Bridging the Opportunity Divide

Creating Big-City Jobs in Small-Town America

September 21, 2017
by
Creating Big-City Jobs in Small-Town America
Rural Sourcing Inc. helps companies "reshore" operations by finding tech talent in small cities across the United States. Photo courtesy of Rural Sourcing Inc.
When it comes to hiring programmers and other tech professionals, companies are looking to places like Indiana, not India.

New Mexico is well known for its long stretches of fiery deserts, rich Native American culture and spicy food that can make people tough-as-nails drop to their knees and cry. What it isn’t known for: its startup scene, at least not in the same way as tech-heavy metropolises like San Francisco and New York.

That doesn’t mean, though, that people who live there don’t want to be a part of it.

“This is the kind of place where I want to raise my child, and with my wife finishing [school], it became more apparent that I needed to stay in Albuquerque. But there weren’t really that many options for tech work,” says Jackson Stakeman, 36, who left the California coast five years ago to be close to his parents, both of whom retired in Albuquerque. “I was getting pulled back to California, and it’s just not what I wanted.”

Stakeman eventually found work locally as a programming analyst and is now a senior consultant at Rural Sourcing Inc. (RSI), which provides IT resources in second- and third-tier cities around the country. But his plight to find a tech gig in a tech desert — no pun intended — is not anecdotal.  

In 2015, close to 60,000 computer science degree-holders graduated from American colleges. Many of them live in what’s derisively called “flyover country” and have had to choose between leaving their cities or finding different work. With the concentration of tech companies located on the coasts, hiring managers have historically been forced to either recruit workers to relocate to these tech hubs or hire abroad.

All that has started to change, though, as both uncertain immigration policies and an increasingly expensive offshore workforce have pushed companies to seek talent in less-known U.S. cities.

Though some major companies, such as IBM, have pushed for hiring Americans in the wake of the current administration’s call for keeping jobs at home, others, like General Electric and Walmart, caught on years ago and began refocusing on “reshoring,” also known as domestic outsourcing, well before the modern rallying cry from the White House.

Between 2009 and 2011, 26 percent of American companies were looking to use offshore services. Two years later, that number dropped three points while interest in reshoring increased by 10 percentage points, according to a report by The Economist.

Much of the shift has to do with the costs associated with offshore work, which has increased in the past decade.

The internet initially made India and China prosperous for their ability to provide cheap labor to help design and build websites. But companies have become frustrated with the offshoring model, particularly as technology has advanced well beyond simple click-and-scroll websites to more interactive and complex ones — all of which require increased communication and response times from programmers.

“It takes so much overhead to manage a team offshore so that you can get over all the societal differences and language barriers. The reality is you can do it a lot better and faster if you just pick up a phone and talk with someone,” says Heather Terenzio, CEO of Techtonic Group, an outsourcing software development company in Boulder, Colo. “Everybody has a horror story about offshore outsourcing.”

That frustration isn’t uncommon, according to Monty Hamilton, CEO of RSI, where Stakeman works. With headquarters in Atlanta and four development centers elsewhere, including Albuquerque, RSI provides domestic outsourcing for larger companies by hiring programmers to work remotely from wherever they happen to live, whether that be the Midwest or the Mountain West.  

“Offshoring was very good when it was a prescriptive solution,” Hamilton tells NationSwell. “But when it’s a more creative idea, now you have to add some people who can ask critical questions.”

Those critical questions often go unanswered when outsourcing to foreign workers who are more rote in their objectives, says Hamilton. He adds that the costs that come with hiring American aren’t significant enough to merit continuing an offshore practice.

“What used to be a 5-to-1 pay gap [between domestic and offshore workers] for professional development is now a 2-to-1 gap,” he says. “The gap is not worth the inconvenience factor.”

Indeed, the costs of offshore outsourcing have risen, with wages increasing nearly 72 percent each year between 2000 and 2008 in emerging countries, according to a 2013 report by the International Labour Organization (though that trend has reversed in some Asian countries).

Anecdotally, Terenzio agrees, telling NationSwell that while Techtonic hired offshore workers in Eastern Europe for 10 years, it experienced its own set of difficulties.  

“We were finding that we had to write up every instruction with so much level of detail that we realized we could just train a junior developer in the U.S. with much more ease,” she says. “We’ve seen firsthand our productivity and efficiency go up, and our headaches go down.”

By hiring domestically for their IT and other tech needs, U.S. companies seem to be catching on.

“What we’ve seen is that people in tertiary cities would really like to make $50,000 to $60,000 as a programmer,” Terenzio says. Though that stands in stark contrast to the high six-figure incomes that developers in Silicon Valley can command, the cost of living in the Bay Area dwarfs most other places. Hiring workers in small towns is a win-win, she adds: “Wages there are lower, and people there are dying for those jobs. If you can outsource to India, you can outsource to somewhere in the U.S.”

And there’s a community benefit, as more people in smaller cities want to get in on the higher salaries that tech offers and keep those dollars in the local economy.

“Denver is my home, and I felt like I could navigate myself here in any path that I took,” says Barry Maldonado, a project manager at Techtonic, speaking of his time figuring out a career move from the nonprofit world to tech. “There were guys I knew who were younger than me and really succeeding not only in their positions but also in the financial side of life, which was one thing I still needed to work on.”

Maldonado enrolled in a coding bootcamp and was hired by Techtonic as a junior developer. His financial situation has “changed drastically,” he says.

Stakeman, the Albuquerque analyst, says that even though he no longer commands a West Coast salary, what he pays in New Mexico for his two-story home with a three-car garage is about the same as he did when living in a studio apartment in Southern California.

When asked if he was living comfortably, despite forgoing a six-figure salary, Stakeman was succinct: “Oh yeah. Oh yeah.”

MORE: 5 Cities Where Successful Wage Growth Is Happening

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