In today’s modern economy, it’s common for companies of all sizes to outsource at least some aspects of their business operations to third-party service providers. Outsourced services could include skills-focused work that requires certifications, like SHRM for HR or CIPP for Privacy. Alternatively, the work could require experience with specific software, tools, or process such as CRM for sales/marketing or PowerBI for data analysis/visualization. Perhaps the outsourced work requires deep knowledge or expertise in a specific discipline, such as Legal, IT, or Fraud. Among the many types of outsourcing, rural outsourcing is often one of the most attractive options. But first, what is it?
Rural outsourcing involves sending work to service providers located in rural locations where the cost of living and operating expenses are lower. Rural outsourcing is a great option for companies who want to realize the benefits of outsourcing while avoiding some of the risks and logistical challenges associated with sending work to offshore locations.
Rural outsourcing is just one of several specific types of outsourcing. According to Investopedia.com, “Outsourcing is the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company’s own employees and staff.”
There are many benefits to outsourcing. Cost is one primary reason that companies choose to outsource rather than staff in-house. It is often less expensive to hire a third-party outsourcing provider than to recruit, train, and manage an internal employee. With an outsourcing provider, companies do not have to worry about the time and costs associated with employee turn-over. Companies also benefit from the flexibility of being able to easily staff projects up and down according to current workload. Plus, there are no overhead costs, benefits, stock options, or salaries to pay.
Although the term outsourcing often makes us think of shipping work overseas, it actually comes in many forms. Some other types of outsourcing include onshoring, nearshoring, domestic outsourcing, and rural outsourcing. Let’s review these different types.
Offshoring occurs when a business operation is outsourced to a foreign country, typically overseas.
When a business operation that was previously moved overseas is transferred back to the company’s home country, this is called onshoring.
Nearshoring occurs when a business operation is outsourced to a nearby country, often one that shares a border with the company’s home country.
When a business operation is outsourced to a service provider in the company’s home country, this is called domestic outsourcing.
Rural outsourcing occurs when a business operation is outsourced to a domestic service provider located in a rural area.
Rural outsourcing can be the best choice for many businesses. It provides the same basic benefits as other types of outsourcing. These benefits include immediate access to expertise and resources as well as the flexibility of being able to ramp up and down quickly. However, rural outsourcing offers many additional benefits as well.
Data is an extremely important asset to any company, especially considering the increased threat of data breaches and unintentional leaks. With rural outsourcing, it’s guaranteed that the work will be supported by U.S. citizens who are subject to U.S. regulations, including data privacy standards. Additionally, many rural outsourcing facilities operate with 24/7 monitoring, encrypted remote-access VPN connections, and strict physical access controls.
Intellectual Property (IP) Protection
Offshore outsourcing can put companies at risk of copyright, trademark, or patent infringements since some common offshoring destinations have a reputation for not fully observing intellectual property laws. While it’s possible for IP theft to occur anywhere, it is much less likely to happen in the U.S. where legislation is stronger and more strictly enforced.
Proximity and Language
Location matters. It’s much easier and less expensive to hop on a plane for a face-to-face meeting with an outsourcing provider when they are in close proximity than it is to travel abroad to countries like India or China. There’s also the time zone factor. Domestic outsourcing ensures you’re never farther than three time zones away from your provider. This makes conference calls and online meetings easier to set up and more productive. The cultural and language compatibility that come with greater proximity is yet another benefit. This leads to improved communications, more thorough understanding, and more readily aligned professional expectations.
Another benefit of rural outsourcing is the generally high employee retention rate. Rural providers are typically considered employers of choice in the areas where they operate. And talent tends to stay with them. This means less turn-over on the staffing of outsourced projects. It also means more experienced employees on hand to support new work.
With rural outsourcing, companies get the value of working with a domestic service provider as well as the cost advantage from working outside of large urban areas. In fact, companies that use rural outsourcing find they can achieve a savings of 20-30 percent from what they would have to pay workers in major U.S. metropolitan areas. This is due to the lower operating expenses (including real estate, utilities, etc.) and lower costs of living in rural areas.
