Rural Sourcing (OnShoring)

How to use Rural Sourcing (OnShoring) to your financial and operational advantage 

Donald StonerSolution Director

Martin GardockiVice President

Agenda

1. What is Rural Sourcing (OnShoring)?

2. Different Types of Outsourcing (a comparison) USA Urban Outsourcing Offshoring Nearshoring USA Rural OnShoring

3. Advantages of Rural OnShoring

4. Rural OnShoring – Is it right for you?

5. Summary

6. Q&A

What is Rural Sourcing (OnShoring)?

The Obligatory Bovine

The Cool Tractor Scene

What is Rural Sourcing (OnShoring)?

A Great Place to Work

Rural Development Center Small Town Offices

What is Rural Sourcing (OnShoring)?

Rural sourcing offers cost, marketing, language and cultural benefits, making it an attractive alternative to offshore and other onshore models for some organizations…Gartner

Key Findings In rural outsourcing — or LCD onshore sourcing — external service

providers (ESPs) establish offices in domestic rural locations to combine the value of a local provider with the advantage of lower-cost labor outside large metropolitan areas.

LCD sourcing is still an immature and marginal trend in the U.S. It is, however, promising, because it offers tangible and intangible benefits around cost, compatibility (working in the same language, business culture and time zone), corporate social responsibility and data privacy regulations.

Different Types of Outsourcing USA Urban Outsourcing - domestic, urban firms

contracted to provide a service - old school.

Offshoring - contracting with firms in places like India and China - started becoming popular in the 1980s.

Nearshoring - outsourcing to firms in Central and South America - last ten years.

USA Rural OnShoring - domestic firms in rural communities or distributed rural teams contracted to provide a service - last five years.

Cost Components of Outsourcing Labor - cost of personnel and source of savings

generated through arbitrage

(Location, Skill set, On/Offshore mix) Transition - cost of identifying, negotiating and moving

work to the outsourcer – time to productivity(Vendor selection, Knowledge transfer, Staff reallocation)

Operation - ongoing cost of the relationship(Governance, Communication, Lost productivity)

Management Reserve - cost of managing the unexpected(Acts of nature/man, Force majeure, Redeployment)

Hidden Costs – opportunity loss

Advantages of Rural OnShoring Labor - up to 20 - 40% less than comparable urban

areas

Skills Available – rural talent is rich in experience. The skills that you want may not be in one place.

Data Security/Privacy – Covered under the U.S. legal system.

Language / Culture / Timezone – MidAmerica work ethic

Intangibles – revitalize local economy

Labor Costs – Urban US vs. Rural US2010 Dice Salary Survey

Operating Costs

TTP = Time to Productivity R + O + KA = TTP

Recruiting On-boarding Knowledge Acquisition

Delivering high quality work with minimal direction

Rural OnShoring – is it right for you? Organization / Culture – how well do you manage change

(process rigor, risk tolerance, change advocate)

Type of Work – is this business critical, volatile requirements

(Significant Business Interaction, SME available onsite, IP)

Cost / Time to Productivity – when must you show results

(hidden costs, opportunity loss, bottom line mentality)

Make or Buy – is this a core competency

(viable partner available, brick & mortar vs. virtual)

Incentives Matter – do you have community engagement

(tax abatements, cash infusion, philanthropy, local sponsor)

Making Your Decision

Total Cost of Outsourcing

Factor Offshore OnShore

Labor

Transition

Operation

Management Reserve

Hidden Cost

Summary It’s not just for farming anymore

Rural Sourcing = Low Cost / High Quality Delivery

Rural Sourcing can compete with offshore

True productivity must consider TCO and TTP

Skills are available in Ohio and across the US

for additional information:

www.ruralamericaonshore.com 

www.ciber.com/downloads/whitepapers/

Q&A