Bringing Outsourcing Home

For many rural communities, future economic development strategies will include efforts to brand themselves as an alternative to sending jobs offshore. In the rural Arkansas Delta, one company is working to keep jobs at home by delivering low-cost technology services to Fortune 500 companies.

Arkansas universities are breeding skilled information technology (IT) workers – and the state plans to keep them on the home front with virtual internships and, once they graduate, employment with an “onshore outsourcing” concept that is taking off in the rural South.

Indeed, Arkansas State University, Southern Arkansas University, and the University of Arkansas system are partnering with businesses to provide opportunities for students through Arkansas Rural Sourcing, a non-profit entity formed to promote state-wide IT training and employment. Then, through Rural Sourcing, Inc., students who want to stay close to home are finding virtual IT work with some of the nation’s largest technology companies.

"The Arkansas Rural Sourcing initiative is an exciting opportunity for colleges and universities to partner with business to provide employment direction for our students. It has a win-win potential that will strengthen our regional economies, provide profitable operations for business and industry, and create wonderful career opportunities for talented graduates,” says Dr. David Rankin, president of Southern Arkansas University.

Arkansas Rural Sourcing has four primary goals: to reach out to rural regions of Arkansas with IT training and infrastructure support, to develop a unified plan to attract employers to Arkansas, to support IT internship programs in rural regions, and to heighten awareness of career opportunities in the IT field through outreach programs.

Arkansas Rural Sourcing, which receives leadership and funding from the state’s three universities and the Horizon Institute of Technology, is making great strides toward those goals. In fact, the organization is currently partnering with technology vendors like Novell to offer specialized training that increases the marketability of its graduates.

Arkansas Rural Sourcing has already established, and even expanded its IT internship programs at the University of Arkansas, Southern Arkansas University, and Arkansas State University. The group plans to add new sites over the next two years. These programs allow students to work with Fortune 500 companies on business projects as part-time paid employees without leaving campus. Southern Arkansas University’s Virtual Internship Program (VIP) won a top national award recognizing its innovation.

Arnie Weller, a team leader at healthcare conglomerate Cardinal Health, says entering into the VIP program with Arkansas State University afforded the company ready access to top-notch technology talent. Cardinal has several interns working for the company at any given time and reports a consistent, quality experience.

“As a VIP employer, we are able to recruit and attain the best and brightest to work on live projects – this benefits both the interns and our company. We get high quality work at competitive rates, and they get real work experience,” Weller says. “Cardinal benefits from being able to influence the tools and technologies that students learn and use, and students and faculty benefit from the additional access to current business tools provided by the VIP lab.”

Arkansas Rural Sourcing caught on so rapidly that it gave one of its corporate supporters and Arkansas State alumna the idea to launch a for-profit counterpart –  Rural Sourcing, Inc. Kathy Brittain White, former chief information officer and executive vice president at Cardinal Health, is behind the concept that brings technology to the students and residents of the Arkansas Delta to stimulate education and economic development.

The idea for Rural Sourcing came to White while she was at Cardinal Health. In the mid-90s, when White needed help with basic application maintenance, she turned to the computer science department at her alma mater. Founded in 2003, Rural Sourcing offers IT services at 30 percent to 50 percent less than larger competitors by locating facilities in rural areas. Rural Sourcing offers IT solution packages - often outsourced by companies to India and Asia - marketing and content creation as well as project management services.

“Rural Sourcing is a for-profit company that is socially directed, meaning that we absolutely still have economic development and growth and support of knowledge workers in mind for the regions in which we locate,” said White. “Much of our work is in Arkansas.” Among other things, Rural Sourcing built the state’s eCorridors Web site, which promotes Arkansas’ participation in a regional fiber-optic network designed to boost research and commerce in the state.

