Columns » Warwick Sabin

Outsource to Arkansas


It is contradictory, but not a surprise, that the same people who celebrate free market economics and the independent entrepreneurial spirit are the champions of tax breaks and financial giveaways for big corporations. In Arkansas, the business and economic development communities have lined up behind Amendment 2, which will give the legislature unchecked authority to issue millions of dollars worth of public bonds for investments that might entice companies to locate big manufacturing facilities in our state. They say that other states do the same thing, and there is no other way for Arkansas to be competitive for the jobs we need to attract. I have already argued in this space that we should not devote all of our energies toward bringing 20th-century work to Arkansas. The U.S. is engaged in a transformation to an economy based primarily on information and technology. An economic development strategy centered on luring car plants to Arkansas in 2004 is as forward-thinking as an effort to build horse-drawn buggies would have been in 1904. Instead, we could do well to heed the example of an entrepreneur who is bringing the right kind of jobs to Arkansas without asking for a handout. Kathy Brittain White is a native of Oxford, Arkansas and the founder of Rural Sourcing, Inc., which provides information technology services to U.S. corporations. In this election year we have heard a lot about off-shore outsourcing, the practice of using foreign workers to handle many administrative and technological tasks, from answering phones to programming computers. In India and China especially, an increasingly well-educated workforce can offer high-end services for a fraction of the cost of employing Americans. White, who served as chief information officer (CIO) for major corporations like Mattel, saw an opening in the market. "I started coming back to Arkansas when I was a CIO in Chicago and had been away a long time," White said. "I found loyal and talented people who we were recruiting away from the state." Arkansas’s combination of capable workers and lower labor costs, especially in rural areas, appeared to be a great opportunity when White started her company 18 months ago. Rural Sourcing now employs 15 people in Jonesboro, one person in Magnolia, and several interns at a lab in Monticello. An important part of White’s business strategy is her focus on partnerships with higher education institutions. Her current operations are managed in conjunction with Arkansas State University, Southern Arkansas University, and the University of Arkansas at Monticello. "The feeder needs to be a strong regional university with strong computer science and information systems programs," White said. If you believe in the free market, you understand how this works to everyone’s long-term advantage. When a company like Rural Sourcing offers to partner with a university, the students see an attractive and realistic job opportunity. The university is therefore compelled to invest in cutting-edge programs, which include the use of modern equipment and talented faculty. Other companies notice a new source for top labor, so they move to the area as well. It is a wonderful, vicious cycle that produced the Research Triangle in North Carolina and Silicon Valley in Northern California. All of Rural Sourcing’s employees are Arkansas natives educated in-state, which says good things about our potential. White said that two of her Jonesboro employees were previously working as waitresses because they couldn’t find any other work. The person working in Magnolia had to live there for personal reasons, but without the opportunity at Rural Sourcing, she would not have been able to utilize her considerable skills in that small Delta town. White expects to have at least five Arkansas locations if her growth strategy is successful. She promises an expansion of the Magnolia operation to at least three employees by January, and she is currently in discussions with UALR about a partnership there. Rural Sourcing also will open facilities in New Mexico and North Carolina next year, because the company needs greater scale to serve its nationwide clientele. The example of Rural Sourcing reminds us that Arkansas has many advantages in the new global economy. While our labor costs are not as low as those in China and India, they are certainly lower relative to the rest of the country. Furthermore, Arkansas is a safer investment, because there are no cultural or language barriers, and no foreign legal minefields. We are closer if management needs to visit, and some work just fits better with a domestic workforce. With our network of two- and four-year colleges and universities, Arkansas is positioned to develop the programs and partnerships for 21st-century work. That is where our tax dollars should be invested, instead of using them to bribe the horse-drawn buggy manufacturers to build factories here.

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