How Rural Sourcing Benefits Communities Now and in the Future
“There is absolutely nothing negative about what you do.” David Markiewicz, reporter for the Atlanta Journal Constitution explained when interviewing Monty Hamilton, CEO of Rural Sourcing, Inc., for a piece on the rural sourcing industry. Buyers benefit greatly from utilizing the services of the rural sourcing industry. However, the benefits don’t stop with the buyers getting quality services at great rates; they extend far into the local economies and lives of the employees that service the buyers.
Employees of rural sourcing type companies are no longer forced to make a choice between having a career for which they have a passion OR staying in a place where they enjoy the familiar lifestyle. Long gone are the days where someone grows up on a farm and his or her only option for a career is to work on that farm or to move to a metropolitan city for opportunities in their chosen field. Non-metro areas across the U.S. are not only benefiting from expanded career options, but also are creating revitalized, mini-tech hubs that offer all of the hip factors of urban areas like walking or biking to work exotic restaurants and unique coffee shops, without the hassles of over-crowded cities.
Colleges and universities are the cornerstones for supplying the talent to support this trend. Local educational institutions such as Arkansas State University (Jonesboro, AR) and Georgia Southern University (Statesboro, GA) have become advocates of this initiative. Their graduates prefer to remain in or near their college towns upon graduation, and until recently, that option did not exist. The education communities in non-metro areas tend to work more closely with the business communities than their peer institutions in the metro areas due to shared objectives of improving the local economies.
Because of this partnership with the surrounding colleges and universities, rural sourcing companies are able to provide a high level of intellectual capital with a built in cost advantage over similar service providers in larger metro areas. According to McKinsey Quarterly, summer 2010, “In the United States, IT labor costs in smaller cities are lower than those in major urban markets by 35 percent or more.”
The rural sourcing industry offers more than just a cost-effective alternative to offshore IT outsourcing. The industry helps contribute to the revitalization of cities and towns across the U.S that otherwise would be suffering in the present economy. With greater access to local colleges and universities and online education and training opportunities, today’s job seekers are no longer confined to old school jobs. This new educated talent pool is specializing in various fields, such as healthcare, technology, and advanced manufacturing. As a result there has been a significant shift from agricultural based workers to manufacturing and finally to knowledge workers.
This continued shift in career paths is due in large part to the current state of the economy, which has lent itself to growing positions in healthcare and technology. The heads of economic development for Jonesboro, AR and Augusta, GA both attest to this transformation. They have seen a dramatic shift in industries that lead their flourishing local economies, specifically in their downtown environments. The types of jobs in these areas are key for future growth. Diverse, well-paying, knowledge jobs attract talented people, which all factor into the present and future sustainability of a particular city or town.
Mark Young, President of the Jonesboro Chamber of Commerce and Economic Development specifically discussed how diversification of their economic base has led to a flourishing downtown economy in Jonesboro, AR. The city has its sights set on turning the once sleepy town into a mini-Austin, TX, leveraging the enrollment at Arkansas State University and the local community to create a cool and hip downtown environment. Rural Sourcing, Inc., founded in Jonesboro, AR in 2004, moved to their current downtown location in June 2010. It is not a coincidence that since this move, four to five additional technology companies have located within walking distance of one another, creating a synergy among the growing population, Jonesboro real estate developer and investor Clay Young explained. He goes on to describe the sense of community among companies with similar specialties wanting to locate near one another. They are able to feed off of one another, and in turn, these “white collar” jobs aid the local economy. So much so, in fact, that there has been a “dramatic” increase in the number of restaurants and stores opening downtown with more in talks for the near future.
A similar trend has been occurring in Augusta, GA, recently rated # 4 for Private Job Creation nationwide by the Bureau of Labor Statistics and #23 by BusinessWeek in their 40 Strongest Metro Economies in the United States. The downtown population of the city has quadrupled in the last five years. Unlike most American cities, Augusta is currently at about 99% occupancy rate for its housing. As more and more people make lives for themselves in these smaller cities and towns, the area’s economy benefits greatly.
Both Mark Young and Walter Sprouse, Executive Director for the Augusta Economic Development Authority, are in agreement that the economic impact multiplier of each new technology job in Augusta and Jonesboro translates into a 2:1 or 3:1 economic impact. This means that, for example, when a new $50k job is created, it will have an impact of about $100k to $150k to the surrounding economy. Each new payroll job “turns over several times,” per Mark Young. “People are eating downtown, spending money at retail stores, buying homes, and paying taxes.” All of which result in an uptick in the community’s value. This economic benefit is due in large part to companies like ESi, a global leader in crisis management software and technology, and Rural Sourcing, Inc. setting up shop in their revitalized downtown Augusta streets. In fact, Margaret Woodward, Executive Director for the Augusta Downtown Development Authority, described the surge in population as “re-energized” stemming from the fact that people want to feel connected with each other and the businesses and people running the town in which they live.
From April 1, 2000 to July 1, 2009, the U.S. Census Bureau found that Chicago, New York, and Los Angeles have all seen a net migration out of the cities and into non-metro areas with rates between 4-5%. Why is the fact that economies like Augusta and Jonesboro are flourishing so important? Let’s backtrack about 5-10 years, shortly before the recent migration to more rural American cities and towns, before generation X and Y-ers wanted to return to their roots and raise families where they grew up. As a college education was becoming more readily available to people across the country, it was enabling the mobility of our workforce and leveling the playing field between educated populations in major cities and non-metro areas. This, in turn, led to a significant “brain drain” in non-metro areas.
It wasn’t until the last five years that the brain drain reversal began when people starting returning to a pre-WWI mindset, per Woodard. This mindset includes wanting to live in locations that afford a lower cost of living but also a higher quality of life. Often times, these cities and towns that people are calling “home” are locations where they grew up or where they have emotional roots of some kind, such as attending college there. An important thing to note is that this trend is not generational. From recent college grads to baby boomers, people are relocating to places where their quality of life is the primary focus of local leaders and the business communities. The surge in housing mentioned by Margaret Woodard has lent itself to a drastic increase in local merchants. In fact, Augusta is in the enviable position of having a waiting list for residents and merchants alike for their downtown lofts and storefronts.
As a result of the higher quality of life than one would find in major cities, such as convenient commutes to work and many options for physical activity in a pollution-free outdoor environment, the turnover of rural sourcing companies is significantly lower. In fact, turnover rates in these companies are less than 5%. This eliminates the need to retrain new workers and repeat knowledge transfer as others leave. With an Austin, TX-like feel to the surrounding environment, people are able to fully connect with their community while also pursuing their passions, which makes them great assets on any team.
Between the social and economic benefits to the communities touched by rural sourcing companies and the cost benefits to the buyers of services, this industry trend has a long prosperous journey ahead. Intra-community connectivity is key to the future growth of non-metro areas across the United States. Through things like sustainability and green initiatives, hip downtown environments, forward-thinking job creation, and partnerships with the education community and local government, smaller cities and towns are able to attract talent back home from major cities and reverse the debilitating brain drain. The future is a bright spot in an otherwise dim landscape for these non-metro areas that are able to attract innovative companies who are intent on creating an alternative for taking jobs offshore.
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