Another idea for Ohio - Rural outsourcing helps Arkansas compete with India - Jul. 8, 2010

Rural outsourcing helps Arkansas compete with India - Jul. 8, 2010

(Ben's comment - we have plenty of rural in Ohio. Who is doing this in Ohio?)

(CNNMoney.com) -- Looking for skilled, low-cost labor? Forget about India and China. How about Jonesboro, Ark.?

As the national unemployment rate hovers near 10%, some companies are starting to eye job-hungry areas of the country as prime candidates for the kind of outsourced work that once would have gone overseas.

Dubbed "ruralsourcing," "rural outsourcing" and "onshoring," the practice relies on two simple premises: Smaller towns need jobs, and they offer a cheaper cost of living than urban centers. So businesses that outsource work to these areas can expect to pay less -- rates are often as much as 25% to 50% lower -- than if they were hiring urbanites with comparable skills.

In response, a new crop of outsourcing startups are popping up with development centers in places like Joplin, Mo., and Eveleth, Minn., where hundreds of employees crank out software code or offer IT support for large corporate clients.

"It's extremely timely given our economic climate," says Mary Lacity, an information systems professor at the University of Missouri-St. Louis who has written 12 books on outsourcing. "And I think there's a demand for it."

Compared with the estimated $60-billion-a-year offshoring industry, rural outsourcing remains just a blip on the radar. Yet the strategy is becoming a more popular option for businesses that are trying to stretch their budgets.

One rural outsourcer, Onshore Technology Services, recruits workers from minimum-wage jobs and gives them intensive training in IT specialties. Sixty-five people work in IT centers in the rural Missouri towns of Macon, Lebanon, and Joplin.

"They're moving people from fast-food to IT jobs and letting them use their brains," Lacity says.

Meanwhile, CrossUSA in Burnsville, Minn., recruits experienced, older IT workers who are nearing retirement for its 100-employee operations in Sebeka, Minn., (population 700) and Eveleth, Minn., (population 3,000).

The draw for workers is the chance to make their money stretch as far as possible prior to retirement. "They're trying to figure out the best way to finish their careers, and some people want a small-town quality of life," says John Beasley, CrossUSA's director of business development.

CrossUSA is growing at a 7% annual clip, with $9 million in sales last year. Its turnover rate is low -- in a town of 3,000 people, who can woo away your employees?

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