Business costs, skills top list for contractors locating operations in U.S.

The cost of doing business and the availability of employees with the right technical skills are two of the top considerations for companies looking to open operations in a U.S. city or town, according to a report from a technology industry group in Washington.

The report is the latest in a series that TechAmerica commissioned to highlight how technology contractors can establish operations -- and keep jobs -- in the United States. The practice, known as domestic sourcing, also focuses on shifting part of a company's operations to rural locations to save money and access new streams of talent.

Domestic sourcing is an alternative to outsourcing work internationally to countries such as China and India, particularly for federal contractors, most of which are required by law to perform the work that agencies awarded them in the United States.

"I'm a big believer in the [domestic sourcing] model, the potential and how it fits" in the global market for information technology, said Jeff Lande, executive vice president at TechAmerica.

Lande has worked on domestic sourcing issues for five years and said the movement is becoming more popular, pointing to recent decisions by Accenture, CGI and IBM to open business centers in rural Alabama and Ohio.

He emphasized that domestic sourcing is not a replacement for globalization, but rather a complement. Certain operations such as call centers lend themselves to domestic sourcing, Lande said, but ultimately the all IT services potentially could be moved outside Washington.

The report, written by former Gartner Inc. analyst Amrita Joshi, now president of consulting firm Ahilia, states the cost of doing business and the availability of talent are the two determining factors for companies considering domestic sourcing. Quality of life and a region's business and political environments also are contributing factors.

Cost of doing business is dependent mainly on the demographics of an area, but state and local officials can offer incentives such tax subsidies, training grants, land grants or state contracts to entice companies. Having the required buildings and technological infrastructure are crucial to attracting IT companies, as are good transportation and broadband availability.

"Especially given the changes in the economy this year, there are sound fundamentals and infrastructure available at incredibly affordable rates throughout the country," Lande said.

Having the necessary talent is another determining factor, and one that's reliant on proximity and access to universities and community colleges. Educational institutions provide companies with access to the skills and workforce they need. Lande encouraged companies to contact state and local officials to assess the quality of the workforce in an area.

"Education is important both for the workforce pipeline as well as for the retraining of staff," he said, adding that the ideal domestic sourcing center could be located anywhere from a former Rust Belt metropolitan area to a sparsely populated rural location. "It really is a mix. It's going to depend on the needs of the company and project. You can have fairly rural areas as long as you have some technological and physical infrastructure in place."