Outsourcing Times

Here’s An Alternative To Offshoring

By Priya Jestin, Staff Writer

Imagine a situation ten years down the line, where there is a huge backlash against jobs being moved offshore, whether to India or any other location. This could lead to many American companies deciding to retain their work in-house or within the United States, for fear of rebuke from customers or stakeholders. What happens to the outsourcing industry then?

According to experts, the offshoring trend cannot stop, but it will definitely slow down. Since the demand will slow down, wages will remain under control. This means India will still be able to retain its cost advantage and will still be the global leader in outsourcing. American companies which may no longer be able to outsource, may look to employ qualified people from other countries including India.

This could lead to large-scale immigrations of qualified people from India, China, Phillipines, and other countries to the United States. Now this makes me wonder. Which is the lesser of the two evils: Sending our jobs out of the country or getting outsiders into the country to do our jobs?

Indulging In The Politics Of Offshoring

By Priya Jestin, Staff Writer

Guess what’s one of the hottest issues in the current presidential campaign? Offshoring jobs of course. While John Kerry plays to the masses by blaming President Bush for massive job losses, he seems to have forgotten that in 1993 as Senator, he voted to implement the North American Free Trade Act (NAFTA). So, way back then, Kerry knew jobs would be lost. Interestingly in 1993 alone, Senate had reports that thousands of manufacturing jobs would be lost. Job loss estimates ranged from 22,500 to 912,000.

What people like Kerry forget in their game of politics is that a slew of new jobs has been created since NAFTA's implementation. According to Economic Policy Institute, NAFTA resulted in exports that created 794,194 new jobs. Overall, the political economy has only helped create more jobs than lost.

But, for a moment let’s assume that Kerry and his ilk succeed in restricting offshoring jobs. What happens then? The offshoring phenomenon has helped boost the economies of many countries; people in these lands now have the money and access to American goods. Through this they invest in the American economy. So if we restrict job offshoring, we’ll effectively be reducing OUR revenues and our jobs. So, what’s the better option?

Public Outcry Against IU Outsourcing Decision

By Priya Jestin, Staff Writer

The idea of outsourcing doesn’t seem to have gone down well with legislators in Indiana. Three state lawmakers recently urged Indiana University administrators not to outsource some school operations, as they felt that the move would harm the region's economy.

Democratic Reps. Matt Pierce and Peggy Welch, of Bloomington, and Sen. Vi Simpson, D-Ellettsville, are joining a growing tribe of dissenters in Monroe County and Bloomington in voicing opposition to the proposal. Their contention is that outsourcing will suppress wage and benefit growth in the region.

So what is it that is irritating residents of these counties? University administrators are considering plans to hire private companies for operations such as campus bookstores, food services and printing services. This proposal is sure to affect jobs at all IU campuses. Wonder if all this is the proverbial storm in the teacup.

Outsourcing As A Slur

I knew outsourcing was a touchy subject with most Americans. But I didn’t expect it to sound like a slur for some. What else do you make of a Michigan company that recently asked U.S. Sen. Debbie Stabenow to retract her statements that it outsourced jobs overseas?

Last week, Jackson National Life Insurance Co. sent a letter to Stabenow asking her to apologize for stating that the company outsourced jobs to India and China. She is said to have made this comment during a campaign TV commercial and public talks. Not one to retract on her word, the Stabenow campaign still stands by its statements.

Stabenow is supposed to have said that her Republican opponent, Mike Bouchard, supports Bush administration policies. She claims that these policies have led to the outsourcing of Michigan jobs. Company president Clark Manning Jr. wrote to Stabenow saying that she “falsely denigrating the excellent organization they have worked to create." Wow! Now what do you make of that?

Any company that wishes to improve its profits and thereby shareholders’ revenues will look for means to reduce costs. I’m not commenting on the present situation but I think it’s high time we behaved like we mature people. Yes, it is a bit difficult to think about that when you are the person losing a job. But then throughout history, there’ve been upheavals, which may have seemed unbearable at that point. However, these events always led to something good. So also is the case with outsourcing.

Walter Reed Outsourcing Blocked

Recently, a bill was produced in the Senate that sought to block spending on a contract for operations support services at Walter Reed. However, the bill fell through in the Senate. The House already passed language to keep the Army from moving forward with a plan to transfer work that is being done at Walter Reed. Had the Senate passed the bill, all the spending on the contract would have been blocked. However, it would not have prevented the Army from carrying out a new public-private competition for the same work.

Read my previous post titled "Outsourcing Tips for Small Businesses" to get outsourcing tips for small businesses.

Employees in Los Angeles Protest against Outsourcing

Recently, I had written a post titled "Did Outsourcing Raise Level of Wages? where I mentioned about the impact of outsourcing on wages. It seems that the debate has been intensified. Thousands of county employees gathered outside the Kenneth Hahn Hall of Administration to protest against low wages and outsourcing of work. They believe that outsourcing has affected their wage structure.

Members of Service Employees International Union Local 660 marched up and down Temple Street with slogans and posters. The union represents about 46,000 county employees. The union's contract is set to expire at the end of the month. However, the employees expect that both sides will agree to a new contract before the expiry of existing contract.

Shocking News: Terror Outsourcing

Several countries including India have been the victims of terrorism. The recent serial bomb blasts in Mumbai have unmasked the ugly face of terror in India. According to sources, terrorists have now adopted a new strategy in the form of terror outsourcing. They have adopted this tactics to leave the security personnel guessing about their moves. The major terrorist organizations are now outsourcing the terror task, according to Indian intelligence sources. Such organizations pick up highly motivated boys and provide them training and other support to carry out the operations. They boys work for a specific price.

Wireless interception aftermath Mumbai serial blasts have indicated that operatives of these blasts were not dedicated members of any organizations. The intelligence sources also revealed that most terrorist attacks in the recent days were performed by operatives who were paid by the terrorist organizations. This is a dangerous trend, as it is not easy for the security agencies to check such activities. Security agencies generally keep a tab on the activities of the militant organizations. However, they have succeeded in fooling the security agencies by outsourcing their tasks.

