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LE S S O N S
Hereshoring
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The state could leverage Core10’s rationale for locating in Huntington to attract other companies to the state’s tech centers.
18 wvl • spring 2017
people and the economy— it would be tremendous,” says Core10 co-founder and COO Lee Farabaugh.
worldwide, companies hoping to save money outsourced nearly $80 billion of business in 2016, says Lee Farabaugh, chief operating officer of Nashville-based software developer Core10. Much of it goes offshore to places like India, China, and especially Ukraine, where project bids might be a quarter what they are in Silicon Valley or New York. But the best-kept secret in IT, Farabaugh says, is domestic outsourcing—or “hereshoring,” a term Core10 has applied to trademark. It was a commitment to hereshoring that brought Core10 to Huntington in October 2016. Offshoring carries hidden costs, she says. Financial ones, like travel and visas, can hike the total up to nearly the same as the cost at the home office. Heap on top of that some less quantifiable “headaches,” such as time zone differences, language and cultural barriers, and difficulty managing project flow. Hereshoring directs work to U.S. places where costs are relatively low and the time zone, language, and business culture are in line with the home office. “I like to call them ‘underutilized markets,’” Farabaugh says of places like Huntington, where the hourly cost of project development can be one-third to one-half what it is in a major market, with none of offshoring’s headaches. “You find fantastic talent, the cost of living is low, and it’s a win-win when you can pay them a good wage to stay in a place where they love to live.” Core10 started in Huntington with three Marshall graduates, doubled its staff to six in January, and plans to employ at least 15 by the end of 2017. It’s one of six companies participating in Generation West Virginia’s yearlong Impact WV Fellowship initiative to attract and retain top-notch employees. Some of Farabaugh’s observations could help the state attract other hereshoring activity.
COURTESY OF LEE FARABAUGH
“Imagine if all of the offshore software development could be fit inside our borders, what that would do for young