With the growth of the tax outsourcing business slowed to a crawl, Xpitax, based in Braintree, Mass., has decided to move outsourced preparation back on shore, but using the same processes that the company established for its processing center in India. The process started last year and hasn't become a major effort, yet. But the company anticipates it will.

“We have an office in Boston and we are setting up part-time people and putting them through the same training,” says Albrecht. While the operation prepared only 4,000 returns during the last tax season and is not expected to show dramatic growth during the current season, he notes,  “I think next year we are really going to push it out in to the market place. I think there is a need for outsourcing.”

Meanwhile, rival SurePrep, based in Newport Beach, Calif., which has faced the same barriers in the growth of its outsourcing business, has been hired by a larger accounting firm to handle preparation of its 1040 returns, says CEO David Wyle, who declined to identify the firm.

That firm is “looking to do a bunch of things to lower cost of service delivery to move  its people toward a consultative mind set, rather than on how to organize and enter data,” says Wyle. “This is designed to get them out of the mechanics.” Wyle notes that the firm is still involved process because its reviewers must still be involved in looking at returns and making final decisions about the contents.