As widely reported, senior managers — focused on cost-cutting — have been sending jobs off-shore to places like Bangalore, for more than a decade. This approach, called off-shoring, threatened almost any job, including customer service, that a corporation deemed a “non-core” operation. Frequently, the foreign companies that offered those services could charge less because they hired untrained people and cut corners.
Then, a predictable backlash occurred. Customers began complaining that service wasn’t what it ought to be. They began seeking out competitors who could provide better service. Sales suffered. Companies gradually awoke to the hidden costs of off-shoring.
That led to the reverse trend, forecasted by the Trends editors: bringing the jobs back home so that companies could exert more quality control over how they were executed. Already, Dell, Hewlett-Packard, and others have brought jobs back to the U.S. But the question now becomes: How do companies cut costs when the jobs are returned to America, where wages are higher and labor markets are tight?
The answer is being found in places like Lebanon, Virginia; Twin Falls, Idaho; Cheyenne, Wyoming; and even on a South Dakota Indian reservation. The fact is that not every place in America is as expensive as New York, Chicago, and Los Angeles. In many small towns, prices and salaries are still very reasonable.
For example, Lebanon, Virginia has a population of about 3,300 and was once a coal-mining town on the mid-Appalachian plateau. Now it’s home to the information technology operations of CGI-AMS and Northrup-Grumman. According to The Christian Science Monitor,1 they have created more than 700 jobs in the town with salaries averaging about $50,000 a year. That’s a big increase from the average pay in Lebanon, which was previously just $27,000 a year.
DaimlerChrysler, meanwhile, has outsourced its Web design to a company called Lakota Express on the Lakota Indian Reservation in South Dakota. And, Dell Computer is locating some of its operations in Twin Falls, Idaho.
At the moment, Appalachia is one of the hottest areas for this trend, which is being called “farm-shoring.” It was kick-started when Russell County, Virginia received more than $4 million from the Department of Commerce, along with money ...
