Janie James says she was cool at first when Indian outsourcinggiant Infosys Ltd. approached her about a job near Atlanta, eventhough she was unemployed. She didn't know much about the company,and it seemed a step down from her old vice-president post atPrimerica Inc.

In the end, she decided she could use experience gleaned fromher work at life insurer Primerica and another stint at a financialinvestment company to help Infosys build its insurance outsourcingbusiness. Now James is an operations manager at the Bangalore,India, company's first predominantly U.S.-staffed center, whichopened in April.

“They saw this was a city with a lot of people who were out ofwork and had the skills they needed for this center,” she said.“Anything that can be done to decrease unemployment is a greatthing.”

James is one of thousands of workers filling outsourced jobsthat are coming back to the U.S., or at least not going offshore.Indian and U.S. outsourcing companies, along with corporate iconslike General Motors Co. and General Electric Co., are reversing a20-year outgoing tide.

These companies and others, including software developerGalaxE.Solutions Inc., say some complex functions, such ashuman-resources and software development, are better to have closerto their own operations and to respond to customers. Indianoutsourcing companies are finding it tougher to get visas forworkers brought from India, and some U.S. businesses want tooutsource — yet keep jobs in the country. State tax breaks alsoprovide incentives to hire locally.

“It used to be just about getting the job done at the lowestcost,” said Madhusudan Menon, who heads Infosys's Atlanta centerand delivery of U.S. business-process outsourcing. “Now companiesare saying some jobs are best done closer to where they are, notcheap as possible somewhere else. They're rebalancing their onshoreand offshore outsourcing.”

U.S. companies with more than $1 billion of revenue sent 1.1million technology and back-office jobs offshore during the pastdecade, according to the Hackett Group, a Miami-based consultingcompany. While it forecasts a slowing outflow beginning in 2013, itcalculates another 400,000 positions will be lost offshore through2016.

A survey of 617 outsourcing industry executives by Boston-basedHfS Research in July and August found the U.S. is seen as the mostdesirable region in the world to expand IT and business-servicesdelivery centers in the next two years. India was second.

Largely Satisfied

Respondents have been largely satisfied with the offshoring oflow-end jobs, such as call centers and routine IT maintenance,according to Phil Fersht, chief executive officer of theoutsourcing research company. With more complex tasks, the surveyshowed the headaches may have outweighed the savings.

“We're at an inflection point,” Fersht said. “They have pickedmuch of the low-hanging fruit offshore, but they're frequently notgetting the quality they need with the more complex functionsthere.” For example, 72 percent of companies said they weresatisfied or very satisfied with domestic outsourcing of humanresource services compared with 41 percent who had those tasks doneoverseas.

The Indian offshore giants are establishing beachheads in theU.S. for political, as well as business, reasons, according toFersht. President Barack Obama and Republican presidentialcandidate Mitt Romney have traded charges of being “outsourcer inchief.”

Menon sees opportunities for Infosys to capture business fromcompanies that want to outsource some operations while not beingaccused of sending jobs overseas.

The principal customer at a Milwaukee center Infosys announcedin July is Harley-Davidson Inc., which insisted that the 75business-processing jobs it wanted to outsource at lower costremain in the country, according to Maripat Blankenheim, aspokeswoman for the motorcycle company. Infosys said it plans tohave a total of 125 employees at the center by attracting otherclients.

Picking up new onshore business from U.S customers could helpInfosys buttress its position against competitors such as CognizantTechnology Solutions Corp., which surpassed it in revenue for thefirst time in the quarter ended June 30, according to data compiledby Bloomberg.

Market Share

Cognizant, based in Teaneck, New Jersey, has doubled its marketshare during the past seven years to 18 percent for the year endedin March, according to an April 19 report by CLSA Asia-PacificMarkets. Infosys's market share fell 4 percentage points to 21percent, the report said. Cognizant, whose workforce is mainly inIndia, has stepped up its high-end outsourcing services and ishiring more employees with relationship management, consulting anddeep industry experience, President Gordon Coburn has said.

Infosys has been operating in the U.S. for 25 years, though upuntil the past two years, only 20 percent of employees wereAmericans, Menon said. Infosys had about 12,000 workers in the U.S.on H-1B and L-1 visas as of June 30, according to a Securities andExchange Commission filing by the company.

