Article

'Not in my backyard' -- state lawmakers fight offshoring

Ed Parry, News Editor

Their backyards are nearly 700 miles apart. Roughly 180 degrees separate their political philosophies. But when it comes to offshore outsourcing, all partisan, cultural and geographical bets are off -- State

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Senators Shirley Turner of New Jersey's 15th District and Jeff Drozda of Indiana's 21st District are on the same page.

Both legislators, appalled to see jobs head across the ocean while their unemployed constituents look for work, have been fighting offshoring in their respective states. While neither lawmaker can prevent private companies from sending jobs overseas, both can make a difference when it comes to state jobs. Sen. Drozda introduced a bill to ensure government contract jobs stay in Indiana, while Sen. Turner is pushing similar legislation in the Garden State.

State Senator Shirley Turner (D-N.J.)

Turner got the offshore "wakeup call" about two years ago when the New Jersey Department of Human Services outsourced jobs to a company that moved a call center to India. The call center provided welfare and food stamp services -- jobs Turner said could have been filled by the people they served. "It didn't make any sense," she said. "We want to get people off the public dole, [yet] we're sending jobs to another country? It's like shooting yourself in the foot."

Turner helped lead a fight to bring the jobs back. The call center is now in Camden, N.J., and employs some former welfare recipients, Turner said. "They're now paying taxes, and the company is paying property taxes, which helps Camden. This is what taxpayer dollars should be used for."

Turner now has a bill moving through the legislature that bans the offshoring of state work. She said that it has bipartisan support in the state capitol and "1,000% support" among constituents. "For government to make money, people have to work and pay taxes -- we can't provide services without them," she said. "People overseas pay no tax on any level and don't spend money here to stimulate the economy. We need to create more jobs here -- we can't continue with a jobless recovery."

State Senator Jeff Drozda (R-Ind.)

After the governor of Indiana killed a $15.4 million deal wherein the U.S. subsidiary of India's Tata Consultancy Services would handle the state's unemployment benefits, Sen. Drozda introduced a bill that, like Turner's, would keep government jobs in the state. The bill died earlier this month after house Republicans walked out of a debate on same-sex marriage, Drozda said. The Democrats then killed scores of bills on the calendar, including Drozda's, but he plans to bring it back.

The offshore bill has put Drozda in a peculiar position for a conservative Republican -- aligned with unions but at odds with big business. "Democrats and Republicans supported it, but there was bipartisan opposition, too," he said. "I found alliances with small business and organized labor, but large businesses opposed it."

Drozda thinks the private companies that oppose his bill need to look at the bigger picture. "Yes, you can save money on a contract [by offshoring], but you're going to create unemployment in a sector where people become dependent on the state. Those are ramifications that other entities don't see out of the gate."

"I am a strong proponent of limited government, but sometimes it's simpler for the government to instill policies for the good of all involved," he said.

Despite the fact that Federal Reserve Chairman Alan Greenspan has spoken out against legislation to counter offshoring -- at least on the federal level, where U.S. Sen. Christopher Dodd (D-Conn.) has introduced such a bill -- Turner and Drozda feel like they're doing the responsible thing for their citizens and sending a message to the private sector, where far more offshoring is done.

"You're beginning to see public opinion take effect," Drozda said. "As long as government is held accountable for offshore outsourcing and the public holds multinational companies accountable, you will see the tide turning."

Turner also believes that corporations are getting the message but could use more prodding. "I think the federal government needs to do more to provide incentives to stay onshore because with our tax code, we can modify [the] behavior of corporations," she said. "We made it too inviting for them to move operations and jobs offshore. We need to change that." Otherwise, the U.S. may lose its middle class and turn into one of the countries it outsources to, Turner said.

Public outcry, private concerns

The private sector may be getting the public message, but CIOs are not so much beholden to the taxpayer as they are to the shareholder and will keep doing what's best for them, according to Amit Maheshwari, CEO of Cambridge, Mass.-based i-Vantage Inc., a firm that helps U.S. companies set up their own operations in India.

Maheshwari believes that offshoring is a scapegoat and that job losses in the U.S. should be blamed on a cyclical downturn. "The right path for America's business and political leadership at this time is to retool the superb American talent and create additional opportunities in America," he said. "A benefit sharing mechanism should be put in place where offshoring not only benefits the companies, but also the communities," such as a requirement that companies use some of their cost savings for direct growth inside the U.S., he said.

Maheshwari doesn't believe political maneuvering will do much to change executive attitudes about offshoring. "As far as I am concerned, America has led the way in the free market economy and proven that this model works the best," he said.

"American executives have played an important role in helping achieve this world leadership, and they are just not going to do an about-face."

CIOs who utilize the offshore model will continue to be caught in the middle. Mike Stout, CIO of Sprint, said that's he's as patriotic and loyal as any American, but that it's important to look at the opportunities offshore outsourcing provides, not just the ones it takes away.

"IT is growing in the U.S., and statistics show that in 2010, there will be millions more jobs in the U.S. than today, and that's in the context of where outsourcing is going," he said. "That lets American worker[s] elevate to a different capability of managing and leveraging technology, not just entering code. If we go too far with legislative controls, we will create more of a disservice to American workers than safeguards."

Stout also pointed out that the American public demands the best for the least. "The business sector needs to respond with lowest cost and highest qualities," he said. "We can't ignore that India and China are there."

Stout says that he's watching the moves lawmakers make against offshoring. For execs who don't really care, Sen. Turner thinks maybe a taste of their own medicine will help.

"The only way to get their attention is to outsource their jobs," she said. "Hotshot MBAs in India are doing a great job for less money with fewer fringe benefits and bonuses."

FOR MORE INFORMATION

Meta: Outsourcing laws still a long way off

You said it: Offshore outsourcing

It's time to talk sense about outsourcing

Ask Amit Maheshwari a question about offshore outsourcing.


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