Ex-CIO promotes rural U.S. alternative to offshoring IT

The low-cost services firm does work in Arkansas facilities

Kathy Brittain White, a former big-league CIO, is capitalizing on her connections to win clients for her tiny, rural IT services company, which she hopes will eventually compete with offshore development firms.

White's firm is getting interest and IT work from marquee companies such as Mattel Inc., Sarnoff Corp. and Cardinal Health Inc., where White was CIO from 1999 to March 2003.

That's not bad for a year-old business based in Jonesboro, Ark., that has two development centers, each with 15 employees. White, founder of Rural Sourcing Inc. (RSI), is a longtime supporter of using low-cost IT workers in rural areas of the U.S. instead of sending technology work to India or China.

People who know White, such as Rich Kurowski, vice president of IT at Cardinal in Dublin, Ohio, said her IT savvy gives her model the potential to work. "Kathy can make things happen, and does make things happen," he said.

Kurowski, who is considering a pilot IT project with RSI, said he sees White's model as an alternative to offshoring.

"She knows how high the bar is for really putting this in place," said Joe Eckroth, CIO at Mattel. "She understands what the end result has got to be." White is on the board of directors at the El Segundo, Calif.-based toymaker.

White's approach is to build development centers, linked to local universities, that are professionally managed and feature rigorous development methodologies and training. "The ongoing challenge is to provide a quality product, just like any company would," White said.

Cost is a major consideration. RSI charges $38 to $60 per hour, depending on the skills required. Eckroth, who has been using RSI workers for about a year, said the cost is about a third of what it is in major metropolitan areas. He said RSI is ideal for projects that "you want to keep near you, like business intelligence."

Kathy Brittain White, founder of Rural Sourcing Inc. (RSI)
Kathy Brittain White, founder of Rural Sourcing Inc. (RSI)

Business Connection

In the past few weeks, Sarnoff CIO Tim Mitchell assigned RSI some intranet development work that would otherwise have gone to his offshore provider. But he's known White from professional CIO organizational work, and that connection opened the door.

Mitchell said he's especially interested in RSI as a potentially reliable and stable source of U.S. workers, a requirement for some government contracts. Sarnoff is a Princeton, N.J.-based defense and electronics company and the successor to RCA Laboratories.

Wooed by state officials, RSI will open a facility in New Mexico in January and one in North Carolina by June, White said.

Other firms are trying the low-cost domestic model, too. Jeff McCaskey, president and CEO of Aurora Consulting Group Inc., a 51-employee IT contractor on the outskirts of Buffalo, said pricing below major-market costs "is exactly how we survive."

McCaskey said he pays his Web developers $60,000 to $80,000 per year, while similarly skilled workers in the New York metro area can earn six figures. He added that he's convinced he can compete with offshore firms. Mattel's Fisher-Price division is among his customers.

Big IT services firms also use workers in low-cost areas of the U.S., not just at offshore sites. Capgemini U.S. LLC, for instance, operates 22 service centers worldwide, including a 500-employee site in Kansas City, Mo., a low-cost area.

Kansas City employees supplement offshore development by working on projects that don't require additional customer interaction and rely heavily on repeatable development processes, said Terry Jost, vice president of outsourcing services at Capgemini. He said he questions whether a rural facility can truly scale up to handle big IT projects.

But White said she doesn't see a problem. She noted that a recent help-wanted ad for a program manager drew 360 applicants from all over the U.S. "I haven't been a little operator," White said. "I've been at very, very big companies. I don't intend to stay small."

Copyright © 2004 IDG Communications, Inc.

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