White gained public attention after being named in Forbes magazine as one of “America’s Top 25 Businesswomen” for her work with economic development in the Arkansas Delta region in 2001. She went on to grant ASU’s College of Business a $2 million gift to establish the Horizon Institute of Technology, a think tank initiated to develop technology-based programs in Arkansas, in 2002. White, its founder, also serves as president of the organization. The Horizon Institute is also one of Arkansas Rural Sourcing’s supporters.

Today White is widely credited with helping to launch a revolution in the way U.S. companies are doing business. It all began during her days at Cardinal Health, a Fortune 500 company based in Ohio. There, White established a “virtual” internship program offering ASU students an opportunity to work for Cardinal’s Chicago office through Arkansas Rural Sourcing. The students were provided with IT equipment and worked remotely from Jonesboro, a university town with a population of around 55,000.

"The idea was the interns would then go and work in the Chicago office upon graduating,” she explains. “What we realized though was that most former interns didn't really want to leave Jonesboro if they could find meaningful work there.”

White soon shifted gears to for-profit status starting Rural Sourcing, Inc. and creating IT service centers near universities in smaller communities. After just three years Rural Sourcing has established branches in five university towns and has a client base ranging from small businesses to multinational Fortune 500 companies including toy giant Mattel and healthcare company Baxter International.

"We're hiring talented people and selling IT services. The twist is we're doing it in areas where others are not. We're going into areas where there's a strong university and good quality of life, where most people would have stayed if they could find a job," White says. "We've found an innovative way to provide graduate employment and develop local economies. It's been a win-win scenario."

A management team with Fortune 500 experience backs White. She credits the rural South location as an advantage when it comes to recruiting. White has attracted top talent by pitching quality of life and low cost of living to prospective employees and executives. She used that strategy to bring an executive from California and a help-wanted ad that the company ran in the Jonesboro paper drew more than 500 applicants from 35 states.

That Rural Source team includes Ken Yorgensen, senior vice president of technology. Yorgensen also served in executive leadership at Cardinal Health before joining Rural Sourcing. And Henry Torres, the company’s director of business development, was an IT executive who held positions at Wal-Mart, Neiman Marcus, and other sizable companies. 

Unlike some economic development initiatives that attempt to bring technology companies to non-traditional tech areas – for instance Michigan recently wooed Google to its heartland with a deal that will bring 1,000 jobs and a sales and operations center to the Ann Arbor area – Rural Sourcing is not trying to bring companies to rural Arkansas. Instead, it is trying to serve national companies from its technology sourcing centers in rural Arkansas. That means retaining IT and computer science college grads. Rural Source has 25 employees in Jonesboro.

“We want to put our state’s IT workers into the field,” White says. “Not only can we serve national companies, we can also serve companies in these rural areas since these regions usually don’t have this type of computer programming support in their backyards. We figured if India could support American companies, then why can’t companies in rural America support companies in the same city?”

White’s growth strategy is to go into regions where others are not. Those regions are often rural. Most recently, Rural Source opened a center in rural North Carolina. The company also has development centers in the Atlanta area. The goal is to partner with universities in these regions to recruit students and attract them to the field of computer science while also continuing to generate a profit.

While White has taken a page from Wal-Mart and Southwest Airlines by tapping into a workforce that would otherwise have to leave the region to find well-paying jobs, Rural Sourcing also has international aspirations. Just recently, White visited the University of Otago in New Zealand to discuss how the virtual sourcing scenario can be replicated in New Zealand, in particular Otago/Southland. She also met with the area's business community to share ideas about regional economic development.

Of course, Rural Sourcing has seen its challenges over the past three years. Attracting skilled IT workers and balancing supply and demand is keeping White and the management team busy, but they are also looking ahead. Rural Sourcing is in talks with some marquee clients and White hopes to make some exciting announcements in the next few months.

“Rural regions like those in Arkansas have lower costs of living, so we can operate less expensively and pass that savings along to our clients,” she says. “We will replicate this model in other parts of the nation. If we don’t do something, then ten years from now every technology job in the nation will go overseas. We want to play a role in preventing that from happening.”