Rural Outsourcing vs a Dedicated Team Offshore: Which Should a US Business Go For?

In the United States, where the expenses of an IT business in metropolitan areas are among the highest in the world, outsourcing development has long been an effective solution to cut down development costs.

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While the word “outsourcing” is most often associated with offshore programmers, the concept of onshore outsourcing – or rural sourcing – is gaining attention and interest. Rural outsourcing means setting up a dedicated team – or hiring a contractor team – in lower-cost regions of the country, where the pricing is more attractive. Rural sourcing is mostly targeted at university areas in regions like Alabama, Iowa, Kentucky, Minnesota, Nebraska, Ohio, Wisconsin, and others.

Both homeland staffing and offshore development have their benefits and challenges. Let’s analyze these and compare the two attractive outsourcing options US businesses have.

Onshore Outsourcing

Pros:

  • Lower costs, compared with metropolitan areas. The salaries in general are lower outside big city areas, and so is office rent. This makes maintaining an IT dedicated team more affordable.
  • Lower turnover rate. The residents of economically depressed areas often have a difficulty finding employment, which is especially true for developers that specialize in rare technologies. Due to this, stable workforce becomes another advantage of rural sourcing.
  • No barriers. Onshore outsourcing eliminates many difficulties, as there are no language or cultural barriers, and the time difference is minimal, if any.

Cons:

  • Limited talent pool. Even in university towns, the amount of IT professionals produced by large state universities can’t compete with the talent pools of major outsourcing countries, such as India, China, or Ukraine.
  • Process immaturity. Rural IT service providers tend to show worse process organization than more mature offshore providers, so rural IT professionals are less familiar with progressive project management and team management techniques.
  • Difficulty sourcing senior level professionals. University areas produce plenty of entry level developers, but senior level IT experts tend to settle in metropolitan areas, where there is more demand on their services and the salaries are higher.

Offshore Development Center

Pros:

  • Drastically lower costs. Rent and support staff offshore will cost much less than in any rural area of the US, and the cost of IT labor force in Ukraine, for example, is often 50% lower than in Western Europe.
  • Extensive talent pool. IT has become one of the leading industries in outsourcing countries, so they offer plenty of entry level developers, produced by universities each year, as well as senior level developers, who have years of experience working with Western customers.
  • More mature service providers and programmers. Working primarily with US-based and European customers, service providers in outsourcing locations implement advanced techniques to organize the process. As a result, the developers are accustomed with front-line trends like Agile development.

Cons:

  • Higher travel expenses. Managers and business owners have to visit their remote teams regularly, and the cost of such visits to Ukraine or India is, naturally, higher than the cost of trips to Alabama or Ohio. That means either more expenses, or less frequent visits.
  • Time difference. Ukraine, for example, is 6 hours ahead of the East Coast of the United States, so it’s afternoon for a Ukraine-based dedicated team when the day only starts in the head office.
  • Language and cultural barriers. Mentality differences influence the management process and can sometimes have a direct impact on the project. Poor English and difficulty understanding accents are also among the drawbacks US businesses name when they talk about offshore development.

Rural outsourcing does have certain benefits for US companies, but at the moment this market doesn’t seem mature enough to satisfy all their needs. Dedicated development teams offshore remain a good alternative: the time difference can be an advantage for projects that need 24/7 support, and language and cultural barriers are slowly eliminated, as most offshore programmers work with Western businesses for years.

As a US-based business, would you rather turn to rural outsourcing or set up a dedicated team offshore in one of the key outsourcing countries? Why? Feel free to reply in the comments.

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