Collaboration

First rural sourcing effort proves successful

Rural sourcing offers a less expensive alternative to $200-per-hour developers and offshoring.

Like most IT departments, my team at Westminster College stays very busy keeping things running and working as hard as possible to address critical business needs. However, we face a couple of challenges that can be pretty tough to overcome:

  • Lack of bodies. With just eight people on the IT staff and a broad support portfolio, everyone on the team has significant responsibilities.
  • Skills difficulties. I have a great team working with me, but with a broad portfolio and new projects constantly hitting us, it's impossible for us to be all things to all people at the exact time it's needed. Further, technology changes very quickly, so being up with the latest and greatest can be difficult, although we all do our best.
  • Short time frames. Due to the small size, my IT staff has to be very support-oriented, leaving little time for large project work. This makes it tough to turn around a big project is a short time frame.

As much as possible, we try to use off-the-shelf software to meet the College's business needs. At other times, we try to customize existing systems to reasonable limits in order to meet these same business needs. Sometimes, however, a great idea arises that can't be met by either of these scenarios.

The challenge when a great idea comes up is to implement the idea within a time frame that makes it useful. With so many systems to support and other ongoing projects, this can be tough. Often, when we need something, we can work with our ERP vendor, but this tends to be expensive and we're sometimes limited in what systems we can use.

For a recent project, we identified a need to develop a relatively complex system in SharePoint. We use SharePoint for our institutional web site and a number of other tasks, and we're constantly growing its use.  We do have a portal product from our ERP vendor, but the new system requires a high level of workflow capability to be present. Rather than code that workflow from scratch, we're going to use SharePoint. From an integration perspective, we can do single sign-on between the ERP portal and SharePoint.

To say that this is a highly visible project is an understatement. Next up, the time frame is very short compared to most of our other projects. Finally, from a staff availability to skills perspective, my team and I can manage the project, but with so many beginning-of-school tasks to complete, we can't do the actual development and hit the target.

So, my next task was to figure out how we were going to accomplish the development goal. I've had mixed success with local lone SharePoint development consultants as they are pretty much booked up. As such, I considered other options. I also knew we couldn't afford a $200-per-hour developer, so I started looking at less expensive alternatives, including offshoring the development, and, during this phase, came across the rural sourcing concept. Now, I had previously heard about the rise of so-called rural sourcers, but I did not have any experience with them. These are companies that either locate in lower cost areas or hire people to work virtually from lower cost areas and they pass the cost-of-living savings on to the client. Rather than outsource work to locations oversees, rural sourcers claim that they can do the same work for a reasonable cost and avoid any potential problems with cultural clashes, time zone issues, and more. Moreover, these rural sourcing organizations say that they help smaller communities thrive, provide people with more employment options, and offer a valuable service to corporate America.

Personally, I'm sold. While I awaited funding for the aforementioned project, I asked Rural Sourcing, Inc. (RSI), with a development center in Jonesboro, AR, to work on a smaller project for which we had a development need. Although I can't discuss specific details or rates, trust me when I tell you that the hourly rate we're paying Rural Sourcing is much less than we'd be paying to most other development houses, and the results are fantastic. The RSI-based development team took my specifications and developed a solution that far surpassed my expectations. Further, in one part of the development process, I came across a commercial web part that might solve one particular issue. Rather than try to code it themselves or talk me into simply having them develop it, they tested it for me and, because they were so familiar with my goals, made a recommendation that we simply buy that web part to accomplish the task, which actually meant a bit less development work for them but a much better overall result. For me, the RSI crew acted as an extension of my team, with daily progress meetings taking place.

Just last week, I received notification that the funding for the original project had been approved. We are now embarking on this development project with the able team from RSI. As I look at ways to add staff at the College, these kinds of options affect my direction. With development rates that are very, very good and a plethora of development skills in their portfolio, companies such as RSI can handle my one-off needs, and as time goes on, I may use companies like this to handle some more of our project work.

While these are not new concepts, economic challenges and budget realities will force more organizations to consider their use.

