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Monday, November 5, 2012

LAIC Buys into Main Street Program; Madison the New India?

Two noteworthy economic developments are afoot in Madison. First, I hear from my local correspondents that Lake Area Improvement Corporation director Julie Gross has officially endorsed—i.e., spent money!—on making Madison part of the Main Street program. The idea of the LAIC doing exactly what I recommend under previous do-nothing CYA director Dwaine Chapel. But Gross has bought into Main Street and convened a downtown development committee that is open to the public. I hope this isn't a sign that we are going to freeze over hard this winter.

The LAIC also gets to toot its horn about Dakota State University's new partnership with Advantenon, the evil overlord of Gamma Regulus whose robot hordes are invading this sector of the galaxy—oh, oops! Sorry, the cool alien name threw me.

Advantenon develops software for mobile devices. They base their business model on employing college students in rural areas to keep costs down—i.e., to pay less wages than they would hiring experienced talent in spendy urban areas. Advantenon discusses this strategy on a page called "Why Rural?"
Advantenon delivers mobile applications more efficiently, with fewer issues than applications outsourced to offshore teams, at costs up to 50% less than traditional on-site development.

By leveraging technically competent resources in lower cost rural communities, project costs are significantly reduced. By combining staff located outside major metropolitan areas with a limited number of onsite resource Advantenon delivers the benefits of rural and onsite flexibility [Advantenon, "Why Rural?" company website, retrieved November 5, 2012]. 
For years, IT companies have been saving money by offshoring labor to India and other lower-wage countries. The labor cost-savings outweigh the disadvantages of language barriers, time-zone separation, and quality control. As wages in India catch up with the West, the cost advantage erodes. South Dakota wages may still carry a premium over India, but they are 29% lower than in Minnesota, Advantenon's home base. Hire college students, and the premium is even less. For their money, Advantenon gets quality work (you DSU kids do have the storied Midwestern work ethic, don't you?) from folks who sprechen sie Englisch, are smack in the middle of most North American customers' time zone range, and are a short domestic flight away from a snap inspection by the boss.

This can be our niche, South Dakota! Get trained, know your tech, and you can be the next Indians. You won't even have to make up a normal sounding name to answer the phone... until the Chinese become our primary customers.

And when you get done with work, you'll be able to walk downtown and enjoy a wonderfully revitalized commercial and cultural core district.

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