In-Shore Outsourcing

As an alternative to offshore outsourcing, some U.S. companies are choosing in-shore outsourcing instead.

American companies challenged to cut costs are now outsourcing to cities within the U.S. where labor costs are lower than the national average.

Among the cities where salaries are below average are: Little Rock, Arkansas; Birmingham, Alabama; Asheville, North Carolina; Albuquerque, New Mexico; and Omaha, Nebraska. Source: Mercer Human Resource Consulting.

If you simply looked at hourly rates alone, companies could save more by outsourcing overseas. Offshore hourly rates can be one-fourth the rates (sometimes less) of similar talent in the United States.

With in-shore outsourcing, however, companies feel they get the best of both worlds. They still can receive cost reductions, albeit less dramatic. But having a labor source located in the United States gives them better control over quality and communications — something they believe offsets the smaller cost reductions.

Tech companies in particular can take advantage of this trend, also being called by some companies “best shoring.”

Wall Street Journal subscribers, read more in the article by Kris Maher.

In-shore outsourcing has been a common practice among some large corporations. They’ve always looked at labor micromarkets within the United States and chosen to locate operations where labor costs are low. But the growth in offshore outsourcing has brought about significant market pricing pressure for tech and call center companies. This in turn forces more companies, including smaller businesses, to look at the in-shore alternative in order to reduce costs. Especially if they do not feel comfortable with offshoring.

Anita Campbell Anita Campbell is the Founder, CEO and Publisher of Small Business Trends and has been following trends in small businesses since 2003. She is the owner of BizSugar, a social media site for small businesses.