Rural outsourcing provides all the benefits of a domestic workforce —creativity, transparency, flexibility, positive team culture and collaboration— without the high costs associated with metropolitan areas. In turn, this allows rural outsourcing providers to pass on the lower costs associated with their rural locations to their clients. In general, companies have an optimal combination of competitive prices and excellent service with rural outsourcing compared to other types of outsourcing.
So how do rural outsourcing providers offer such high-caliber services? The strategy employed by many rural outsourcing providers is simple.
Many rural outsourcing providers are located in midsize cities near colleges and universities. These areas often have a high concentration of educated and skilled people. This includes an influx of recent graduates entering the workforce, so the talent pool is vast.
Rural outsourcing also benefits the local community. It provides educated workers an opportunity to find a career in their chosen field without needing to move to a large city. This in turn boosts the local economy where the outsourcing provider is located.
Sounds like a win, right? If you’re considering moving some aspects of work to a rural outsourcing provider, follow these tips to ensure you’re setting yourself up for success.
Tips for Going Rural
- Thoroughly research the rural outsourcing provider. What services do they provide? What tasks are they equipped to handle? Some may possess a breadth of knowledge and resources to handle almost any project. Others may be more specialized within their given area of expertise. It’s important to make sure the provider is a good fit for what you need.
- If you’re looking for immediate support, ask the outsourcing provider if they have current available resources. If they don’t, ask how the provider will recruit and train for your projects. Also ask how long it will take to get the team fully ramped up.
- Look at the security, data privacy, and intellectual property protection capabilities of the rural outsourcing provider. Ensure their standards meet or exceed your own. Document them within the contract.
- Ensure the outsourcing provider has a sound business continuity and disaster recovery plan in place. It’s a good idea to document this within the contract as well.
- Implement a strong governance program to oversee every aspect of the outsourcing relationship. This includes the contract, service level agreements (SLAs), key performance indicators (KPIs), issue resolution, and security.
- Keep an open line of communication for direct and timely feedback. Touch base regularly. It’s also important to clearly outline priorities and expectations to ensure the service provider is working towards achieving your goals and desired outcomes.
- Evaluate the quality of work deliverables frequently. This allows for quick adjustments to be made when needed.
Common Outsourcing Myths
Outsourcing has been around for many years and often conjures up an image of a call center in India or a manufacturing plant in China. While offshore outsourcing has historically provided significant cost savings, it has also illuminated some troubling drawbacks. Fortunately, many of these issues do not apply to other types of outsourcing, like domestic or rural outsourcing. Here are a few common myths.
The idea that quality must be sacrificed in order to realize other benefits, like cost savings and flexibility, is one of the biggest misconceptions about outsourcing. In reality, many rural outsourcing providers offer highly specialized skills, knowledge, and expertise that do not exist within the company. So, moving this work to an outsourcing provider can actually improve overall quality and increase operational excellence.
Poor communication is another common misconception about outsourcing. While it’s true that outsourcing work to a far-off location can present time zone problems and language barriers, outsourcing work domestically solves these issues. For example, if you’re on the West Coast and your service provider is on the East Coast, you may need to schedule your meetings in the morning in order to accommodate the time zone difference. However, there won’t be any need to take a call at midnight or the crack of dawn in order to talk in real-time.
Harm to Company Culture
Another common misconception is that outsourcing damages company culture. Companies may be concerned that employees will feel threatened or worry they are being replaced. Or they may be concerned that employees will feel frustrated with the changes to their workflow or the added complexity of working with a third party.
All these issues can be addressed by explaining why certain tasks are being outsourced and highlighting the benefits, not only to the company as a whole, but also to individual employees. Outsourcing provides the company, as well as individuals, the freedom to focus on core business activities while handing off non-core functions to a service provider who specializes in them.
To Recap: Why Choose Rural?
Cost savings and flexibility are key factors that make outsourcing an appealing option. However, rural outsourcing offers many additional benefits. These benefits include heightened security, cultural compatibility, and a high employee retention rate. In addition, rural outsourcing provides access to trained resources with expertise and experience in their given area. This allows companies to meet immediate needs without hiring, training, and managing the work in-house or dealing with the problematic aspects of sending work overseas.
In conclusion, rural outsourcing is a great solution as it offers the value of working with a domestic service provider along with the lower costs associated with rural areas.
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