Consider employing near-site IT workers

Don’t expect to see an end to the IT staffing shortage anytime soon. Recent Meta Group Inc. figures conclude the demand for IT services is growing at 25 per cent per year.

To get around the shortage, most CIOs are well-versed in Staff Development 101: focus on retention, hire from within, load up on training opportunities. But beyond the usual parameters lie untapped options for bolstering IT staff.

Some resourceful IT leaders are expanding their hiring view beyond the boundaries of their own towns, but not as far as going off-shore. They are hiring rural workers, who often will work for less money and form a more stable workforce.

Rural Citizens – Northwest Airlines

A couple of years ago, Northwest Airlines Inc. relied on offshore IT talent to bridge its staffing gaps. But the arrangement wasn’t perfect.

“It can be difficult to work through language barriers and time-zone differences,” said John Parker, vice-president of information services for US$9 billion NWA in Minneapolis-St. Paul.

Another option soon presented itself.

One day in late 1997, Parker’s predecessor, then vice-president of Information Services Bob Borlik, read a newspaper article about the plight of Minnesota’s forgotten rural towns. A multi-state electrical and telecommunications co-operative had just installed state-of-the-art frame-relay wiring throughout the town of Sebeka (population 600) in a bid to attract businesses. (The co-operative is in the process of wiring many rural communities throughout the heartland.)

Borlik was intrigued. He dispatched a few consultants from Cross Consulting Group Inc. to the town – 200 miles from Minneapolis – to scout around for a way to set up a rural outpost to extend NWA’s development staff.

“We thought there was a chance it could provide us with a more stable workforce at a cheaper price than any of the major metropolitan areas. It wasn’t as cheap as offshore labour, but if you factor in the intricacies of working with staff from another country, you’re not that far off. It was worth a try,” Borlik said.

NWA had been paying offshore developer companies between US$20 and US$30 per worker per hour. Cross Consulting president and co-CEO Nick Debronsky figured the price point for rural workers would be between US$30 and US$50 per hour. Hardly chump change, but fully 30 per cent to 40 per cent lower than metropolitan rates for full-time workers. So Debronsky and Borlik decided to open a facility in Sebeka with about 30 programmers to start. To mitigate the risk of being saddled with a satellite facility if the arrangement did not work out, the workers were employees of Cross, not NWA. But Northwest made it clear the relationship was for the long haul, and Borlik viewed Sebeka as an NWA satellite location, not just a big bunch of contractors.

“We were looking for longevity in the relationship. We want people who have worked on our systems a long time. That’s where we get the best synergy,” said Parker. Sebeka programmers have worked on Y2K remediation as well as on maintaining the company’s Cobol applications. Once they have a certain amount of training and experience, Sebeka employees are eligible to join NWA’s 1,200-person IT staff at headquarters.

Because the majority of Sebeka employees come from service-industry jobs and do not have technical skills prior to joining the company, Cross pairs new workers with mentors with more technical expertise. “It takes about a year for them to become proficient,” said Ross Graba, vice-president and director of operations for Cross in Apple Valley, Minn.

For the workers, being able to work for Northwest in Sebeka means they don’t have to leave town to make a living wage. “It was either work here or bag groceries,” said project manager Andrew Ronneberg.

“Having grown up in Sebeka, I didn’t want to move to the city. Life has a slower pace here,” said Ronneberg, one of 40 who graduated with his class at Sebeka High. “I want my [3-year-old] daughter to go to Sebeka High.”

Borlik, now senior vice-president and CIO at US$23 billion grocery retailer Supervalu Inc. in Eden Prairie, Minn., is evaluating a similar deal with Cross at the company’s brand-new Watford City, N.D. facility.

Borlik sees the arrangement as a way to tighten the links between contractors and Supervalu. “Generally, you can’t count on your outside [contractors] being there for the future. This is a little different. As you groom the consultants, they become more stable and they’ll stay around. It’s a new concept.”

The high retention rate associated with rural workers can be a competitive advantage for a company that uses them, said Christopher Young, IT project manager for the Economic Development and Finance department for the state of North Dakota in Bismarck.

Low labour costs are an undeniable benefit, too. “North Dakota is ranked number 51 [including Washington, D.C.] in terms of average high-tech wages. I’m not particularly proud of this. But it’s a function of a phenomenally low cost of living,” Young said. For example, a new five-bedroom house with central air, a large yard and a nearby school costs about US$120,000.

Despite these advantages, Northwest’s Parker cautions the arrangement is not for every company. IT staff at headquarters must do extremely detailed design for any project that Sebeka employees will work on so that objectives are clear. And staying in touch with the off-site developers is critical. In addition to daily contact via phone and e-mail, Northwest staff visits Sebeka to provide application training as well as for quarterly progress meetings, and Cross has an on-site relationship manager at Northwest’s facility.

For companies willing to do the work, taking advantage of rural workers can be a cost-effective way to extend their IT staff.