The Statesman reports that -

Intelligence inputs reaching here reveal that terrorist organisations pick up “hardliner, alienated Muslim boys” in the age group of 18 to 26, impart them training and then ask them to do “any terror operation of their choice” and pay them accordingly, said a senior intelligence official.

Australian Federal Government's Outsourcing Deal with CSC

The Department of Immigration and Multicultural Affairs (DIMA) and the Australian Electoral commission (AEC) have extended their outsourcing contracts with Computer Sciences Corporation (CSC). The extended contracts will be worth $112 million. DIMA will extend mainframe and mid-range support for the Border Critical Infrastructure (BCI) and related project work for an additional two years. The original contracts with DIMA and the AEC were signed in 1998 for a three years period. In 2002, it was extended for another four years. CSC provides mainframe services to the AEC. The original contract was the part of the federal government's Cluster 3 outsourcing contracts.

According to Computer World -

Cluster 3 relates to the first group of federal government agencies undertaking IT infrastructure outsourcing, announced in July 1997. The agencies include the Department of Immigration and Multicultural Affairs, The Australian Securities Commission, The Australian Electoral Commission and The Australian Industrial Property Organization.

Bush gives green signal for outsourcing

The visit of President George Bush to India was significant for the outsourcing industry  as outsourcing has been a concern across various segments of the population of both countries. President George Bush faced this issue head-on and stated that outsourcing is a result of globalization and should be seen as an opportunity rather than a threat. However, he did not give the disadvantages a go-by and admitted that outsourcing results in job losses.

The MBA from Harvard further stated that outsourcing is in it's infancy and the huge middle class segment of India cannot be ignored. President Bush has given his best to manage the attitude towards outsourcing in both US and India and stated that his re-election was a testimony of his polices. Chron.com reports:

"The classic opportunity for our American farmers and entrepreneurs and small businesses to understand is there is a 300 million-person market of middle class citizens here in India," Bush said Friday during a discussion with young entrepreneurs at a business school in Hyderabad.

Declaration mandatory for outsourcing outside Colorado

The state of Colorado has brought in a bill that makes it mandatory for any private business seeking contracts from the state government to declare whether any of the business processes involved will require outsourcing to any other state or country prior to the actual commencement of the work.

After a contract is accepted, if is felt that it is necessary to move some of the work process outside the state, the contractor is required to explain to the state the need for such outsourcing. The bill is being introduced by Denver Democratic Sen. Peter Groff, who is heading the Interim Committee of the Legislature to examine the process of government purchasing and contracting practices. The move is not to impose any ban on outsourcing, but to ensure clarity in state expenses. LongmontFYI reports:

Aurora Democratic Sen. Stephanie Takis is also working on an outsourcing measure, which she said she will probably revise and may introduce as a non-committee bill next year. Takis’ draft proposal would require the state Office of Economic Development and the International Trade Office to prepare annual reports estimating the net number of jobs lost in Colorado during the previous year — and the estimated money lost to the state’s economy — as the result of outsourcing and offshoring.

State Auditor Report raises questions on savings for Texas Health and Human Services Commission from outsource contract with Convergys

A recent report by the state auditor has indicated that the Texas Health and Human Services Commission has not succeeded in reaching the targeted $21.7 million savings from outsourced human resources and payroll functions to Cincinnati-based Convergys Corp. This has prompted Texas state senators to ask for the setting up of a legislative committee to examine all current and future outsourcing contracts of the Commission.

At this point of time, Convergys has not come forward with any comment regarding the reported lack of cost-saving results from the contract. A spokesperson of the Commission stated that the agency did not expect any money-saving results in the first year of contract; rather, it is expected that a total saving of $32.7 million will take place over the next five years. Austin Business Journal reports:

Barrientos and Sen. Eliot Shapleigh, D-El Paso, are asking Dewhurst to work with House Speaker Tom Craddick, R-Midland, to create a new, joint interim committee to analyze the findings of the state auditor and scrutinize the commission's contracts, Barrientos spokesman Ryan Duran says.   

India seeks to pressurize US and EU on outsourcing commitment at WTO ministerial meet

At the WTO ministerial meeting, India will seek to impress upon the world community the need for a commitment from member countries, in particular the US and the countries belonging to the European Union, to continue outsourcing to India and bring in trade reforms that will facilitate such outsourcing. Among such reforms is the lowering of custom duties. India is committed to permitting commercial presence in India and allowing cross border movement of services.

India will also take steps to improve services and trade. Within the G-33, India has been concentrating on security mechanisms, and calling for the removal of western agricultural subsidies. The government has also formulated various amendments to the TRIPs agreement, which will have repercussions on the obligations in the convention on biological diversity. This will help protect traditional knowledge and encourage "benefit sharing" with those who possess such traditional knowledge. The Financial Express reports:

As a part of its strategy, India, amid renewed bonhomie with the US and EU, has planned to aggressively seek a commitment from these countries on cross border services, specifically trade reform that would ensure outsourcing to India is not prohibited. India has put forward a services offer which makes fresh commitments on Mode 3 (allowing establishment of commercial presence) and Model 1 (covering cross border supply of services). It has also called upon the US and other nations to lower custom duties.

Read More: India to seek commitments on outsourcing at WTO meet

To outsource or not to outsource: the raging political debate in the US

India and China have been the leading outsource markets for companies based in the US, and the number of US-based companies seeking outsourcing partners in these countries is constantly on the rise. This has led to fears of loss of jobs within the US, and the issue has now become a public debate.

Inc.com reports that more than 35 states in the US are considering anti-outsourcing bills, and some states have gone a step further: Tennessee governor Phil Bredesen put his approval on a bill granting incentives to companies who refrain from outsourcing, and New York and California prevent access to public funds for companies who have outsourced work.

