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Home sourcing on rise in US

A burgeoning trend of home sourcing and rural outsourcing is catching up in US, writes Shalini Narang.

india Updated: Dec 08, 2005 16:29 IST
CALIFORNIA DIARY | Shalini Kathuria Narang
CALIFORNIA DIARY | Shalini Kathuria Narang

A burgeoning trend of home sourcing and rural outsourcing is catching up in US to complement if not compete and slow if not stem the politically volatile outsourcing and off shoring tide.

Though outsourcing over the last five to seven years has become an economic reality for big and small companies in US, the trend is nevertheless, a political minefield that has incited local angst and a need for alternatives.

According to Forrester Research, a consulting firm within the next decade, about 3.3 million service sector jobs will be off shored.

The innovative practice of in sourcing back end jobs requiring basic IT skills was commenced by low cost domestic carrier-Jet blue in 2000 by in sourcing its reservation work to home based agents. The no frill company also runs an online, self-training method for home-based reservation agents.

The parallel movement of home shoring is aimed at moving call centre jobs or jobs requiring basic IT skills to home based US workers and software programming jobs to low cost US metros or rural areas instead of to India, China, Brazil, Taiwan or other countries.

Some others companies testing the politically correct alternatives of home sourcing or rural-sourcing include Office Depot, American Automobile Association (AAA), the roadside assistance provider and Internal Revenue Service, US government agency responsible for tax collection and tax law enforcement.

The proponents predict that home sourcing is taking off and teams of home-based professionals can be trained to replace outsourcing as the preferred approach by enterprises looking to deliver quality work at lower cost.

Many advantages like no infrastructural expenses of offices and related amenities, lower travel costs, fewer cultural and management differences, higher employee retention rates and minimal overhead costs are being promoted as competitive alternatives to off shoring.

Gartner predicts that 10 per cent of all US call centres may develop some home shoring component. Many Home shoring aficionados feel that software development and support work in low wage US areas like Arkansas or rural North Carolina can compete with Asian destinations.

IDC, a market intelligence company estimated in 2004 that there were more than 100,000 home shoring jobs in the US.

Rural Sourcing, a North Carolina-based IT services company claims to provide information technology services at 30 to 50 per cent below most U.S. consulting firms by tapping into the increasing number of IT professionals in rural America, where overhead and wages are lower than in metropolitan areas. The company claims 20 clients, including Mattel and Cardinal Health and $1 million in revenue and 50 full-time employees at five IT centres in Arkansas, North Carolina and Missouri.

The company is charging $35 to $50 per hour for IT expertise, which may cost around $100 in New York City. While the cost is no match for outsourcing rates in India, yet the company propagates that their clients benefit from local accents and similar time zones.

On the other hand, the naysayer of the trend feel that though there may be 'pockets' of experienced IT workers in these smaller communities, but sustaining the supply of those resources is difficult and the growth can be continued only by finding enough of these 'pockets.'

Easy access to broadband, online collaboration tools, VOIP, etc help create virtual IT teams irrespective of location and the current global economic and political order dictates that rural US workers may complement the offshore workers in the knowledge based service economy in the coming years.

For long term sustainable advantages involving regions and people besides bottom lines, companies might complement in shore home based urban or rural workers with their offshore counterparts to provide the needed software and information technology services.

First Published: Dec 08, 2005 16:29 IST