Infosys and its Indian peers now are having more difficultyobtaining U.S. visas. Last year, 54 percent of Indian petitioners'initial requests for L-1B visas, which allow employees with“specialized knowledge” to work in the U.S., were rejected by U.S.Citizenship and Immigration Services, compared with 4 percent in2007. Infosys said in an SEC filing that the immigration agency has“increased its level of scrutiny in granting new visas,” and citeddifficulties meeting the requirements for L-1 visas.

Tata Consultancy Services Ltd., the biggest Indian outsourcingconcern with $10 billion in revenue, also is growing its U.S.presence, opening an outsourcing center outside Minneapolis inSeptember to employ about 300 IT workers.

In 2011, Tata Consultancy augmented the work it already wasperforming for Dow Chemical Co. in Mumbai by setting up outsourcingoperations in Midland, Michigan, near that company's headquarters.Tata Consultancy currently has 400 employees there, according tospokesman Michael McCabe, handing back- office functions, includingsupply-chain scheduling and planning for Dow and other clients.

Even with the 2,000 U.S. workers Tata Consultancy plans to hirethis year, which is a 25 percent increase from 2011, Americansremain a minority of its approximately 20,000 employees in the U.S.and Canada, McCabe said. About 92 percent of Tata Consultancy's250,000 workers worldwide are Indians, according to thecompany.

Create Opportunities

Still, the onshore outsourcing centers create opportunities incities such as Atlanta, where unemployment has been above thenational average since May 2010. The area's jobless rate was 8.9percent in August, the latest month available, while the nationalrate was 7.8 percent in September.

Infosys was attracted to the area because of its many insuranceand health-care businesses, according to Menon. His company sawoutsourcing opportunities in those industries and a large pool ofunemployed, experienced workers, he said.

“When I told the Georgia Department of Labor what I needed, theygave me 5,000 people without a job in those sectors,” Menon said.He led an Infosys team that interviewed scores of candidates atthat agency's suburban Marietta offices in January. Others, likeJames, were recruited.

The offshoring reversal also can be seen in U.S. companies suchas GM and GE, which were early adopters of outsourcing and now arerepatriating jobs.

GM said it plans to bring 90 percent of its IT work in-houseand, in many cases, onshore, hiring 10,000 workers over the nextthree to five years. The automaker said it will open four U.S.technology “innovation centers,” one in Austin, Texas, with 500employees, another in Warren, Michigan, with 1,500 jobs and twoothers in cities yet to be determined.

GE also is building a technology center outside Detroit, whereit plans to employ 1,100 people, as part of a broader initiative toreseed the company's IT capabilities in the U.S.

Mike De Boer, who led the recent development of a technologycenter in New Orleans for the company's GE Capital unit, said thebusiness needs a rapid-response approach to technology changes,such as mobile-phone applications, which requires proximity.

“The speed you need to meet customers' requirements is all aboutbeing near to the customer,” said De Boer, who's hired 27 ITworkers so far for a facility that is slated to reach 300employees.

Opportunities Reappear

U.S. software engineers who have lost jobs, such as MichaelZureich, say they are heartened to see opportunities reappear intheir field. Zureich, who worked in auto-manufacturing processesfor 24 years, was laid off by Siemens PLM Software in 2009. Hebecame a math teacher in 2010 after a fruitless 18-month jobsearch, he said.

Then he heard of GalaxE.Solutions, a Somerset, New Jersey,company that is shifting some of its 2,000-employee workforce fromIndia to the U.S. It opened an office in Detroit, where it now has200 on staff, to help develop software for U.S.-based health-careclients. GalaxE.Solutions, like a number of companies that havebeen repatriating jobs, received state tax breaks as an incentiveto influence location.

“The complexity of the business and the agility required wasincreasing, and I didn't feel we were achieving the collaborationand innovation our customers required,” Tim Bryan, chief executiveofficer of GalaxE.Solutions, said in an interview.

Zureich, 54, who joined the company in March 2011, said whilehe's earning a little less than he made at Siemens, “I'm gettingsignificant job satisfaction and regained a lot of the confidence Ilost.”

At the Infosys center outside Atlanta, James said she is waypast thinking of an outsourcing job as a step down and is learninga business that is here to stay.

“I like challenges, and it's a notch on my belt,” she said.“Infosys is making a transition, too; when you want to do businesshere, it helps to give people more opportunities.”

Bloomberg News

Copyright 2018 Bloomberg. All rightsreserved. This material may not be published, broadcast, rewritten,or redistributed.