Rural Sourcing (OnShoring) The Circuit Breakfast BYTES


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

In today's tough economy, businesses of all sizes and industries are seeking new ways to maximize profit margins. Virtually every business outsources something whether from critical operations down to printing of marketing material. The outsourcing industry is evolving with new services and capabilities being offered both in the USA and worldwide.

Don Stoner of CIBER and Marty Gardocki of Rural America OnShore Sourcing gave a great presentation on the value of onshoring.

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  • Cost - rural talent costs up to 20 - 40% less than comparable urban areas. Lower cost of living and lifestyle driving the decision to stay rural. Skills Available – rural talent is rich in experience. You can find the skills that you want, but not necessarily in one place. Location … Location … Location Data Security/Privacy – rural talent are covered under the U.S. legal system. IP and copyright protection is covered. Legal recourse in available as a last resort. Language/Culture/Timezone – Midwest work ethic, no language barriers, working the same schedule you do. Intangibles – you are hiring local suppliers, helping with economic revitalization, many minority and female owned business and buying American
  • Organization Culture Process rigor Risk Tolerance Willingness to Change Type of Work Significant IT/Business Interaction & Knowledge Must be done onsite Volatile Requirements – WIP Legacy Systems Cost/Time to Productivity What are you willing to pay Factor in the hidden costs Opportunity loss is real When will the benefits hit the bottom line (time to productivity) Make or Buy
  • Rural Sourcing (OnShoring) The Circuit Breakfast BYTES

    1. 1. Rural Sourcing (OnShoring) How to use Rural Sourcing (OnShoring) to your financial and operational advantage  Donald Stoner Solution Director Martin Gardocki Vice President
    2. 2. Agenda <ul><li>What is Rural Sourcing (OnShoring)? </li></ul><ul><li>Different Types of Outsourcing (a comparison) </li></ul><ul><ul><li>USA Urban Outsourcing </li></ul></ul><ul><ul><li>Offshoring </li></ul></ul><ul><ul><li>Nearshoring </li></ul></ul><ul><ul><li>USA Rural OnShoring </li></ul></ul><ul><li>Advantages of Rural OnShoring </li></ul><ul><li>Rural OnShoring – Is it right for you? </li></ul><ul><li>Summary </li></ul><ul><li>Q&A </li></ul>
    3. 3. What is Rural Sourcing (OnShoring)? The Obligatory Bovine The Cool Tractor Scene
    4. 4. What is Rural Sourcing (OnShoring)? A Great Place to Work Rural Development Center Small Town Offices
    5. 5. What is Rural Sourcing (OnShoring)? <ul><li>Rural sourcing offers cost, marketing, language and cultural benefits, making it an attractive alternative to offshore and other onshore models for some organizations…Gartner </li></ul><ul><li>Key Findings </li></ul><ul><ul><li>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. </li></ul></ul><ul><ul><li>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. </li></ul></ul>
    6. 6. Different Types of Outsourcing <ul><li>USA Urban Outsourcing - domestic, urban firms contracted to provide a service - old school. </li></ul><ul><li>Offshoring - contracting with firms in places like India and China - started becoming popular in the 1980s. </li></ul><ul><li>Nearshoring - outsourcing to firms in Central and South America - last ten years. </li></ul><ul><li>USA Rural OnShoring - domestic firms in rural communities or distributed rural teams contracted to provide a service - last five years. </li></ul>
    7. 7. Cost Components of Outsourcing <ul><li>Labor - cost of personnel and source of savings generated through arbitrage </li></ul><ul><ul><li>(Location, Skill set, On/Offshore mix) </li></ul></ul><ul><li>Transition - cost of identifying, negotiating and moving work to the outsourcer – time to productivity </li></ul><ul><ul><li>(Vendor selection, Knowledge transfer, Staff reallocation) </li></ul></ul><ul><li>Operation - ongoing cost of the relationship </li></ul><ul><ul><li>(Governance, Communication, Lost productivity) </li></ul></ul><ul><li>Management Reserve - cost of managing the unexpected </li></ul><ul><li>(Acts of nature/man, Force majeure, Redeployment) </li></ul><ul><li>Hidden Costs – opportunity loss </li></ul>
    8. 8. Advantages of Rural OnShoring <ul><li>Labor - up to 20 - 40% less than comparable urban areas </li></ul><ul><li>Skills Available – rural talent is rich in experience. The skills that you want may not be in one place. </li></ul><ul><li>Data Security/Privacy – Covered under the U.S. legal system. </li></ul><ul><li>Language / Culture / Timezone – MidAmerica work ethic </li></ul><ul><li>Intangibles – revitalize local economy </li></ul>
    9. 9. Labor Costs – Urban US vs. Rural US 2010 Dice Salary Survey
    10. 10. Operating Costs
    11. 11. TTP = Time to Productivity <ul><li>R + O + KA = TTP </li></ul><ul><ul><li>Recruiting </li></ul></ul><ul><ul><li>On-boarding </li></ul></ul><ul><ul><li>Knowledge Acquisition </li></ul></ul><ul><li>Delivering high quality work with minimal direction </li></ul>
    12. 12. Rural OnShoring – is it right for you? <ul><li>Organization / Culture – how well do you manage change </li></ul><ul><ul><li>(process rigor, risk tolerance, change advocate) </li></ul></ul><ul><li>Type of Work – is this business critical, volatile requirements </li></ul><ul><ul><li>(Significant Business Interaction, SME available onsite, IP) </li></ul></ul><ul><li>Cost / Time to Productivity – when must you show results </li></ul><ul><ul><li>(hidden costs, opportunity loss, bottom line mentality) </li></ul></ul><ul><li>Make or Buy – is this a core competency </li></ul><ul><ul><li>(viable partner available, brick & mortar vs. virtual) </li></ul></ul><ul><li>Incentives Matter – do you have community engagement </li></ul><ul><li>(tax abatements, cash infusion, philanthropy, local sponsor) </li></ul>
    13. 13. Making Your Decision Total Cost of Outsourcing Factor Offshore OnShore Labor Transition Operation Management Reserve Hidden Cost
    14. 14. Summary <ul><li>It’s not just for farming anymore </li></ul><ul><li>Rural Sourcing = Low Cost / High Quality Delivery </li></ul><ul><li>Rural Sourcing can compete with offshore </li></ul><ul><li>True productivity must consider TCO and TTP </li></ul><ul><li>Skills are available in Ohio and across the US </li></ul><ul><li>for additional information: </li></ul><ul><li> </li></ul><ul><li>  </li></ul><ul><li> </li></ul>
    15. 15. Q&A