Dec 19, 2018

Revitalizing a Rural Economy

Much has been written about the problems of our economically distressed rural areas. The reality is that many of the reasons these communities were developed - agriculture, mining, forestry - although still important industries, have dramatically reduced their need for labor. 

I grew up in Ishpeming, a small city nestled in the gorgeous Upper Peninsula of Michigan, surrounded by amazing waters and forests, with four striking seasons that rotate from beautiful summers and falls to frigid cold and endless snow. It was once booming with its numerous mines.

But I've spent decades watching this wonderful city deteriorate economically, and I understand why: The same mining industry that brought my relatives here from Finland and Sweden now operates on less than a quarter of the labor required to produce the same amount of iron ore.

However, I am very familiar with one idea for helping many of these rural areas, and that is the domestic version of offshore software development. It goes by various names, including onshoring, domestically sourced IT, domestic outsourcing and rural outsourcing. Regardless of name, it's a relatively easy concept that works.

Unlike most jobs from a few generations back, software development does not require people to work in proximity to each other. For a variety of reasons, the cost of living in rural areas can be half or less that of an urban area. 

Somewhat surprisingly, it is not difficult to find highly skilled technical people like myself who are very happy to leave an urban life behind and live in a rural community. Economically, this is a win-win for clients and communities. Not surprisingly, this concept is catching on across the United States.

So how is this done? The simplest way is already widely done across the country, and that is securing a telecommuting arrangement with an employer and moving to wherever you want, provided it has high-speed internet access. With a phone and a laptop, you have most of what you need to work.

However, few will take this risk, and need a more structured environment to make this change. This essentially is a company that finds clients that accept remote software development and software engineers to work for them. 

Getting from a single telecommuter working out of a spare bedroom to a large organization with dozens or even hundreds of highly skilled technical people earning high salaries in rural areas takes more than a few steps. Let me share my experiences in this area.

The initial problem, as in many startups, is getting launched. The first decision is where to locate. This may be easy because, like me, you may have once lived in a rural area that has broad appeal to many, such as a tourist destination. You probably need some sort of small urban anchor that can provide families with the basics of modern life, such as retail, services, education and healthcare.

So how to start? My standard answer for several young techies wanting to jump start their moribund metro life in a Dilbert cube is to rent a large home in one of these areas, and all live and work in one place. That is, return to their college dorm days.

Most likely at least a couple will be able to get their current employer to agree to let them continue their employment as telecommuters. However it is done, the idea is to accept a period of hard work and low income, not so unusual with a new business.

From here, it's critical to name yourself, put together a marketing plan, keep expenses and rates low, and build a foundation to survive in the somewhat turbulent world of consulting. Marketing starts with a website and a LinkedIn company page. 

Then move onto Twitter, Glassdoor, Indeed, Facebook and other social connections. I suggest you don't end the day without someone posting something somewhere that has your name and what you do on it. Monitor and grow connections to your LinkedIn company page. This is all critical even when everyone is working "60-hour" work weeks because eventually you will need more clients and workers.

A word on expenses. Your competitive advantage will always be price, so never abandon this. Make sure any potential client knows that you are "30-50% off metro rates," and make sure that you really are. Otherwise, you are just another bunch of techie prima donnas who at best are somewhat better than the millions of other IT workers that are much more accessible than you are working from some mountain hut. 

And don't fool yourself into believing you can be just as effective working remotely. All things being equal, it is almost always an advantage to have people working in proximity to others. Both communication and relationships are easier and better. But organizations will often gladly put up with your work-style inconveniences if they can significantly cut their costs.

The concept of offshoring originated outsourcing the Y2K fix to cheaper emerging markets such as India. These countries have remained strong competitors in US software development, and rural outsourcing will continue to compete with them. To some degree, you will always find your pricing sandwiched somewhere between them and Silicon Valley.

But foreign resources have several of their own problems, such as language, culture and time-zone barriers, plus sometimes legal issues with foreign services. These all present opportunities for the rural outsourcing firm.

One misconception of low-cost rural organizations is that people are glad to give up the financial rewards of urban life in order to life a substandard life in a rural environment. This simply need not be true. Even with significantly lower rates, employees working in a rural environment, from a cost-of-living perspective, can easily earn as much or more than high priced urban areas.

From the start, it is important to structure your environment so that it works regardless of location. Connect everyone electronically via cloud services, including your phone system, email, documentation, company systems and software development tools. Everyone should be able to move to another location and your company should function well.

These disciplines will ensure that you are as virtual as possible, so that people and clients can literally be just about anywhere and your operation runs as seamlessly as possible. These steps will all help compensate for your big negative: You are geographically located in an inconvenient area.

If you start with a couple of developers supporting a couple of clients, it doesn't take much for you to need more help. This can be tricky but eventually you will learn that there is a strong cadre of people that are very interested in migrating out of a city. Online advertising, a LinkedIn company page and social networking are critical in getting these connections developed before you need additional workers.

You will find that hiring into a rural community is very different than normal hiring. Your pool of resources is probably not nearby. Further, your first challenge is less about finding a specific skill and more about finding an individual who wants nothing more than to live in an area like yours. And to make things more difficult, these individuals may not even be aware of the opportunities you offer.

Therefore, posting ads and searching online databases probably is not going to help you much. Instead, you need to get your name out into areas where individuals you seek may live, realizing that these individuals may not have even considered the opportunities that you are offering. You also may find yourself hiring great raw material that you then train into your particular technical skill-set.

But once you develop a network to proper areas, you will find people who already understand that urban salaries can become play money when a basic house with barely a yard sells for a million dollars. They are looking for a sense of security and a set of basic benefits, such as access to healthcare, paid time off and a 401K. But otherwise, you may not need to sell yourselves as much as you think.

Since your costs will be significantly lower than what your clients normally pay, if you market yourself properly, there is almost unlimited work available in software development, and your growth will probably be limited most by your ability to secure resources. That is why recruitment is so important from the start - by the time you need the people, you may not be able to find them. But eventually you well may be able to build an organization with scores or even hundreds of software developers.

Once a structure for formal telecommuting is in place, the same model can work in other IT areas besides software development. We have expanded into business analysis, quality assurance and project management. Other avenues to consider are database and system administration, plus other areas outside of technology, such as engineering, that can also be done using the same concepts.

And because you have establish an environment that works regardless of location, you may find yourself able to hire people that telecommute from other low-cost areas. We have had people working remotely for us in six different states from coast-to-coast. Depending on the area, they may be seeds to a whole new set of resources.

If you have any questions or are interested in additional information or help in engaging in this area, feel free to contact me via this site; or Twitter, LinkedIn or Google via JonJosephA.