After two rounds of layoffs, Ellen Wagner still had a job — training the programmers brought in from India to replace her co-workers...
WATFORD CITY, N.D. — 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 here, for a third of what it would cost in the frenzy she left behind.
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She piled into an SUV with her golden retriever, Ginger, and two cats, and beelined away from the offshoring trend that has siphoned thousands of jobs from the U.S. economy.
The journey took Wagner to this town of 1,435, nearly 50 miles from the closest traffic light — and a job in an office fashioned out of an old John Deere tractor dealership. The slate-blue cubicles around hers, decorated with pictures of faraway skylines, house 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 such as this for a way to, if not beat offshoring, then at least compete on similar terms.
Companies are 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.
The company Wagner works for, Eagan, Minn.-based CrossUSA, is one of a handful of mostly smaller firms trying this blend of business plan and social experiment.
Most 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 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,” says Kathy Brittain White, the company’s founder and president.
Ciber, a computer consulting firm with $840 million in annual sales, opened its first low-cost programming site in Oklahoma City this year.
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 midsize 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 Ciber’s Oklahoma center and 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 considered 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.
The smaller paychecks and other cost advantages move these companies much closer to competing with offshoring. The challenge is that they’re being pressed on multiple fronts.
As U.S. companies ship computer jobs overseas, they are drawing heavily on foreign labor — particularly Indian programmers — to come here and do part of the work that remains.
U.S. law requires they be paid the “prevailing wage.” However, “the regulations are written so loosely that you can pretty much pay whatever you want,” says Ron Hira, co-author of “Outsourcing America: What’s Behind Our National Crisis and How We Can Reclaim American Jobs.”
“They’re essentially taking away the major comparative advantage that U.S. workers have, which is the ability to be here geographically,” says Hira, an assistant professor of public policy at the Rochester Institute of Technology.
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, Northwest Airlines, canceled work. 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.
Workers in Watford City rely on their U.S. location to get things done, often speaking five or six times a day to clients at desks in New York and Texas. But many still appear slightly dazed to find themselves here, removed from the amenities of city life.
Williams, the Chicago programmer, arrived in April with his bowling ball to find that the town’s lone alley is a part-time business open only during the winter.
Cross, from Halifax, walked into the liquor store soon after he arrived expecting to find Canadian beer. The manager told him the store would be happy to sell him some, but that it would take a special order and he’d have to wait two weeks.
Now it is getting difficult for workers to find a place to live in a town whose housing is already strained by a surge of oil workers.
There is an upside. This time of year, the parking lot at the municipal golf course still brims with pickups at 9 p.m., as duffers take advantage of sunsets that stretch long past dinner. With just two people per square mile, there are endless stretches of open land that invite contemplative hikes and horseback riding.
A.J. and Kelly Roundbehler, programmers who moved here from Jacksonville last year with their 8-year-old son, have taken to it quickly. Rent on their three-bedroom apartment is $300 a month, compared to $1,100 in Florida. They’ve bought two horses and are looking for a homestead with a corral.
The Roundbehlers may soon have company. 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 workers by summer’s end.
“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, says.
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 says.
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.”