About

Since 1994, Scott Lowe has been providing technology solutions to a variety of organizations. After spending 10 years in multiple CIO roles, Scott is now an independent consultant, blogger, author, owner of The 1610 Group, and a Senior IT Executive w...

29 comments
ParadigmIT163
ParadigmIT163

Our Rural Outsourcing Center business unit continues to deliver globally best in class implementations and support - all from Erie PA. And the best part is that we build jobs in the ERP technology area while savings companies money! Absolute Win - Win & Win!!

jdm
jdm

I think the bottom line to the article is -- create a clear set of requirements for the work and get multiple bids. It's not unusual to see a factor of 2-3 difference in cost between bids for the same work. And the highest bidder isn't necessarily the most qualified to do the work. This method of procurement takes time, but for larger projects it's especially important.

Ternarybit
Ternarybit

Rural sourcing isn't really any cheaper, the cost if just offset differently. In rural sourcing, you rely on a reduced cost of living, and ask society to shoulder the burdern of providing the people living in those areas with services and infrastructure that will never pay for itself. There's nothing glorious or redeeming about small town life.

mandrake64
mandrake64

I work 3 days a week at home, connected via Citrix to my work environment. Connection speed is fine for programming and monitoring process control applications. I have actually performed all after hours call outs from home since 2003. That has saved me time and money on travel and the hazards associated with it and improved the response time to system problems. Would like to move further out into the country as well. But not too many software company in real rural areas in Australia.

DaPearls
DaPearls

I read some of the comments and realized that people were comparing rates within the US. I believe the author was stating how Rural Sourcing is less expensive than Off-Shoring. Hard to believe, but it may be true. You also don't have to deal with being 6-12 hours off from your dev. team. If the talents lies within these boarders, then it would be a GREAT idea to inject a little money into that talent pool.

DavidOnline
DavidOnline

Slow Internet may have been concern in some areas in the past. I live on a gravel road in Southern IL, seven miles from the nearest small town. I have a fiber optic connection to the Internet that is faster than the one I had in Arlington, VA. I write code for my customers from the screened in porch while listening to the birds sing. Occasionally a deer, fox, raccoon, opossum, squirrel, and rabbit passes through the yard. Most of the factories around here have shipped jobs off-shore. The shirt factory, the dress factory, Whirlpool, Maytag, and the list goes on. Hard-working people with families have been left with little alternatives. I encourage our IT leaders to consider partnering with junior colleges to build the future IT teams that the country needs to be successful. Why do you invest money and time in foreign countries by outsourcing work to them and then complaining about the "poor quality" that is received in return?

ChallengerTech
ChallengerTech

I agree with the concept of using smaller "ONSHORE" companies to save costs but still get a quality product. It's what keeps the US economy strong. Too many BIG BANKS and BIG INSURANCE companies are off-shoring their work to their detriment...deadlines are missed, coding is shoddy, and they end up have to source onshore to cleanup the mess. I say it serves them right! I think we should limit further the H1B visas for ANY IT work as well and source from home! Our economy depends upon it.

Charles Bundy
Charles Bundy

Moving high tech industry to rural settings is a great way to mitigate costs associated with geography. Why pay for a high cost of living area when you can get the same product in a low cost of living environment? The problem I have seen is that in the rural area there isn't as much mobility for the worker and the per hour costs start to actually go beyond cost of living differentials. This devalues the work being done and the human beings who do it. e.g., management starts to buy in to the "work must be easy", and the "workers must not be capable if we can get away with paying them peanuts".

melbert09
melbert09

I think its a great idea. It is happening here in the UK as well, Ive seen both hosting and development shops locating in more "Rural" areas due to the costs. If you look at the Job boards and the salaries/contract rates that they are paying in those areas you'll see the difference. A System Admin in London can make around ??45k where in a smaller community ??20k - ??25k is more common. Even IT managers are at ~ ??30k - ??35k where in London it would be around ??55k - ??65k.

