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30 state governments are offshoring IT jobs

By Karl Schoenberger
Mercury News, Thu, Jul.15 2004

GOVERNMENT AGENCIES IN California and at least 29 other states have contracted with foreign firms for information technology services, sending jobs and taxpayer dollars overseas, said a report released Wednesday by labor advocacy groups.

The report, commissioned by WashTech, the Washington Alliance of Technology Workers, did not estimate the total dollar value of state offshoring or the number of jobs involved, saying only a limited amount of the activity could be documented because of the lack of information. It called on states to require contractors to disclose where their work is carried out and to create a database of contracts for public review.

WashTech said it hoped the report would revitalize efforts to pass legislation in California and other states that would restrict offshoring of state government services. Several such bills have been introduced in Sacramento but have not advanced.

``This study is going to re-ignite the debate over sending state IT services overseas," said Marcus Courtney, head of WashTech, a Communications Workers of America union local in Seattle that represents high-technology workers. ``It shows how widespread the trend is, and it will give legislators concrete examples to move their agenda forward."

The report, ``Your Tax Dollars at Work . . . Offshore," was done by the Corporate Research Project of Good Jobs First, a non-profit economic policy group in Washington, D.C.

Philip Mattera, who led the research team, said the study involved ``cobbling together" a list of more than 300 mostly foreign companies that specialize in offshore outsourcing and then comparing that data against lists of state contractors and qualified vendors.

The methodology was conservative, Mattera said, because it did not count large U.S. companies such as IBM and Electronic Data Systems that outsource domestically and overseas. Researchers found 18 companies -- including the major Indian offshoring firms Tata Infotech, Wipro Technologies and Infosys Technologies -- had captured at least $75 million in contracts in 30 states. Some of these companies were hiring retired state officials to expand their access to the market, the report said.

``Even if there isn't a great deal of money involved yet, there is a symbolic issue here," said Mattera. ``The fact that a state is spending taxpayer dollars overseas is a public policy issue. So much of this is unknowable because there's no transparency."

Opponents of legislative curbs on global outsourcing criticized the report for supporting the view that limiting the trade in services will protect U.S. jobs.

``I have no problem with transparency in government contracting," said Harris Miller, president of the Information Technology Association of America. ``But my sense from talking to CIOs and state officials is that the amount of IT work going overseas from state agencies is infinitesimal. We oppose any legislative measure to restrict trade in this area, because it could hurt U.S. companies bidding on foreign government contracts."

Dave McCurdy, president of the Electronic Industries Alliance, said labor advocates ``should be concerned with framing the debate around new job creation" rather than protecting a small number of jobs.

``But this is an election year, and it's highly polarized with an electorate that is anxious about job security," he said. ``If you can reduce a complex issue into a bumper sticker you might win the election, but you haven't solved the problem of job creation."

© 2004 San Jose Mercury News

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