Outsourcing: Rural Outsourcing Not Just for Startups

By Ann All

Last week I wrote about growing interest in rural onshore outsourcing, wondering whether increases in the number of IT pros living and working in rural areas might lead to a significant shift in U.S. IT employment.

It’s led to a change in strategy for at least one outsourcing provider, Canada’s CGI Group. According to an IT News piece, CGI will focus on expanding in small towns and rural areas, in the United States and in other countries as well. CGI’s goal is to have 20 percent of its staff in locations with populations of 50,000 or less. It will save money, since employing staff in rural areas typically costs 30 percent less than doing so in large metro areas.

CGI already has three delivery centers in the rural United States. It plans to add two more this year and also to establish similar centers in Canada and Europe. It will also investigate creating rural centers in India. (Perhaps it will be able to get help from the Indian government, which is making investments in rural areas to promote this kind of activity and address a potential shortfall in qualified IT workers.)

The most important factors in recruiting workers from less-populated areas are adequate broadband access and proximity to universities, says Donna Morea, CGI’s president for U.S., Europe, and Asia.

Interest in sourcing from rural areas is more talk than action at this point, says Anand Ramesh, research director at Everest Research Institute. He says most clients are willing to pay a 10 percent to 15 percent premium for the deeper talent pools typically available in larger cities.

Most of the rural onshore outsourcing companies I’ve heard and read about are startups specializing in this model, like Rural Sourcing Inc. and Onshore Technology Services, two companies that IT Business Edge contributor Don Tennant wrote about last spring. CGI is different in that it’s a better-established provider seeking to tweak its existing model by giving it a more rural slant. CGI employs 31,000 people and obviously is not a startup.

Employing home-based contact center agents, many of whom likely live in lower-cost areas, is also a somewhat more common sourcing model. Based on its website, that doesn’t look like CGI’s primary business.


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