viweed
viweed

The guy who wrote this article does not know diddlysquat. 15 years in the 'industry', what? at a college?? Give me a break! I've been in the industry since I graduated from high school at 12 and went to work for Big Blue 3 months later as a programmer... 51 years ago. Unlike Al Gore I actually DID help to build the internet (ARPAnet). You know the real experts don't think they know answers, because one doesn't become an expert until one has failed many times and worked through the failure to some semblance of success. Scott, you should be ashamed of yourself for drawing conclusions based on NOTHING, or perhaps I mean 'faulty syllogism'.

mattohare
mattohare

I've been able to connect remotely to a place with the fast connection to see how it works (or doesn't). A developer doesn't need all the data in a rural location to test. The developer simply needs access to a place that does. As far as the same pay as the city people, we generally don't need it. We don't have to show off to our neighbors, they already know us. We don't have to pay large prices for a night out, the places are nice but don't charge extra to help people show off. Finally, we don't have to spend hundreds or thousands a month for transport. We're closer to our work, and the traffic is lighter even if we do have to drive there.

viweed
viweed

The guy who wrote this article is actually IN the 'rural' area, so what's he talking about? It sounds like he hired a bunch of yokels not real developers. What's the idea of saying developers cost 200 bucks an hour? Doesn't he know where to find cheaper resources? We bill our USA-based people at 75-85/hour and pay around 100K. That is a 'decent' (not a great) salary in this inflationary time. If you want to pay cheaper than that, you can, but you 'get what you pay for'. I've been managing offshore teams for 15 years and none of them are ever worth the 'savings'. They just don't grok American culture where people bust their butts and sacrifice their family life, their spiritual life, their HAPPINESS to 'get the job done'. Manila, Kiev, Noida, Buenos Aires... they will not work that hard. After all, USA is 'da man', and no one works hard for 'da man', if they ain't one of 'em. Outsource to a small company based in North Carolina, Georgia, South Dakota, Maine and you can hire people for 35-45/hr. But are you looking to have slave labor? Then you must outsource to Manila etc. You can pay someone in Manila the equivalent of $7-12 / hour (top wages there) and get 'okay' development, but just for colleges like the one in this article. If you want to hire AMERICANS then you must pay them decent wages and forego 'top' profits for 'fair treatment'. It won't happen. Corporations are amoral of course, and they don't care. They have been getting by with cheap, poor-quality code (from India, etc.) for so long they finally realized the truth. The world does not function at top-quality but at mediocre-quality, and in the end everyone dies anyway. (I don't have a good closing comment, except it is what it is.)

HAL 9000
HAL 9000

Is the need for a Reliable Fast Net service for them to be successful. Take the Net out of the mix or have prolonged downtimes you have effectively shut down the Development Company from existing and new work. This is something that will work with a National Broadband Network but is pushing things when Technology like that is not available. So the big Cost Savings possible will not be found as those Rural Companies need to be themselves in the larger Rural Centers to get the necessary services to allow them to reliably deal with their customers. ;) Col

dogknees
dogknees

That the people doing the work are still paid the same as their city dwelling associates.

n.smutz
n.smutz

I can see cost of living as part of the equation. Rural outfits probably have to be cheaper to get business and get noticed. You may be able to squeeze rural labor harder before people can't make their housing payment; but there are other market forces. Working from home or living in a small town is a marketable perk. The local University attracts professors above it's league because of it's rural location and easy access to mountains and rivers.

Scott Lowe
Scott Lowe

The $200 per hour rate (yes I've seen it more than a few times) was to demonstrate an upper end of the spectrum. I do not believe that on shoring is less expensive than off shoring, but we've gotten very good results from the on shoring effort with very reasonable costs. Scott

mattohare
mattohare

There are facilities in the Gaeltacht that would be ripe for this.

JamesRL
JamesRL

Color me skeptical, though I would imagine they have broken the labor laws once or twice.

