Some Outsourced Jobs Are Coming Back

Aug. 1, 2008 — -- As the U.S. economic slump continues, American jobs are increasingly in short supply: the U.S. Labor Department reported on Friday that employers shrunk payrolls by 51,000.

The decline was smaller than expected but still marked the country's seventh straight month of job losses. The national unemployment rate, meanwhile, has jumped from 5.5 percent to 5.7 percent.

But some experts say there is a bright spot on the jobs front: At least a handful of American companies who had relied on workers stationed overseas are now bringing jobs back to the United States. In addition, foreign companies are continuing to expand U.S. operations and hiring more local residents, instead of flying in foreign staff for business.

It's called "insourcing" or "reverse outsourcing." It's the opposite of outsourcing, the oft-criticized practice of American companies' shipping jobs abroad to take advantage of lower labor costs and other incentives.

Some observers are skeptical that insourcing is yet a significant trend, and one pointed out to ABC News that it cannot easily be seen in economic numbers -- but others see anecdotal cases where it appears to be happening.

Thomas M. Koulopoulos, the author of the book "Smartsourcing," said that in the last three years companies from Dell to Citigroup have been bringing jobs back into the U.S. Part of what's driving the changes, Koulopoulos said, is an emphasis on improving customer service and client relationships.

"There was this illusion that globalization was just about technology and the world is flat because you make it flat, but that only goes so far," he said. "You have to have people there close to the customers."

Proximity to customers was "the paramount reason" for Tata Consultancy Services, an Indian information technology company, to open a new 1,000-person office in Cincinnati, said Tata spokesman Mike McCabe.

Tata, which announced plans for the new office in March, has had sales offices in the United States for years, but the Ohio delivery center will be the company's first U.S. office to house consultants that do the company's nuts-and-bolts work.

Being able to sit down with clients and "understand their challenges, their plans for the future and how we can help them -- obviously, it's much more effectively done in person," McCabe said.

McCabe said that company will look to local candidates to fill most of the jobs at the Cincinnati center.

"We want to have a good understanding of the market, so hiring local talent provides that," he said. "Obviously, they're the people who know the market."