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Rural Sourcing: Trend or Main St. Savior?

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Definitions

• Offshoring is the relocation of a whole process, piece of a process, a function, or a discrete piece of work outside the boundaries of the United States, either within or outside the boundaries of the company.

• Onshoring is the sending work to service providers in domestic locations where salaries and operating expenses are lower.

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Progression of IT Sourcing

1990’s 2000’s1980’s

Domestic, urban firms

contracted to provide IT

services – OLD SCHOOL

Contracting or hiring in places like India and China where labor costs were

lower

Contracting or hiring in rural communities

within the USA or establishing

distributed rural teams

Contracting or hiring in places such as Central

and South America –

lower wages, closer to home

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Enter Rural-Sourcing

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Considerations for IT Rural-Sourcing(Offshore or Not)

LABOR COSTS Annual salary, recruiting & turnover

Average of 30%% less compared to urban areas, recruiting and attainment considerably lower

AVAILABLE SKILLS Formal education, resource churn and stability

Alignment (partnering) with a University or region where you are the big fish in the pond

DATA SECURITY Regulatory, law enforcement, perception

Healthcare, Financial, regulatory – completely protected by the US legal system

LANGUAGE & CULTURE

Inferred understanding, work ethic, expectations

First language English, any other is available via services or training. MidAmerica work ethic

TIMEZONE Issue or incident response, project alignment

Work as a team, in the same time mode. Project Management, delivery & support (24 hours if need be)

INTANGIBLES Economic incentive Embedded real interest to make your business work

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Liaison’s Rural-Sourcing Strategy

Carbondale, Illinois

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Liaison’s Rural-Sourcing Program

• State of the Art new Facility, access to University technical services and advances

• 25 Liaison Employees located in Carbondale, Illinois– 24 x 7 Staffing model – Plan on ramping up to 35 by end of 2012

• 70/30 split of recent graduates and seasoned veterans

• Global Competencies: MAPPING, PRODUCT SUPPORT, MANAGED SERVICES

• Tight alignment and support from Southern Illinois University– Recruitment– Curriculum Influence – Research and Special Projects

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Labor Costs – Urban vs. Rural Sourcing

2010 Dice Salary Survey – Ciber Consulting - 2011

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TTP – Time To Productivity

Recruiting ® + On-boarding (O) + Knowledge Acquisition (KA) = TTPRural Sourcing = Delivering HIGH QUALITY work, with minimal ramp up and direction

(LOWER THE OVERHEAD – exposes the Offshore myth of lower costs)

2010 ciber Consulting & Rural America OnShore Sourcing

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Rural Sourcing Summary

• Rural Sourcing: Offers a competitive cost model, withoutsacrificing quality

• Rural Sourcing: Can clearly compete as an alternative or compliment to offshoring

• Rural Sourcing: Skills are available in some of the most unknown parts of the country

• Rural Sourcing: Invests in our people and economy right here at home

• Rural Sourcing: Offers a competitive advantage and differentiation

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In-Shoring as an Economic Development Strategy

Kyle Harfst, PhDExecutive Director

Southern Illinois Research Park

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Carbondale Illinois

• Illinois population – 12,910,409• Jackson County, Illinois – 58,103• City of Carbondale – 25,623• Six hours from Chicago• Two hours from St. Louis• Three hours from Nashville• Seven hours from Atlanta

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Southern Illinois University

• Three main campuses – Carbondale, Edwardsville, Springfield (35,000 students)

• 19,000 students on Carbondale campus• 210,000 Alumni of SIUC

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Office Of Economic & Regional Development

• SIUC Small Business Incubator• SIUC Small Business Development Center• SIUC International Trade Center• Illinois Manufacturing Extension Center• Center for Rural Health & Social Service Development• Community Development & Outreach• Southern Illinois Research Park

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What is Economic Development?

Improving the quality of life in one’s community through strengthening its economic base

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Traditional Economic Development model

BusinessStart-Ups

Business Retention

and Expansion

Business Attraction

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New Model: Cycle plus …Inshoring

Research Project for Southern Illinois

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How did we become involved with on-shoring?

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Inshoring Research Projectfor Southern Illinois

“as the tide shifts away from off-shoring, rural regions are evaluating similarities between themselves and those developing countries that have attracted U.S. businesses to operate there

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Typology of Outsourcing

Source: Gurstein P. (2005)

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Typology of Outsourcing

Source: Gurstein P. (2005)

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An exampleOf a targetedindustry

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Liaison Technologies & SIUC

• Liaison COO is an Alum of Southern Illinois University• Conversation started in January 2010• Challenges with off-shoring• Interested in bringing those positions back to the United

States• Must be a financial decision to relocate – not an emotional

one

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Liaison made the decision to invest in Carbondale & southern Illinois

• Established a presence in the Southern Illinois Research Park – landed in the Dunn-Richmond Economic Development Center

• Flexible work space provided as the workload expanded• Beyond space – value added activities• Critical meetings with campus units – Computer Science,

Information Technology, etc.• Commitment to the region by staying in Carbondale via a

more permanent location

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From our perspective this has been a great collaborative effort!

• Economic impact of additional jobs in southern Illinois• New graduates have more opportunities to stay in this

region• Additional collaboration with Computer Science &

Information Systems Technology departments on campus

• Mr. Mieldezis of Liaison has given back to the university community through his position as a board member of the SIUC Alumni Association

• Another company with an SIU graduate landed here during a transition of his business model

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Solutions

• Data Integration• Data Management • Data Security

Multinational

• Global headquarters in Atlanta• European offices in Finland,

Netherlands, Sweden, UK• More than 7000 customers

worldwide in over 46 countries

Visit Southern Illinois Research Park here

For more presentations:Liaison Webinars

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Additional Resources