Forrester Research reports that over the next decade, outsourcing will result in the loss of 3.3 million jobs in the US. However, in spite of opposition, outsourcing continues to flourish. Inc.com reports:

Ironically, vocal opposition by politicians as well as extensive coverage in the media are both cited by the report as reasons for the recent surge in outsourcing. The report also says that a "second wave" of outsourcing will form where smaller, tech-orientated companies will follow the lead of large corporations in searching overseas for cost-cutting measures.

Read More: Outsource at Your Own Risk

Nuclear War Avoided Due to Outsourcing?!?

In what seems a rather interesting and incredulous take on the Indian Pakistani conflict, a writer for IndiaDaily speculates that nuclear conflict was avoided between India and Pakistan because of...outsourcing.  In the scenario, India and Pakistan were at the point of escalation when American corporations began to express a real financial interest in offshore outsourcing.  American corporations indicated that they wanted to invest heavily in India, but only insofar as the country remained stable militarily. 

This need caused Indian destination firms, who controlled much of the Indian corporate economy, to lobby the government for a peaceful resolution to the conflict.  Their efforts were successful and instead of beating the war drums, the Indian government made a genuine effort at peace negotation and war was avoided.  The answer seems a touch simplistic, but from a free market perspective it makes some sense.  It is generally agreed that a stable government brings greater foreign investment and that such investment improves the infrastructure and ultimately the standard of living for a particular country.  Whether corporate India would have been able to control the direction of the government in the midst of a run up to nuclear conflict seems a bit difficult to accept, but the underlying logic here works well. IndiaDaily.com reports:

Indian outsourcing oligarchs made enormous amount of money exploiting the youth of India to work for American projects at substandard salaries.  The world was saved from a nuke war that could have devastated South Asia.

Read More: It was American corporate leaders and Indian outsourcing oligarchs who convinced BJP not to attack Pakistan after Indian Parliament attack and avoid nuke exchanges

Sarbanes-Oxley Drives Work to Outsourcers, but Problems Still Linger

Accounting and financial disclosure firms around the world are benefitting from Sarbanes-Oxley's rigorous requirements.  Companies across the United States are deciding to outsource the arduous task of ensuring compliance with the bill rather than attempting to do it themselves.  This has meant jumps in profits as large as 35 percent from firms like India's Infosys.  Despite this rapid increase in business, however, outsourcing companies still face a hige challenge in maintaining their profitability edge.  First and foremost among these is turnover.  In some companies turnover exceeds 70 percent meaning that transition costs run high and the quality of work is lower than it should be.  The turnover is an indication of the increasing competition for labor, whose scarcity is driving up wages and eliminating much of the initial rationale for entering into outsourcing in the first place. CRM News reports:

Selling the end-to-end solution and getting the least risky processes as business.  This is the most challenging aspect of their collective long-term business models. 

Read More: Outsourcing's Double-Edged Sword: Trust

FAA Denies Protests to Outsourcing Contract with Lockheed Martin

In what has become a very high profile outsourcing showdown, the Federal Aviation Administration has defeated two bid protests this week which may have prevented the transfer of flight service jobs to Lockheed Martin Corp. in early October.  The FAA is attempting to enter into a 10-year, $1.9 billion dollar contract with Lockheed Martin to provide services such as weather briefings, flight restrictions information, and in-flight navigational advice to pilots of private planes.  Opponents contend, however, that the move will unfairly eliminate a number of federal retirement benefits for FAA employees as well as expose the FAA and citizens in general to unnecessary safety issues.  Despite the fact that the FAA has succeeded in defeating two cases regarding the legitimacy and safety of the transfer, they are not yet in the clear.  FAA employees have some hope that lawmakers will step in to block legislation, however, it how appears that much of the initial balking at the deal in congress was simply political grandstanding. GovExec.com Reports:

Lawmakers could pass legislation that would block the outsourcing, for example, though the effort appears to have lost some momentum. 

Read More: Options running out for opponents of FAA outsourcing

FAA Proceeds with Outsourcing Despite Two Protests Filed

The Federal Aviation Administration has rejected two challenges to its announcement last February to outsource 2,500 federal flight service jobs.  The two protests claim that there were significant procedural errors in the awarding of the work to Lockheed Martin Corp. and as a consequence the deal was invalid.  The challenges specifically argued that the in-house team was penalized for circumstances beyond its contral and because it failed to accurately account for costs that would be incurred through the Lockheed Martin venture.  Essentially the claims argued that the in-house team had not been given a fair shot to keep the work in-house.  An independent judge ruled recently however, that the protests would be denied and the contracts could proceed as planned.  While there is some speculation that the protesting groups may appeal the case nothing has been definatively stated on the issue.  A bill going through the US Senate may make all this meaningless however, as it explicetly prevents the FAA from giving jobs to a contractor.  If it is passed, it is widely assumed that the contract with Lockheed Martin would become nullified. GovExec.com Reports:

The House, for example, recently voted in favor of an amendment to the fiscal 2006 Transportation-Treasury appropriations bill (H.R. 3058) that would prevent the FAA from giving the jobs to a contractor.  The Senate is crafting its version of the bill this week.

Read More: FAA rejects appeals of outsourcing decision

Read More: FAA rejects appeals of outsourcing decision

Indian PM Singh Promotes Outsourcing in Good Will US Tour

During a four day good will tour through the United States, Indian Prime Minister Manmohan Singh presented his pro-outsourcing case to American corporations and indirectly to the American public.  While the trip did not reveal anything which demonstrated a remarkably new direction for India, it did point to the growing integration of the Indian economy with that of the US and its reliance on America for so much of its technology employment.  Throughout the visit PM Singh reiterated his argument that outsourcing was beneficial for all parties involved and that it was a direct consequence of globalization.  In drawing this tie Singh is making the case that outsourcing is not a consequence of governmental interference in the global economy, but rather is simply a natural development of broader changes in the global marketplace.  This is in an effort to combat those within the first world that are arguing that western workers are overall more efficient and productive than their Indian counterparts but that they are victims of India and other countries efforts to produce for their domestic workers an unfair advantage.  It is his hope that by diffusing the situation early, India can avoid the kind of wrath that Chinese companies have taken for their countries monetary policy.  CIOL Reports:

"Outsourcing is not a one-way beneficial string.  Just as America's outsourcing has helped Indian firms, it also is a source of strength to American corporations.  In a competitive global economy, the fact that outosurcing lowers cost of operations of American companies and enables them to compete more effectively against their competitors not only in the US market but also in the global markets," Singh said.

