Ruralogic CEO tells importance of broadband

By KATY ADAMS
Special to The Times

Joe Burmester, CEO of Ruralogic, which is headquartered in Bryan, was a featured presenter during a webinar Dec. 14 about building businesses on investments in broadband in rural areas.

Ruralogic was featured due to its success of building a business on rural broadband investments, and Burmester explained how the company was born.

Burmester stated in 2009, which was when Ruralogic was formed, information technology outsourcing from the United States was at $85 billion annually and growing. He noted that information, coupled with frustration seen with international outsourcing and the high unemployment rate in the country at the time led to the opportunity for Ruralogic.

He noted Ruralogic’s goal is to repatriate off-shore information technology services, bringing the jobs back to the United States where they are needed. Burmester explained when looking at areas in which to locate the business, the criteria was for low-cost domestic outsourcing, as explained by Matthew Kazmierczak, senior vice president of Tech America.

Burmester said the company looked for low-cost areas with appropriate resources such as technological support, workforce availability, low-cost infrastructure and a supportive political environment. Once their location of Bryan was chosen, the company moved on to establish partnerships with local colleges and universities, such as Northwest State Community College, to retrain displaced workers.

“We are now at this point actively looking at our next area of expansion,” Burmester said. Ruralogic has since expanded into the city of Napoleon.

“The next approach is to grow into the areas of the Midwest,” he said, noting the emphasis has absolutely been on small, rural areas. “That’s where our cost advantages have been and where the people are.”

As evidenced by Ruralogic’s success in building on rural broadband investments, Kazmierczak explained low-cost domestic outsourcing, as an alternative to sending jobs overseas, has become more than a fad.

Kazmierczak explained the driving force behind low-cost domestic outsourcing includes companies’ dissatisfaction with offshoring as costs for wages and infrastructure continue to rise and problems with significant political issues with offshoring.

“Economic downturns lead to many companies being criticized for sending jobs overseas,” Kazmierczak said, noting it’s mostly called to the attention of the general public during times of economic distress when the unemployment rate is high.

According to Kazmierczak, today’s reasons companies turn to low-cost domestic outsourcing include a high unemployment rate, which is interpreted as a wide field of available workers, wage deflation and concern over fundamental shifts in American competitiveness.

Kazmierczak also noted the benefits of low-cost domestic outsourcing, which was touted by Burmester as reasons behind Ruralogic’s success. They include lower costs, more ease of doing business as travel time and communication between company headquarters and satellite sites, the speed to market and less risk.

For rural areas looking to market themselves to businesses looking to utilize low-cost domestic outsourcing, Kazmierczak explained there are four factors used as criteria for location selection – the cost of doing business, work force, the business and political environment, and the quality of life.

Kazmierczak noted the cost of doing business and the work force most likely make up 70 to 80 percent of the final decision, though all factors are typically considered.

Within the cost-of-doing-business criteria, Kazmierczak said businesses look at labor rates, real estate costs, infrastructure costs, state and local taxes, economic incentives, airport access, state debt and federal funding support.

Within the work force criteria, one of the key components looked at by businesses is access to nearby colleges and universities in order to retrain or train potential employees. In Ruralogic’s case, the company created a partnership with nearby Northwest State Community College for this purpose. Knowledge of the work force, net migration potential and the population/scale of the area are also reviewed.

Although Kazmierczak noted low-cost domestic outsourcing is not a fad, he said many companies do still need to assess if it is right for them in the context of global sourcing.

For Ruralogic, Burmester stated by bringing new jobs into local communities, the company helps re-energize and diversify the area.

“We provide career opportunities for the next generation to get trained and stay in the community or come back to the community,” Burmester said. “But it is critical that we have broadband because that’s the kind of things we can do with that platform.”

Dallas Tonsager, under secretary for the United States Department of Agriculture’s Rural Development, stated the importance of broadband in rural America cannot be overstated.

“Broadband investments are creating jobs now as networks are built in rural areas,” Tonsager said.

Tonsager noted that with the investments in rural broadband come infinite potential for rural economic development.

Despite the support of the Obama Administration to build broadband infrastructure in rural areas across the United States, Tonsager noted the country still faces a significant urban-rural divide. “It’s not enough for us to build out the networks,” Tonsager said. “We must also build businesses upon these investments.”