is low, but many people are out of work. By hiring workers in these areas, companies pay between 25 and 50 percent less than they would if hiring workers in an urban area.

Onshore Technology Services is a rural outsourcing company with locations in Macon, Lebanon and Joplin, Missouri. It recruits workers out of minimum-wage jobs and trains them to handle IT jobs. In Burnsville, Minnesota, CrossUSA recruits older IT workers who are closing in on retirement.  The company is growing by 7 percent annually. Atlanta-based Rural Sourcing Inc. takes a slightly different tack: It opens locations in midsized cities near colleges, which have a good population of IT workers but still have lower living costs than big cities. The company has clients ranging from small businesses to Fortune 500 firms.

While CNNMoney says ruralsourcing is still small compared with the $60 billion offshoring industry, it’s growing as U.S. businesses seek solutions that let them cut costs without the tradeoffs that offshoring involved.

If you’ve ever outsourced to foreign companies, you know the cost savings can quickly be eaten up by inefficiencies due to different time zones, cultural issues and communication problems. This can make the slightly higher cost of ruralsourcing well worthwhile.

One Rural Sourcing client cited in the article says while they pay 15 percent more than they would to an Indian IT firm, the cost is still half of what they would pay to hire a fulltime developer in their metro area. Plus, when there’s a problem, they can call the worker on the phone and talk about it.

If you, like many American business owners, are dismayed by the flow of jobs offshore but torn because you need to spend less on hiring, ruralsourcing could be a great solution.

7 Comments ▼

Rieva Lesonsky


Rieva Lesonsky Rieva Lesonsky is a staff writer for Small Business Trends covering employment, retail trends and women in business. She is CEO of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Follow her on Google+ and visit her blog, SmallBizDaily, to get the scoop on business trends and sign up for Rieva’s free TrendCast reports.

7 Reactions

  1. I love the idea and think it will gain in popularity. Training employees is obviously a cost, but the big issue I see is getting reliable, fast internet to some of these areas. Companies may have to look at infrastructure to determine which “rural” areas will work.

  2. Like Robert, I love this idea and appreciate you highlighting the details, Rieva. I guess in some senses I’ve been ruralsourcing for years as I use Guru.com quite a bit and almost all of my contractors are in the USA. I’ve had a few overseas workers for my projects, but mostly they are from small towns in the US.

    Since my work is mostly digital, I don’t have a problem with hiring someone overseas, far from it, but I have found it easier for many of my projects to have someone based in U.S. And I can see where that would be a draw for many small businesses who worry about some of the downsides of offshoring.

    Besides Guru, there are other services like them and I think companies would be surprised to find that many of the workers in those systems are US-based and affordable.

  3. In addition to these good onshoring companies, there is one onshoring company that is growing quite rapidly nationwide: Rural America Onshore Sourcing. While these companies focus only on IT services, Rural America offers not only IT outsourcing services, but business process, marketing process, and creative design outsourcing services.

    The Huffington Post recently ran a short article about Rural America: http://ht.ly/2sSBX

    Thanks

    Christopher Hytry Derrington
    CEO

  4. The law profession is one in which outsourcing to foreign soil is accelerating. There have been the predictable problems with communication and cultural differences, especially when it comes to tasks that require higher levels of training and analysis, and the idea of using outsource providers within the US is gaining traction. The cost is usually marginally more, but because the providers typically don’t have the overhead that traditional US legal service providers have, the costs are still much less than what it would cost to provide those services in house (or in “firm”). The marginal extra cost is more than absorbed by the gains in efficiency and work quality.

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