Read More: Globalization led to outsourcing: PM

Organized Labor Appeals to Security Issues to Slow Outsourcing

A recent report indicates that British Gas (BG) is planning to cut 2,000 jobs from its Manchester offices and move 1,000 of these jobs to India.  This has, unsurprisingly, caused quite an uproar within the organized labor community in Great Britain.  Of particular interest in this case, however, is the approach labor is using to combat the measure.  After achieving little success in halting the larger outsourcing movement by appealing to wage and justice issues, the labor movement is now arguing that offshore workforces do not provide a secure environment for sensitive information.  They are referring of course to the recent spate of incidents in which sensitive information was compromised by Indian workers in Indian firms.  This has led to a wave of concern in the western world about identity theft.  The success of this approach remains to be seen.  If labor can portray the condition of information in Indian offshore companies as unsecure they may succeed in getting legislation requiring more secure measures be taken.  This will, in effect, increase the cost of doing business in offshore locations such as India and curb the flow of companies shifting work abroad. The Financial Express reports:

In the release, Steve Bloomfield, Unison's head of utilities, terming the job losses as "completely unacceptable", says: "Offshoring also brings its own problems of data protection and regulation of customer information." According to Unison, British Gas plans to move backroom work to India where the company claims they can make a 400% saving in operation costs.

Read More: British TU threatens stir against BG's India plans

Outsourcing Deal Leads to Florida Republicans Financial Scandal

The US education system is seemingly a never-ending market for generating reports of inefficiencies and idiocy.  Many of these criticisms are undeserved.  Recently, however a number of individuals are criticising the Tallahassee school district for outsourcing spam protection for their website.  Previously the service was provided for free from Florida State University in an effort to get teachers and students online at a minimal cost. Fear of liability issues and a slew of lawsuits was the purported reason for moving the work to an outsourcing destination firm.  But now critics are concerned that the government's inefficiency in the matter may indicate back room payouts rather than mere costs associated with an outsourcing contract.  The project, which was once free mind you, is now costing school districts like Manatee County $437,000.00. The company is also reportedly providing very sub-par services as e-mails are inundated with spam, the supposed reason for paying the company in the first place.  All this has added up to create a bit of a scandal.  Complicating the story is the fact that Gov. Jeb Bush's one-time campaign manager is the lobbyist that was representing the company in the deal.  All in all, this is a lesson that if outsourcing is not done with cost efficiency as the first priority, it can tend to be a very bad deal for the people it is supposed to serve.  Tallahassee.com Reports:

Hayes took over the contract, FIRN2 was born, and several things happened as a result.  The first was a loss of $7.63 million from the USAC, which concluded that, contrary to its funding requirements, "price was not the primary factor" that the state used in awarding the contract to Hayes.

Read More: Outsourcing is filling your box

ECJ Ruling Requiring VAT on Outsourcing Contracts Analyzed

Recently a European court ruled that outsourcing companies must pay a tax on some contracts.  Wall Street investment firm Sanford C. Bernstein & Co. has announced recently however that this ruling will not have a major negative effect on the European technology services market.  The court case surrounded Accenture Ltd. who argued that it was exempt from paying tax revenue because it was doing insurance-related work.  The court, however, found that Accenture did in fact have to pay taxes on the revenues it recieved through the outsourcing contract.  This decision caused a bit of a stir in the outsourcing community as fears of high taxation driving out companies working on low margins began.  Companies were initially concerned that they might be required to pay between 15 and 25 percent of their revenues in the form of a value added tax.  The report by Sanford C. Berstein & Co. argues, however, that payment of such taxes is only necessary if a company fails to structure a contract in a tax efficient manner. DallasNews.com Reports:

But there are several ways outsourcing companies can structure contracts so they won't be subject to the tax, said the firm, which worked on the report with Dallas-based consulting firm the Everest Group.

Read More: Outsourcing ruling analyzed

IT Solicitation Reveals Differences Between US and UK

In a move that displays the rather striking difference in public relations regarding outsourcing between the United States and the United Kingdom, Britain's Office of the Deputy Prime Minister is openly soliciting a company to maintain, modernize and operate its desktop and IT infrastructure.  In fact, the office stated that it had a "preference" for a single IT supplier to provide these services.   Of particular interest here, is not that the government would like a single operator of this portion of its IT, but that it is so brazen to solicit the work from an outside contractor rather than keeping the work in-house.  While critics would argue that the United States is certainly no stranger to IT outsourcing, this type of public solicitation for any company, international or domestic, would create a Public Relations nightmare in the US for the organization involved.  By contrast, there seems little public discord regarding the matter in Great Britain. Silicon.com Reports:

The department said its "preference" is for a single supplier to provide all the services, and added that the deal could be worth around £35m over five years.

Read More: Deputy PM starts £65m outsourcing hunt

India Seeks WTO Regulation to Protect Outsourcing

In an indication that outsourcing is becoming an ever more integral component of the Indian economy, the country is now seeking World Trade Organization protection against a western backlash against outsourcing.  In recent years a flurry of US congressional proposals have attempted to limit outsourcing with an aim towards preventing domestic job loss.  These efforts have raised serious concerns in India, that their economic future resides in the hands of western public opinion regarding outsourcing.  In an effort to limit the potential for such changes, the Indian Government is attempting to force the US to lock in current legislation regarding the ability of domestic companies to outsource peripheral and some core competencies.  Express India Reports:

We are very concerned with the US binding the current situation because all these noises just keep coming," Nath told reporters after a speech to the US-India Business Council. "The issue needs to be once and for all put behind us."

