Backshoring: Just PR, or Long-Term Business Strategy?

Some economists are recommending that U.S.-based companies that have sent work overseas bring it back to the U.S. They advocate for "on-shoring" or " "-not as a protectionist trade policy-but as a strategic move designed to conserve a market (namely, U.S. consumers.)

These economists argue that backshoring or , as the practice is also known, will help stabilize the world's largest consumer market-the U.S.-as well as the world economies that depend on U.S. spending. They add that backshoring will also yield larger profit margins over the long term.

"The recession experienced in the U.S. has and will continue to have adverse consequences for other countries," says Dr. Felix Rioja, an associate professor of economics at Georgia State University, who has also consulted with the World Bank. "We are the biggest economy in the world and we buy many imported products from the rest of the world. But demand [for those products] has fallen as Americans have lost jobs and have less income."

Rioja believes that backshoring will help the U.S. and the foreign economies that depend on American spending emerge from the recession. By creating jobs in the U.S. through back-sourcing, unemployment will fall and more Americans will again have the income to spend on products and services sourced domestically and overseas, which will in turn help foreign economies rebound from the recession.

Several major U.S. companies including , Delta, Dell and the Home Shopping Network are moving some of the work that they had offshored back home. IBM announced in January that it would open a new technology service center in Dubuque, Iowa. The company plans to employ up to 1,300 white-collar workers at the new center by the end of 2010. According to the Iowa Department of Economic Development, the incentive package, which is worth US$55 million over 10 years, includes a portion that will be forgiven once hiring numbers are met and a historic department store is refurbished.

But skeptics say the back-sourcing movement is more window-dressing than bricked substance.