October 22, 2007 (Computerworld) --

Q&A: Nadav Sela
The COO at Genesis Networks Solutions Inc. discusses rural onshore outsourcing.

What are the advantages of rural onshore outsourcing? First, there’s the low cost associated with a lower cost of living. There is sometimes a misconception that the best IT talent can only be found overseas or in larger metropolitan areas of the U.S. But a very talented pool of individuals has given up on the hectic pace of the big city. These workers are often in the same time zone as the companies that contract with them, and there are no language or cultural barriers.


How do the costs of in-house and offshore development compare? Considering the low rates and elimination of overhead (office space, equipment, maintenance, HR), the savings over in-house could be 40% to 50%.


Nadav SelaThe raw hourly rates are about twice as high as offshore. However, there are savings related to management, efficiency, travel, communication and attrition. The high rate of attrition in offshore ventures is a big hidden expense.


Are U.S. companies showing a willingness to consider this approach? Definitely. They are not abandoning offshoring altogether in favor of rural sourcing. But they are finding that some activities, especially ones that require more interaction with clients and a high volume of communication with their metropolitan U.S. centers, are better handled utilizing rural sourcing.


Which element of your pitch do companies most respond to? Cost is a main factor, but management and control are very important. The time zone and geographical proximity combined with lack of language and cultural barriers make management and control both easier and less expensive when compared to offshore ventures.

Political support and showing good corporate citizenship are also important. This becomes a significant contributing factor, especially when dealing with Fortune 100 companies.
--Jamie Eckle

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