Read More: India wants WTO protection from outsourcing bans

Bush Pushes For Repealing Anti-Offshoring Bills

In recent years, the US Congress has proposed and passed a number of bills which have limited the scope of outsourcing federal jobs.  Recently, however, pro-outsourcing forces within the government, specifically the Office of Management and Budget, have pushed for thousands of jobs to open up to the public.  Avoiding the hot-button word "outsourcing" officials instead discuss publically the need for the expansion of the A-76 program, a system designed to incorporate market competition by soliciting bids for federal work from private contracts (aka domestic outsourcing).  FederalTimes.com Reports:

“Does it make sense to insulate all of these federal employees from competition? We don’t think so,” he said. “We think it makes good sense to allow competitions to see where the best values are."

Safavian also cited a provision in Homeland Security’s 2005 appropriations bill that prohibits it from using funds to compete positions of immigration information officers. He said immigrants have to wait in long lines at immigration offices because the immigration information officers have not changed the way they do business for years. He said competition could force the department to come up with better ways to do its business.

Read More: OMB officials seek repeal of anti-outsourcing laws

EU Funds Pro-Outsourcing Publicity Program

The European Union is currently engaged in a bit of domestic propaganda in an effort to encourage trade unions and employee representatives to embrace outsourcing.  The organization, known as MOOS, is and EU funded effort at making offshore outsourcing, a primary concern of national labor organizations, more palatable to the nation as a whole and these organizations specifically.  The organization's existence indicates a response by corporate europe to increasing concern within the European public about the effects of offshore outsourcing on the individual laborer.  While the United States certainly has its share of corporate-led efforts supporting similar aims, and Bush's recent efforts to expand market competition in federal jobs all parallel this organization's efforts, a formal governmental agency tasked with offshore outsourcing lobbying is a new level of western government intervention into the debate over outsourcing. UNI Telecom Reports:

MOOS is a major EU funded project which aims at making offshore outsourcing socially more sustainable. Partner organisations from 6 countries and the labour research institute of the Belgian university Leuven monitor and track offshore activities in several sectors all over Europe

Read More: UNI: Making Offshore Outsourcing Sustainable Project (MOOS)

Congressional Election Year Brings Spike in Anti-Outsourcing Legislation

After a brief lull in debate over the issue of offshore outsourcing, the American public is once again gearing up as politicians eager to secure the vote propose anti-outsourcing legislation.  In just the first three months of 2005, over 112 anti-outsourcing bills have been proposed throughout some 40 states in the US.  That number is in sharp increase from the 107 bills of which 5 became law through the entirety of 2004.  The National Foundation for American Policy (NFAP) is covering these laws and highlights a few with the potential to radically change the landscape of US outsourcing. The Economic Times Reports:

The NFAP study lists several bills of concern – a New Jersey bill, which prohibits state contract work from being performed overseas; bills in Oklahoma and Mississippi about call centers outside the US; Montana bill keeping state work in the US; Washington bill putting checks on outside contracts and a Maryland bill prohibiting the federal government from binding the state to international agreements.

Read More: Outsourcing: 100 US Bills target India

US Congressman Costello Proposes Anti-Outsourcing Bill

An amendment put forth this week by U.S. Congressman Jerry Costello of Illinois was defeated on almost perfect party lines this week.  The only dissenting Congressman was Dana Rohrabacher (R-CA) who voted to support the amendment.  The ammendment sought to prohibit federal jobs from being offshored and requiring National Oceanic and Atmospheric Administration (NOAA) contracts to be performed in the US.  Rather than focus on the actual proposed amendment, however, perhaps the most salient point in this situation is the fact that outsourcing continues to be a strictly party line issue with seemingly little willingness to compromise on either side of the aisle.  Suntimes News Reports:

"It is high time that we put the needs of American workers ahead of arcane international trade rules," stated Costello.  "The amendment addresses how Federal tax dollars, collected from American workers, are spent by the Administrator of a Federal agency.  My amendment simply directs that those dollars should go to create American jobs rather than to the lowest bidder in a global labor market.  This was a simple choice."

Read More: Costello Again Tries To Prevent The Outsourcing Of U.S. Jobs

State of Florida Rescinds Telecommunications Outsourcing Contract

The state of Florida has rescinded one of its largest telecommunication outsourcing contracts after an increasingly heated conflict between AT&T, Sprint, Verizon, BellSouth and MCI.  After intense negotiation between the telecommunications giants, no agreement could be reached forcing the withdrawl of the measure.  Unlike other state outsourcing ventures this particular event, although ultimately unsuccessful, was not so due to the public outcry which has increasingly forced state and local governments to eliminate outsourcing from its potential cost-cutting arsenal.  Rather, the bureaucracy that surrounds such ventures involving governments was the ultimate culprit for its demise. Tallahassee Democrat Reports:

"I think we got very close, but we just couldn't get there," Vezina said, saying of the negotiation marathon, "It was productive; it was well done, but it just didn't do the trick."

Read More: State cancels technology outsourcing project

Russia Implements Reforms to Encourage Outsourcing

The Russian government has recent proposed the development of a network of technoparks and free economic zones modeled after the successful efforts in Bangalore and Hyderbad.  Additionally the government has committed to investing $650 million over the next five years in IT infrastrastructure as well as simplifying tax and legal hurdles for conducting business in the country.  The attention given to outsourcing is due to the its prominance as the fastest growing industry in Russia. The MosNews Reports:

The Russian IT sector has demonstrated 25 percent annual growth and software exports have been growing at 40-50 percent annually over the last few years.  More than 250 companies are already active in offshore software development and Russia's outsourcing industry is expected to reach $2 billion over the next few years.

Read More: Russia Seen as Next Global Outsourcing Leader

US Anti-Offshoring Bills Revoked

As predicted, the once-highly touted anti-offshoring bills that sprang up in state legislatures throughout the nation are now being revised and limited, or revoked altogether.  Despite initial enthusiasm for the bills which crested in the last presidential elections, the costs associated with the bill are causing states like Colorado to revoke the bills.  Rocky Mountain News Reports:

Sen. Jim Dyer, R-Centennial, called the legislation's demise "healthy," saying the $24 million price tag probably was too low.  "It's breathtaking to tell the taxpayers to dig into their pockets for that," he said.

