US tech firms return to the Midwest as outsourcing costs rise

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US companies are moving work from overseas to lower-cost cities of the United States, mostly in the Midwest, according to a report by Lower-cost US cities are still more expensive than outsourcing overseas, but doing the work in the US reduces problems related to culture, languages and time zones that are commonly encountered in overseas outsourcing. Many Silicon Valley companies have also shifted to lower-cost domestic locations, from expensive cities such as New York and San Francisco that as a result offer staff better quality of life. Still others such as IBM are reducing telecommuting and ordering more people back to the office. NewCo Shift says that “co-located outsourcing is the newest trend in tech outsourcing. In person, face-to face, co-location is the most effective form of communication, especially when you are faced with brainstorming and solving complex issues. Software development is often complex.”