The latest employment statistics from the United States Department of Labor have some heartening news: the unemployment rate fell by 0.4% to 9.4% in December 2010, and non-farm payroll employment increased by 103,000. According to the same department, “Employment rose in leisure and hospitality and in health care but was little changed in other major industries.” So while many of the American tech giants shipped their jobs overseas to enjoy the so called benefits of offshoring, there were quite a few enterprises that opted to look within the country for their work requirements. The process of outsourcing work domestically is called inshoring. 2010 saw IT enterprises that have their headquarters in major cities, like New York or Los Angeles, move their work to non-tech places like Mississippi instead of moving their business processes overseas. This is a cheaper alternative to offshoring since it essentially involves choosing a domestic vendor over an overseas partner. It helps keep jobs within the country.
Advantages of Inshoring
Inshoring brings with it several advantages, some of which include:
Decrease in labor costs by 25%
Lowered risk means there are fewer security risks or abuses of IP
Zero impact from any kind of currency fluctuations
Zero legal hassles since issues are handled domestically
Great incentives from the government because you will be increasing employment opportunities within the country
Provide the right stimulus for building local industries across the country
Rural Sourcing Is Here!
Along with inshoring, another major reason why we have seen a slight improvement in the employment rate could be because of rural sourcing/ domestic sourcing. Seen as an economical option to offshoring, rural sourcing was encouraged by the administration and welcomed with open arms. Gartner saw rural sourcing as the model that “offers cost, marketing, language and cultural benefits, making it an attractive alternative to offshore and other onshore models for some organizations.” The simple idea was to use onsite professional services from teams located in rural areas across the states. It was the perfect solution for a country that was reeling under recessionary after effects. Cost effective operations and low cost of living in rural areas in the U.S. when compared to the traditional labor markets of metropolitan cities like San Francisco, Boston, etc., coupled with the advantages of reduced risks compared to the offshore model of operating made rural sourcing even more beneficial. These benefits ensured that enterprises would no longer have to deal with issues of distance and multiple time zones. Every enterprise can try and ensure that our domestic IT workforce remains employed and this can be achieved by encouraging and implementing different forms of domestic outsourcing models. Or, like Andy Grove, Senior Adviser to Intel, said in his article, “If we want to remain a leading economy, we change on our own, or change will continue to be forced upon us.” Here’s hoping that enterprises can inculcate the right changes to ensure jobs stay within the country!