Rural outsourcing on the rise in the U.S.

The rural option offers better intrateam communication than offshoring, better pricing than the huge outsourcing firms

For years, U.S. companies have been shipping development work and other IT tasks offshore in pursuit of low labor costs. Now a growing number of organizations are taking advantage of lower costs closer to home, by hiring outsourcing providers with operations in rural areas of the U.S.

Hard numbers on the growth of rural outsourcing are difficult to come by because none of the leading IT and sourcing research firms breaks out data specifically on rural outsourcing. But Mary Lacity, professor of information systems at the University of Missouri's College of Business, who has been conducting extensive research on the market, says that in the past year or two there has been huge demand for the services.

One indication of the growth in demand, Lacity says, is that the service providers are quickly ramping up staff. "Suppliers are scrambling to get enough qualified people to make sure they can meet the surge in demand," she says. "So many clients I've heard from are interested in this model." Lacity estimates that there are about 20 rural outsourcing providers in the United States and, based on her analysis of the providers, the total market size is about $100 million.

One such provider is Rural Sourcing Inc., based in Atlanta, with development centers in Jonesboro, Ark., and Durham, N.C.

Pros and cons

Rural outsourcing provides the same basic benefits as other outsourcing arrangements: ready access to technology expertise, and resources that the client lacks internally.

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