Overcoming outsourcing

After two rounds of layoffs, Ellen Wagner still had a job — training the programmers brought in from India to replace her co-workers. But frustrated and tired of resisting the changes, Wagner decided to take a bold step.

She outsourced herself.

She quit her job in Seattle and took another paying half as much. She sold her house and traded it for a split-level overlooking a pasture, for a third what it would cost in the frenzy she left behind.

She piled into an SUV with her golden retriever, Ginger, and two cats, and turned away from the offshoring trend that has siphoned thousands of white-collar jobs from the U.S. economy.

The journey took Wagner to this town of 1,435 — a self-dubbed "oasis on the western horizon," nearly 50 miles from the closest traffic light — and a job in an office fashioned out of an old John Deere tractor dealership. The company Wagner works for, Eagan-based CrossUSA, is one of a handful of mostly smaller firms trying this blend of business plan and social experiment.

The slate blue cubicles around hers, decorated with pictures of faraway skylines, include programmers from Chicago, Pittsburgh and Jacksonville, Fla.

"I've been here six weeks," says Larry Cross, who migrated from Halifax, Nova Scotia, after his last job was shifted to India. "And from the door of the office, I've already seen three antelope and five deer."

Watford City will never be mistaken for Bangalore, the nucleus of India's thriving outsourcing industry. But some U.S. workers and companies are looking to places like this for a way to if not beat offshoring then at least compete on similar terms.

They're betting that by doing business in cheaper locations, and paying workers much less than their big-city counterparts, they can secure jobs that might otherwise go offshore.

It's still not as cheap as India. But companies tell customers they'll be doing business with workers who better understand their needs, in a time zone within an hour of their own. They pitch workers on a less chaotic, more affordable lifestyle.

But will it work? As skilled labor becomes a global commodity and economic realities keep shifting, neither the workers nor their companies can be sure.

Most companies have chosen locations less remote than Watford City, in the rolling grasslands of far western North Dakota. All believe they've found a foothold against foreign competition.

In Jonesboro, Ark., and Portales, N.M., startup Rural Sourcing Inc. has opened programming centers staffed by fresh graduates of nearby universities, working for less to stay close to home. The company also is setting up in North Carolina and West Virginia.

"There is talent in areas that have a low cost of living and have no knowledge-work," says Kathy Brittain White, Rural Sourcing's founder and president.

In Oklahoma City, Ciber Inc., a computer consulting firm with $840 million in annual sales, opened its first low-cost programming site this year in a vacated call center, using the work stations and telephone operators that were left behind.

Computer work "is going to go somewhere else cheaper, and it can either go to Bangalore or it can go to Oklahoma City," says Tim Boehm, the executive in charge of Ciber's low-cost initiative. The company plans five or six centers in the next two years, all in mid-sized cities.

Other companies are trying to work the fringes of large metropolitan areas, including Chicago, Pittsburgh and Silicon Valley, away from the premium office space and an easy draw for workers who live even farther out.

Pay varies. But at CrossUSA's North Dakota site, programmers make about $40,000 a year. Some of those who have moved to Watford City from metropolitan areas say they used to earn twice that or more.

"I look at my check and I'm crying," says Gerald Williams, a programmer from Chicago.

Still, workers have good reasons for coming here. Many are in their 50s and say they were being pushed from jobs because of age, or were having trouble finding new positions. Some came for a lifestyle change, tired of long commutes and expensive housing. Others had simply run out of choices.

Jim Near, 59, lost his last job when his Minneapolis company was sold and 500 mainframe programmers were sent home. About the same time, other area employers cast another 1,500 information technology workers into the job market. Near went for two years without work and lost his family's home to foreclosure. When CrossUSA called last year to ask if he'd consider a move to North Dakota, he grabbed the lifeline.

"My wife wanted to get into a smaller town," he recalls. "I said, 'How small do you want to go?' "

Wagner, also 59, felt secure in her job, but she'd long mulled moving closer to her Wisconsin birthplace and a grandson in Minnesota. When her company let go many of her fellow programmers, she found herself doing the work of four people and snapping at the Indian programmers brought over for training.

"The people I worked with from India... were concerned about people from China taking their jobs and I was like, excuse me guys, aren't you taking our jobs?" Wagner says.

CrossUSA's center represents efforts by both the company and the town to reinvent themselves. Watford City, long dependent on oil drilling and cattle ranching, installed broadband Internet service a few years ago to attract other businesses. CrossUSA set up shop after winning a contract to do computer work for the state government.

Not long after, the company's primary customer, Eagan-based Northwest Airlines, canceled work after the 9/11 terrorist attacks. Then the state contract was pulled, and CrossUSA closed its center. It reopened last year, when the company was hired by a New York insurance firm to help program its mainframe system.

CrossUSA's operation here is small — about 20 programmers. But the firm recently landed a contract with a second large insurer. That will require adding 25 to 30 more workers by summer's end, and a similar number at the company's Minnesota site, a former carpet warehouse. The company also plans to open another center in rural Montana.

"My dream is to have five centers like this, distributed and networked (across rural areas), because it doesn't matter where you are anymore," the company's CEO, Nick DeBronsky said.

Experience has persuaded more of his employees to buy into that vision.

"What I like about this company is they've figured out a way to compete with the outsourcing," Cross said. The workday over, he takes a swig from the prized special order of Labatt beer, and gazes across an endless vista of gray-green buttes and open sky.

"The only thing that gets me is, it's 47 miles to McDonald's."