Read More: Plug pulled on anti-offshoring bill

Unions May Restructure Against Offshoring

The fastest growing union in the nation, the Service Employees International Union, is making a bid to vastly restructure the US labor union. The union has threatened to leave the AFL-CIO if the union federation does not take a stronger and more active position against phenomena like offshoring. While initial reactions by the AFL-CIO to SEIU President Andy Stern’s proposition has thus far been negative, some analysts believe that the recent power slippage by unions will force them to treat his recommendations credibly at the March executive council meeting. As far as offshoring is concerned, any such move may mean a more organized and formal effort to isolate and lambaste participating companies. Yahoo News Reports:

Stern's arguments and his threat last summer to leave the AFL-CIO if serious changes aren't made have deeply rankled many other labor leaders. They have triggered a fiery internal debate that may reach some resolution at either the labor federation's March executive council meeting or this summer's quadrennial convention. There's also the possibility that the arguments will set the stage for a dramatic contest for the presidency of the AFL-CIO and an organizational split on the fiftieth anniversary of the merger of its two forerunner federations

Read More: Labor Debates its Future

NY Lawmaker Proposes Legislation to Limit Funding for Outsourcers

State Assemblyman Richard Brodsky of Weschester New York is raising quite a stir by introducing a bill that would prevent companies who recieve New York state tax subsidies from moving jobs out of the state.  While the legislation is clearly an attempt to curb offshoring internationally, the wording of the bill may prevent large companies from even transferring work to other states.  Assemblyman Brodsky has made the case that this bill is not intended as a block against outsourcing altogether, but that it simply stops outsourcing from being subsidized by the state. Many critics argue, however, that the bill will hurt corporate profits in the region and ultimately cost the state more jobs than it saves.  Newsday.com Reports:

The legislation proposed by state Assemblyman Richard Brodsky of Westchester would prohibit companies from sending jobs out of New York if they received tax breaks or other financial incentives from the state. A violation of the legislation would require a company to repay whatever benefits it was awarded, and ban it from receiving further state financial assistance for five years.

Read More: Bill aims to stop companies that get tax incentives from sending jobs out of state

Maine Considers Anti-Offshoring Bill

In what some are touting as a plug against all offshoring, Maine legislators are beginning deliberations on whether to create a law which would limit, if not eliminate, job offshoring from the state.  While some legislators are claiming that the bill is little more than a symbolic act indicating the state's solidarity with displaced workers, others are pointing out that this bill may harm profit margins in the region.  As of yet, there are a number of proposals on the board ranging from a strict limitation of all offshoring, to limitations on those businesses whose offshoring practices are deemed to produce net negative economic effects on the state.  Maine Today.com Reports:

Maine is one of several states reacting to the attention American companies have gotten in recent years for the practice of offshore outsourcing - the shifting of service and high-tech jobs overseas. The country saw a flurry of legislation in 2004, when 36 states had proposals aimed at keeping state work from going abroad, according to the National Conference of State Legislatures.

Read More: Policymakers struggle with outsourcing issue

US Ambassador Allays Fears of Outsourcing Restrictions

In response to the growing fears about the negative domestic economic ramifications of outsourcing to India, US ambassador David C Mulford stated firmly there was no threat of prohibitive legislation being enacted. Instead, Mulford reiterated the positive economic benefits associated with outsourcing and the need to reintegrate and retrain those displaced by the process.  The Times of India Reports:

"There's a positive balance of $ 57 billion (in volume of trade) and there's a realization now that there is an economic logic behind outsourcing. Every dollar that is going out by way of outsourcing is bringing in more than a dollar," Mulford said at a press conference here.

Read More: Envoy sees no threat in outsourcing to India

Government Outsourcing Growth Slowed

Political debate and anti-offshoring legislation has slowed the growth of IT outsourcing by local and state governments. According to market-research firm Input, growth rates will remain at 3% through 2009, when government IT outsourcing will reach $17.7 billion.

From Information Week:

"Retiring government employees, as well as archaic government legacy systems, are undeniable factors in the state outsourcing market," James Krouse, Input manager of state and local market analysis, said in a statement accompanying the report. "The increasing demand for outsourcing in the coming years will be borne out of necessity, which politics will be unable to refute."

According to the report, outsourcing sectors such as IT platform operations, applications services, applications management, and desktop services will grow rapidly during the next five years, driving much of the total market growth.

Read more: Growth Slows In IT Outsourcing By Local And State Governments

Anti-Outsourcing Legislation Will Fail

As outsourcing of services from high cost regions to low cost regions continues to gain momentum, many developed nations are attempting to combat the phenonmenon with anti-outsourcing legislation. New research from Frost & Sullivan indicates that any such legislation is bound to fail.

According to New Ratings:

Using a combination of qualitative information based on primary research in 14 countries together with quantitative data obtained from end-user surveys among IT decision-makers in France, Germany, Hong Kong, Japan, the United States and the United Kingdom, Frost & Sullivan analysts tracked global offshore outsourcing and off-shoring of IT jobs for the period 2002-2004.

According to the study, IT job exports are forecast to increase by a compound annual growth rate (CAGR) of 5.9 per cent between 2002 and the end of 2004. In 2004, a total of 826,540 IT jobs are expected to be exported by France, Germany, Hong Kong, Japan, the United Kingdom and the United States to lower cost countries, amounting to a combined value of US$51.6 billion.

Read more: Anti-Outsourcing Legislation Unlikely as Global Outsourcing of IT Jobs Gains Momentum

Kerry Defeat Pleases Indian Outsourcing Firms

Senator John Kerry's defeat in the U.S. presidential election was greeted with joy among outsourcing firms in India.

According to the International Herald Tribune:

Kerry once referred to "Benedict Arnold companies" and chief executives that sent jobs overseas, invoking the name of a notorious 18th-century American traitor. He promised that as president he would end tax deferrals for companies that send work abroad.

