Made in lower-cost America (Published: February 8, 2005, 4:00 AM PST By Ed Frauenheim Staff Writer, CNET News.com): This isn't about the weak dollar making it attractive to produce goods in America. Instead this is about the cheaper cost of living in some parts of America, and how that can prove attractive for the outsourcing of tech projects. I mentioned this in passing a few days ago, but this is a worth-while topic to cover in depth.
I grew up in the middle portion of the U.S., in Kansas and later Kentucky. I went to college in Kentucky (U of Kentucky, class of '89). Shortly after graduation I landed in Silicon Valley after a detour working for AT&T in New Jersey. There wasn't at the time many tech jobs in Kentucky, so I looked outside the state for my opportunities. Ever since leaving my strongest desire has been to be closer to my family, for the trek from California to Kentucky is long and arduous (if driving) or merely expensive and inconvenient (if flying).
The C|NET article linked above talks about this from a different angle. It examines several companies who offer to do "outsourcing" work, but from smaller cities (with drastically lower cost of living) in the U.S. than sending the work overseas. One thing struck me deeply is how many of the employees interviewed said how they didn't want to leave their homeland just to pursue a technology career. So they stayed at home and did whatever they could to stay in their homeland, such as waiting tables in a restaurant.
I've been thinking for some time, there's a lot of good quality Universities in the U.S. that are turning out intelligent and well-trained people. Then what choices to they have? Either they leave, like I did, or they stay at home and maybe don't have very interesting work. But at least the ones that stay at home have their families nearby. In any case, this represents a talent pool that can be drawn on much the same way as talent in places like Bangalore is being drawn on in a large way.
The article quoted an interesting difference. A house in Boston that would cost $400,000 would cost $80,000 in Oklahoma City. That's the main source for the cheaper costs, is the cost of living. If happiness is the owning of objects (e.g. a house, furniture, etc) then you can pay an Oklahoma City based employee less and s/he will still be able to buy the same number of objects.
Here's the companies mentioned in the article:
- Rural Sourcing: Jonesboro, Arkansas
- Ciber: They have locations all over the world
I'm all for this. I guess one of the lessons of globalization is that everybody is in competition with everyone else. Being in competition doesn't mean you roll over and do nothing. Instead it means you look at your strengths, capabilities, and do what you can. People in the middle part of the U.S. are seeming to realize they can compete for these "outsourcing" deals.