Rural Outsourcing shows strong growth and provides excellent opportunities for outsourcing entrepreneurs. OA Advisor, Professsor Mary Lacity co-authors marjor study on Rural Outsourcing

Industry Insight: Building IT Capabilities in Rural America

 

Strategic Outsourcing: an International Journal announces the publication of an industry insight on rural outsourcing by leading academics, called “Field of Dreams: Building IT Capabilities in Rural America”.   Rural outsourcing is the practice of outsourcing work to suppliers with delivery centers located in low-cost, non-urban areas. The authors of the study--Professors Mary Lacity and Joseph Rottman--visited rural delivery centers in the United States and interviewed founders, executives, delivery center managers, delivery team members, and rural outsourcing customers.  Lacity explains why they chose to study this emerging trend, “We have been studying the global outsourcing market for 20 years.  We wanted to study rural outsourcing because the model promises lower costs to clients than urban-based centers and higher quality of work, superior domain knowledge, higher cultural compatibility, closer proximity to the customer, and time zone advantages over offshore suppliers.  But we questioned whether suppliers could adequately scale this model and wondered how suppliers could attract, train, and retain enough talent in rural areas.”   Their study found that rural outsourcing can grow, at least in the United States where 61.7 million people live in non-urban areas.  Suppliers are challenged to develop enough human capital fast enough to meet growing client demand, but government support and alliances with rural-based universities have helped suppliers grow at over 100% per year.  Lacity says, “Overall, we do not foresee that rural outsourcing will replace offshore outsourcing, but will rather serve to complement most large-sized clients’ vendor portfolios.”   Outside the US, many countries, including the China, India, and Israel, are interested in rural outsourcing as governments struggle to create good jobs in a tough global economy. 

 

This research has been featured in BusinessWeek, CNNMoney, and ComputerWorld.

To access the report, please go to:

 http://www.emeraldinsight.com/products/journals/journals.htm?id=so#samples

According to CNNMoney.com “the practice relies on two simple premises: Smaller towns need jobs, and they offer a cheaper cost of living than urban centers. So businesses that outsource work to these areas can expect to pay less -- rates are often as much as 25% to 50% lower -- than if they were hiring urbanites with comparable skills.  In response, a new crop of outsourcing startups are popping up with development centers in places like Joplin, Mo., and Eveleth, Minn., where hundreds of employees crank out software code or offer IT support for large corporate clients.”

A broad range of rural entrepreneurship programs is being supported by universities and local governments throughout many areas of the country.  We encourage professionals with outsourcing expertise, experience and pertintent business ideas to explore what these programs have to offer. 

One of OA’s areas of focus with regard to new opportunities for Business Process Outsourcing (BPO) and IT Outsourcing (ITO) is these rural areas and the local universities that have the potential to launch the creation of these companies.  If you are currently developing a rural outsourcing company or leading an entrepreneurial program within a university located in these areas and would like to discuss support from OA, contact info@outsourcingangels.com.