Rural Shoring – a trend to wait & watch for!


    We have heard of onshore, offshore, midshore and nearshore locations.

    Is rural shoring a new, long-term term or a fad in the sourcing world? It is certainly a new term and is expected to stay longer, unlike most fads. It has a sustainable value proposition for US based companies that would like to retain their customer care processes onshore for a variety of reasons and yet realize cost advantages, though to a lesser extent compared to an offshored scenario!

    Rural shores are second or third tier locations in North America that are pretty much inland and/or in the country (where salaries aren’t as high as major metropolitan areas). Rural shoring works in particular scenarios such as:

    1) A client explicitly asks for such an operation and is willing to support the process on account of maintaining higher cultural compatibility between the workforce and end customers, pre-empting issues arising from voice and accent differences or the inability to relate to client situations and render help accordingly.

    2) Moderate sized processes that do not have rapid scaleability requirements – scaleable beyond 150 – 200 FTEs in a particular location.

    3) Availability of stable workforce to capitalize investments in training and development and lock the value created within.

    In an acquisition of East Coast based US call centers in which I was involved, the client did not want the processes to be offshored though there was potential for cost savings, but instead wanted additional onshore investments to support future growth. Of course, this was backed by the right price and contractual commitments. The local government also welcomed the move with substantial grants in terms of tax credits, workforce development and recruitment support.

    AT Kearney’s Global Services Location Index 2007 rates US tier II locations in the 21st position in a list of 50 positions in the world. Ranking of these locations may go up, though it slipped from 12th position in the 2005 Index. This is important to consider when companies start classifying the customers into premium, value and economical, based on predefined parameters and decide to serve at least the premium customers from onshore locations – or, when companies start charging customers for customer care, overtly or otherwise, for usage beyond a particular limit and let that charge pay for onshore operations.

    Will such a situation lead to an onset of reverse shoring of customer care processes for select category of customers? The answer lies in the coming times!