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Local outsourcing gains momentum in America
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Local outsourcing gains momentum in America
Cities that are IT hubs
“The decision for us to execute on our cross-sourcing model in a US rural community was based on lower operational costs and a lower cost of living in rural areas of the US compared to larger metropolitan cities such as Atlanta, Boston, or San Francisco,” Paul Eurek, founder and CEO of Xpanxion told ET in an interview last week.
Customers such as NCR, Coca Cola and Goldleaf Financial Solutions are outsourcing software projects to Xpanxion. At a time when political lobbyists such as Senator Chuck Grassley are leading a campaign against offshore outsourcing by American firms, some customers might prefer to outsource smaller projects to local providers and avoid being seen as supporting the outsourcing of US jobs.
“They offer lower costs than traditional US labour markets, potentially less risk (political and other) than offshore, closer proximity (and perhaps quicker and cheaper travel to the customer site than an offshore worker),” said Ron Hira, assistant professor of public policy at the Rochester Institute of Technology.
While cost advantages of delivering a project from a location such as Corsicana, or Kearney (Nebraska) could be almost 20-40% cheaper when compared to Los Angeles, outsourcing experts such as Ms Hira argue that rural sourcing will still remain a niche market because not many customers are located in the rural locations.
“The wage differentials are simply not compelling enough for rural sourcing to take significant market share,” Ms Hira said. “If you need to be onshore, it is more likely because you need to be co-located with the customer and the customers aren’t in rural locations,” she added.
Source:
http://economictimes.indiatimes.com/International-Business/Local-outsourcing-gai