Bush, in contrast, was largely silent on the issue. But members of his team, among them N. Gregory Mankiw, the chief economic adviser, and Treasury Secretary John Snow, have both defended offshoring as a form of free trade.

Read more: In India, outsourcing firms rejoice

Outsourcing Did Not Hurt Bush on Election Day

With President Bush being re-elected with a large popular vote margin, it is clear that Americans did not equate outsourcing with job loss, according to Indian business leaders, and the practice of offshoring will certainly continue.

From Forbes:

Early in his campaign, Democratic challenger John Kerry promised curbs on outsourcing - the practice among U.S. companies to move white-collar work to cheaper countries like India. American labor unions have blamed the practice for job losses in the United States.

But outsourcing "was never an issue with the general public, but something a small group blew up into a big thing," said Pawan Kumar, chairman of VMoksha Technologies in Bangalore, the south Indian city that has become the center of India's high-tech economy.

Read more: Outsourcing to Continue, Many Indians Say

Kerry's New Outsourcing Agenda

Senator John Kerry has redefined the Democratic anti-outsourcing agenda with a plan to keep high-paying jobs in America. Many Indian-Americans are torn over the issue, not wanting their own children to grow up in a jobless American, yet on the other hand feeling that India is being targeted by anti-outsourcing politicians.

From newkerala.com:

Apart from the call-centre identification demand that Kerry reiterated, he has included some good news and bad news for the H-1B visa holders, many of whom are of Indian origin.

He has called for capping the H-1B and L-1 visas and for making sure there are no skilled American workers to fill a job before getting people from overseas. On the other hand, if a foreign worker is to be brought in, he or she should be paid the prevailing rate in the US.

Read more: Kerry campaign redefines outsourcing agenda

Kerry Admits Outsourcing Will Remain

With the U.S. presidential election less than three weeks away, Senator John Kerry has acknowledged that he cannot rid the United States of outsourcing should he become President.

According to Reuters:

Democratic Presidential candidate John Kerry, who had earlier denounced as ‘traitors’ CEOs of US companies outsourcing to countries like India and China, acknowledged that the practice is here to stay but promised a level-playing field for the American worker.

"Outsourcing is going to happen. I have acknowledged that [...]" Kerry said during the third and last Presidential debate with George W Bush on Wednesday night.

Read more: Kerry acknowledges outsourcing is here to stay

Can Kerry Prevent Outsourcing?

According to a recent Zogby International poll, 71% of Americans feel that outsourcing is bad for the nation's economy. But most economists feel that Democrat presidential candidate Senator John Kerry can do little to stop the phenomenon, and that it will inevitably remain a part of global trade.

From the Michigan Daily:

“When you think of all the other problems the economy is facing, (outsourcing) has gotten attention out of all proportion to its significance,” said Gary Saxonhouse, a University economics professor.

Saxonhouse cited recent reports by the General Accounting Office and Department of Labor, which found in a survey of 2003 mass layoffs that only 13,000 job losses — less than 1 percent of the 1.5 million lost in layoffs of more than 50 workers — were due to offshore relocation.

“While it’s extremely painful for the 15,000 people who, in a year, might lose their jobs to a company moving its operations overseas, it’s not an important economic issue for the economy as a whole,” Saxonhouse said.

Read more: Economists say Kerry can't stop outsourcing

Schwarzenegger Vetoes Outsourcing Ban Legislation

California Governor Arnold Schwarzenegger on Wednesday vetoed a bill that would have barred state contractors or agencies from outsourcing jobs offshore.

According to Reuters:

"While this bill purports to be about saving jobs, it would actually be detrimental to our economy and the creation of new jobs in the state," he said in his veto message.

"The bill adds additional restrictions on state contractors, thereby resulting in less competition at the state and local levels and ultimately result in higher prices paid by governmental entities for goods and services."

Read more: Calif. Governor Vetoes Bill Barring Outsourcing

Analysis of John Kerry's Outsourcing Plan

U.S. Senator John Kerry plans to end tax breaks for companies that outsource jobs offshore. Some argue over how effective this plan would be in keeping jobs in the U.S.

From Computerworld:

The Kerry plan, outlined online (download PDF), doesn't spell out many details, but Kerry advocates eliminating "special tax breaks" for U.S. companies with overseas subsidiaries. Under current U.S. tax law, U.S. companies with overseas operations can defer paying taxes on income at those operations until they bring the profits back into the U.S.

The Kerry campaign has criticized President George Bush for "encouraging" offshore outsourcing. Bush's advisers have suggested that limiting offshore outsourcing may hurt the U.S. economy in the long term.

Read more: Kerry's plan on outsourcing faces mixed reviews

AFL-CIO Launch Outsourcing Database

The American labor union AFL-CIO has set up a new campaign to combat outsourcing. They have launched a database which will track jobs sent overseas.

According to the Seattle Post-Intelligencer:

Richard Trumka, secretary-treasurer of the AFL-CIO, said the new Job Tracker database will help workers know which companies are exporting jobs, "and they can use that information to fight back."

Visitors to the Web site (www.workingamerica.org) are urged to write President Bush and their senators and House members to tell them to stop the export of jobs overseas. To make that task easier, the Web site will fax a pre-written form letter automatically if visitors provide their name and address.

Read more: Union sets up database to track job outsourcing

French Government Fights Outsourcing

Amid growing concerns of lost jobs, the French prime minister Jean-Pierre Raffarin has announced that they will spend more than 1 billion euros in tax incentives that they will offer to companies who do not move jobs abroad.

According to the International Herald Tribune:

Companies ranging from makers of microchips to underwear have this year announced plans to transfer activities to Asia, Eastern Europe or North Africa. Others, like the French arm of German car parts maker Robert Bosch, have used the threat of relocation to persuade workers to put in more hours for no extra pay.

Raffarin said the government would name the first areas designated as competitiveness zones in early 2005. He said the government would also soon announce tax breaks for companies that resist pressure to relocate some or all activities abroad.

