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Executive Editor, News

Grass roots battle over outsourcing simmers

Aug 18, 20034 mins
Enterprise ApplicationsTechnology Industry

Among the vacationing Americans enjoying the summer sun are politicians and lobbyists, taking a break between legislative sessions. But behind the scenes a grass roots effort to curb outsourcing is simmering, set to come to a boil when legislators get back to their desks in the autumn.

Various ingredients could mix to make a combustible brew: IT workers banding together to push for new structures limiting foreign competition; legislators, some of whom are up for re-election in November, ready to take up their cause; fears about national security; and all the while, on the business management side, increasing use of non-American workers to cut costs. Heating it all up is ongoing concern about a generally weak economy.

A Maryland bill aimed at restricting offshore outsourcing never made it out of committee review in the House of Representatives before the state legislative session ended. But that’s not the last of the bill, according to Pauline Menes, the Democratic delegate who wrote the bill.

“I don’t think they had enough information to make a decision,” Menes says. “There was a hearing and not many people showed up, which surprises me, but I think that might be because more publicity was needed.” Menes is vowing to repropose the bill in the next session in the state, in January, and this time, she plans to do more groundwork to make sure people know about the bill.

“I fully intend to refile and I will be fully diligent to make sure people who may be interested know about it.”

“The state isn’t in the business of giving work to foreign workers in order to pinch pennies,” Menes says.

In New Jersey, a bill that in most cases would prevent the state from awarding jobs to companies that would use offshore outsourcing to complete contracts passed the state Senate unanimously, 40-0, eight months ago. However, it is still being reviewed by the Government Committee in the state Assembly, where it is meeting some opposition.

The bill would increase costs to the taxpayer because it can potentially prevent New Jersey from awarding contracts to lowest bidders in the global labor context, says State Assemblyman Upendra Chivukula, a Democrat.

Nevertheless, partly due to publicity kicked up by the outsourcing bill, the Department of Human Service’s Division of Family Development, the state agency that oversees state welfare and food stamp programs, has asked one of its contractors, back-end electronics payments processor eFunds, to staff a call center in New Jersey, rather than continue to use outsourced workers in India. The move will cost the state an extra $886,000 a year at current case loads.

The outsourcing bill’s Senate sponsor, Shirley Turner, a Democrat, defends higher contract costs that may result from the bill, by pointing out problems that stem from unemployment. “We are paying now, when people become unemployed and for the consequences of unemployment. People go on welfare, there are problems with the family, there’s abuse, drugs, and this comes at a cost to society,” Turner says. Turner has heard talk of amendments to the bill, but vows “if amendments are made that water down the bill to make it ineffective, I will re-propose it.”

Though New Jersey has the country’s highest per capita income, Turner points out that the out-of-work population in the state’s urban centers are double the overall unemployment rate, reaching into the double digits.

Security is also a concern, especially in an area that lost lives in the Sept. 11 terrorist attack in New York City. “In a time of high terrorism, we have to think about security, and who is examining all that personal data,” Turner said.

New Jersey legislative sources say despite some opposition, since the bill had such an overwhelming support in the Senate, it stands a good chance of at least making it out of Government Committee in November, paving the way to a vote in the full Assembly. Once bills pass both Senate and Assembly, they go to the governor, who decides to sign them into law or not.

There are national and local unions and trade associations across the U.S. who are sure to back such bills.

For example, at the end of July officials at the International Federation of Technical and Professional Engineers (IFPTE) approved efforts step up lobbying to the U.S. Congress for measures to restrict work from leaving the country, and to tighten the requirements for granting work visas to foreign technical workers.  The visa programs are already under assault: There were five bills proposed in Congress this year that would make them more restrictive.

With legislative action happening at the federal and local level, the debate over outsourcing appears ready to take center stage on the American scene.