Originally published November 15, 2004:

The former CIO of Cardinal Health is developing an alternative to offshore IT outsourcing. Her company, Rural Sourcing, Inc. (RSI), operates in low-cost rural areas in the US to compete with offsource outsourcers, and the idea is catching on.Kathy Brittain White started RSI after working with several large companies like Mattel and Cardinal Health, where she worked with offshore outsourcers. Her approach is to create development centers near rural universities, combining rigorous high-quality development methodologies with local resources in a low-cost environment. RSI's first two development centers are in Arkansas. Other companies, like Aurora Consulting Group, Inc. near Buffalo, NY, have a similar approach. RSI is taking advantage of incentives from New Mexico and North Carolina to open development centers there in 2005.

Large companies and government providers are increasingly working with rural outsourcers because rural outsourcing addresses the problems of offshore outsourcing:
face-to-face communication, time-zone, language and cultural differences, and citizenship requirements for government work. But, possibly even more important, it can also provide evidence in an ongoing debate on whether the real benefits of offshore outsourcing outweigh the real costs. Many IT workers believe this issue is swept under the rug by company leaders seeking to protect their public company's stock price.

If so, rural outsourcing's competition may be a sleeping giant. In addition to lower costs, offshore outsourcers tout higher productivity and processes compliant with international quality standards. But they haven't provided much proof - not that US companies are asking. Instead, the ITAA defends offshoring with conflicting arguments, claiming there is a shortage of IT labor in the US and that the loss of 35,000 IT jobs per year is related to economic conditions and the burst of the Internet and telecom bubbles. The ITAA, referred to by some US IT professionals as a lobbyist for offshore outsourcers, doesn't include outsourcing in the list of IT issues on its website, even though 11 of the 25 headlines listed there are related to outsourcing issues, and disputes of its studies supporting offshoring have been presented as testimony to Congress. 

But some big service providers with significant investments in offshore locations like CapGemini have noticed rural outsourcing and are developing rural centers themselves. However, they question whether smaller rural outsourcers can handle bigger projects. Ramping up for new projects hasn't been an issue for RSI, notes White.

Others question the positive impact of rural outsourcing on IT employment. In a Computerworld editorial, Frank Hayes described the "Farmshore Future." He argues that this won't be good for the corporate IT worker because it provides more incentives for companies to replace employees with outsourced workers, even if they are still in the US.

Rural outsourcing employees may earn less than their urban counterparts. They may live in less popular and less expensive areas, but they have jobs and pay taxes, and for many, that is the point.