Anxious About Outsourcing
States Try to Stop U.S. Firms From Sending High-Tech Work Overseas
By Greg Schneider
Washington Post Staff Writer
Saturday, January 31, 2004; Page E01
State and federal lawmakers are finding little success in efforts to stop technology companies from sending jobs overseas. But a paragraph buried in the giant federal spending bill the president signed Jan. 23 could pave the way for state laws around the country aimed at preventing the export of white-collar jobs to cheaper foreign markets.
The paragraph prohibits the federal government from awarding certain contracts to companies that will perform the work overseas. The measure expires at the end of September, and industry officials say few contracts are likely to be affected.
But the provision sets a precedent that information technology companies say could stoke a national backlash against them. Such companies are at the forefront of a trend of moving service jobs offshore -- jobs such as computer technical support and software programming -- and giving them to English speakers in India, the Philippines, Russia and other countries with lower wages for such work.
Critics say the trend contributes to the U.S. economy's "jobless recovery," along with the more extensive loss of manufacturing jobs transplanted overseas. Last July, for instance, U.S. firms shipped as many as 30,000 new service-sector jobs to India while eliminating some 226,000 in this country, according to a recent study by researchers at the University of California, Berkeley.
Forrester Research has estimated that 3.3 million U.S. service-sector jobs will flee to foreign countries over the next 15 years, along with $136 billion in wages.
They'll be drawn by stark economics: Computer programming jobs that pay $60,000 to $80,000 per year in the United States can go for as little as $8,952 a year in China, $5,880 in India or $5,000 in the Russian Federation, according to the UC-Berkeley study.
Harris Miller, president of the Information Technology Association of America, said companies could suffer if they are unable to use cheaper foreign workers to stay competitive.
The clause in the federal spending bill "sends a signal to the rest of the world that it's okay to become protectionist," Miller said. "It also gives a certain amount of aid and comfort to people at the state level who are trying to promote similar legislation: 'The feds did it, why can't we?' The total amount of dollars [involved] could be substantial."
So far this year, eight states have taken up legislation aimed at preventing public dollars from going to companies with workers overseas, according to the National Conference of State Legislatures. In Maryland, state Del. Pauline H. Menes (D) re-introduced such a bill after having one die in committee last year.
Menes said she became concerned after learning last year that welfare recipients in Maryland who call a help-line with questions about their food stamps may be connected to a private contractor's call center in India or Mexico.
"I think it's very inappropriate for a state to fulfill services by out-of-country individuals when they have well-qualified people in their own state . . . and they choose to allow companies to prey on the low pay in foreign countries to get their work done," she said.
The same reasoning led the state of Indiana to cancel a $15 million contract last fall with a company that would have administered unemployment services from a call center in India. State Sen. Jeffrey Drozda (R) then introduced a bill to prohibit offshore work in all state contracting. The measure is up for a vote by the full Indiana Senate on Monday.
"Pure and simple, this is a jobs bill," Drozda said. "I'm a conservative Republican, but I have the support of many labor organizations."
The AFL-CIO has mobilized support for such bills around the country, urging not only outright bans on overseas contracting but also an end to tax incentives that encourage overseas work and measures that force contractors to disclose where their employees are located.
New Jersey state Sen. Shirley K. Turner (D) introduced the first anti-offshore legislation nationwide in 2002, which passed that state's Senate unanimously but failed to come up for a vote in the Assembly. She has re-introduced it this year, and said the provision in the federal spending bill should boost its prospects.
The federal measure is far more limited than the various state proposals. It applies only to contracts that involve competition between a federal agency and a private contractor, prohibiting the winning contractor from performing the work outside the U.S, and it expires at the end of fiscal 2004.
Stan Z. Soloway, president of the Professional Services Council, which represents high-tech government contractors, said he knows of no such competitions that have resulted in jobs going overseas. Security restrictions often keep government contractors from using foreign workers, he said.
Miller, of the ITAA, said the whole issue has been overblown. He estimated that in the entire information technology industry -- both commercial and government work -- less than 2 percent of some 10 million jobs are performed overseas.
The ITAA is monitoring the legislation in states around the country and helping organize business leaders to lobby against it. Companies need the flexibility to use cheaper, offshore workers to help them hold down costs, Miller said. What's more, information technology is one of the few business sectors where the United States runs a trade surplus, exporting some $8 billion more in 2002 than the country imported.
If the United States starts throwing up protectionist barriers, he said, other countries might do the same, "and the big losers are U.S. workers and U.S. industry."
© 2004 The Washington Post Company |