Scott Lowe
Scott Lowe

I've actually worked in a variety of verticals (pretty much all except health care) and happen to have spent the past few years in higher ed. I like it here. This is a place where I come to share some of what I do and why I do it. Thank you for helping to build the Internet. I use it every day ;-) Scott

viweed
viweed

But this author is suggesting that big city developers make 200/hr. Where in heck since 1999-2001 do they make that much? I'm at the level where I know what people make, and they don't make that, not any more. But one needs at least 50,000 to have a decent life even in a rural community, especially if one has a family to support. One can get a satellite linkup just about anywhere, anyway. One doesn't need to be connected to do development, you can do it on your local desktop and only upload when done. But honestly 100K is really 'middle income' not 'high income' anymore. This country is turning into what George Soros and his puppet (Obuma) want. Poor and Rich. Just like the rest of the world. Sock it away now while you still can. Look for 'wfh' (work from home), that's the only way to be really financially successful in technology. Iive in the country, telecommute. Lots of companies allow that now (Wells Fargo for example). Most of my people WFH, because I have made it so for them

dogknees
dogknees

I don't see that need enters into it. If I do the same work I should get the same pay. As for your other comments, they are more than a little offensive. Don't assume that you know what I/we do, the way I/we act or our motivations for it. To do so is always arrogant and offensive, no matter how many people you might know who act this way for the reasons you give.

Scott Lowe
Scott Lowe

I regularly see rates of $200... can't afford to do that for much. I do know where to find cheaper resources, hence the article. We are paying more than $35 to $45 per hour for the development work, bu the way. All of the people we've worked with are Americans. In everything we do, my goal is to make sure that we're paying a "fair price" for what we get. Note than I did not say "minimal price." I agree wholeheartedly that you get what you pay for.

santeewelding
santeewelding

I completely missed that part. Shows how much a welder knows.

JamesRL
JamesRL

My company struggled with this issue for some time. Some people lived in big cities, some did not, and the cost of living gap was huge. The choice was, close down the big city offices altogether, or differentiate between locations to pay people similarily on an adjusted cost of living scale. So they came up with a geographic catagorization system. In the previous system each job catagory had a range of pay, from low to high. No one got a wage cut, but their pay band range was adjusted. Some people found themselves at the low end of the pay scale, so they had room to grow, other found themselves at the upper end, so less chance for big raises. It has worked out for most people. There has also been a push to have people work from home, and that has reduced costs in big city offices significantly. As well some big city offices have been relocated to smaller towns where the cost of office space is significantly less.

mattohare
mattohare

I may have been replying out of annoyance that I still see from people in Belfast, Dublin, Seattle, Portland and Los Angeles, that have a rather arrogant idea of what a successful life is. You probably life a sound, responsible life. And, you may be part of the quiet majority. I still think that the inflated costs related to the computer trades and industries relate to things that are not value. Look at licenses and fees we have to pay for some software and services when the firm put little or no effort into it. Look at all the firms that grew on hot air from investors money that was never returned. I'm sorry that I offended you (and anyone else that is a city-dwelling sound developer). However, I still see enough over priced providers that don't seem to be aware of what's happened in the world economics.

kirkaiya
kirkaiya

As a long-time freelance and contract (independent) software developer and project manager, I think it's important to distinguish between the rates that IT consultancies (the smaller ones, who generally staff projects by finding freelancers like me) charge, and what the actual developers are paid. I generally charge in the $75 - $85 range, but I know that I'm being billed out at a mark-up of 1.5 - 2.5 (which means the end-customer is paying $112 - $212 or so). That mark-up is, in part, justified by the body-shops finding, screening, and dealing with the developers, shielding the actual customer from having to deal with it all (and probably having a "back bench" of devs they've worked with before, as well as a few tech-leads in-house). So yes, in cities, companies end up paying $200 for experienced devs *through an agency*, while the dev him/herself is probably getting $100/hour for that.

mattohare
mattohare

I started a culchie/redneck, so that's my core. I can do 'city' when I need to, and enjoy it. If I stay to long, though, I just go mad.

dogknees
dogknees

I'm probably in the minority of people who have lived over 20 years in the country and in the city, so I see both sides.