Read more: France to combat outsourcing

California passes anti-outsourcing bill

Let's see them balance their budget now! Sify reports on a ridiculous development in California:

Amid growing outrage against outsourcing, the California Senate has passed a bill banning state and local governments from contracting work to foreign firms.

The bill would prohibit all levels of state government from contracting or subcontracting with companies that use foreign labour, media reports said here today.

The ban applies only to contracts for services and contains several provisions designed to ensure no trade agreements or pension fund financing would be affected.

Now let's see them implement it. Ha.

Kerry on Outsourcing

Not that this is news, but Kerry is not "against" offshore outsourcing (propoganda and political posturing are, well, just that.) The Financial Express reports:

US Presidential hopeful John Kerry accepts outsourcing, which has snowballed into a major election issue, as a reality and his Democratic Party will continue its good relations with India initiated by former President Bill Clinton, New Mexico Governor Bill Richardson said.

"We recognise that outsourcing is a reality, but at the same time, we want to develop our jobs and industries more at home here too." But Senator Kerry is an internationalist and I think India should welcome him as an American President, Mr Richardson said when asked about his party’s strident posture against outsourcing.

Amicus threatens to strike over offshoring

Silicon.com reports:

Delegates from the finance workers' section of trade union Amicus are meeting today in Scarborough to vote on industrial action over offshoring by banks and finance companies... "The delegates from workers at HSBC will meet on Saturday to decide what action they will take against the announced 3,500 job losses there." They will have a range of options including work-to-rule, overtime bans and selective strikes.

Bush Official On Outsourcing

Information Week reports:

"A Bush administration official Wednesday said the U.S. can best protect IT jobs by investing in training and education and not by enacting legislation that would prohibit offshore outsourcing. 'If we embrace isolation and reject working with the rest of the world, it will be to our detriment,' said Phillip Bond, under secretary of commerce for technology.

"Bond was speaking at a panel on offshore outsourcing in New York City sponsored by the Information Technology Association of America, a trade group representing high-tech manufacturers, who generally oppose limits on offshoring."

Lou Dobbs: Hypocrite on Outsourcing

The following is an editorial by staff writer Boney B.

Ah, Lou Dobbs. He's the obnoxious man whose CNN business program ("Lou Dobbs Tonight") features a segment called "Exporting America" that blasts companies that outsource. His outspoken style is popular, but rather ignorant, as we reported in April.

Meanwhile, Dobbs' popular newsletter highlights companies in which he recommends investing. A recent report shows that 8 of 14 companies he extolled in his newsletter were listed on his CNN Web site as offshore outsourcing offenders! Ignorant politics, for ignorant people.

Union-backed outsourcing measures added to Senate Defense bill

GovExec.com reports:

"Legislation to give civil servants new rights to challenge government outsourcing decisions inched closer to law Monday when the Senate attached it to the fiscal 2005 Defense authorization bill.

"The legislation, sponsored by Sens. Susan Collins, R-Maine, and Carl Levin, D-Mich., would let federal workers appeal the outcome of public-private job competitions to the General Accounting Office - -a right currently enjoyed only by contractors.

"In separate action, the Senate added an amendment from Sens. Edward Kennedy, D-Mass., and Saxby Chambliss, R-Ga., to the Defense bill that would make it easier for the Pentagon to shift work from contractors back to government employees."

Protest Against Lloyds TSB's Offshore Outsourcing

The Times of India reports:

"Shareholders attending Lloyds TSB's annual meeting were greeted by protesters demonstrating against the bank's decision to export 1,500 call centre jobs to India.

"The demonstration, organised by the Lloyds TSB Union, urged shareholders to back their campaign to halt the offshoring.

"The staff union has collected 360,000 signatures in support of its campaign and large numbers of shareholders came forward to add their names."

Offshore Outsourcing Not to Blame for Lost Jobs

According to SearchCIO.com:

"Statistics show that the backlash in the U.S. over offshore outsourcing isn't really deserved, according to an IT trade organization that claims the positives far outweigh the negatives. But a grass-roots group representing workers feels that American companies are heading offshore for the wrong reasons.

"Jeff Lande, senior vice president at the Arlington, Va.-based Information Technology Association of America (ITAA), told attendees at Gartner Inc.'s Outsourcing Summit that of the roughly 10 million IT workers in the U.S., 372,000 have lost their jobs in the last four years, mostly due to overhiring in the '90s, the dot-com meltdown and the recession." Read more

Unions Urge Outsourcing Tax

According to Union Network International:

"A tax on offshored jobs to help workers and global union negotiating teams to confront the employers were just two responses to the global mobility revolution to emerge from a key debate at the UNI-Europa Finance meeting in Luxembourg.

"UK finance affiliate UNIFI outlined three globalisation agreements it has already signed with major banks providing early negotiations over outsourcing, measures to find staff new jobs and new skills - and commitments to accept unions in the new offshored operations.

"The International Labour Organisation's John Sendanyoye unveiled a two-year programme to help ensure decent work in both outsourcing and insourcing countries." Read more

Tennessee First State to Pass Outsourcing Laws

From the Navhind Times:

"In response to the outsourcing of jobs to India and other low-cost countries, Tennessee has become the first state in the United States to enact a law discouraging companies to offshore government work.

"The Tennessean Governor, Mr Phil Bredesen had signed the law that offers businesses an incentive for not sending data-entry and call-centre work out of the country to cheaper offshore locations.

"Legislatures in 35 US states have introduced bills seeking to address the outsourcing issue, usually by banning the state from contracting with companies planning to employ offshore workers." Read More

Kansas Bill Seeks to Curb Outsourcing

The Hindu reports:

"The state of Kansas has adopted a bill seeking to bar outsourcing of telephone enquiries about its food stamp programme to India and other countries.

"The bill sponsored by Kansas democratic legislator Tom Holland was passed in the Kansas lower house with a 95-19 vote and by the Senate 30-5 on Saturday and has been sent to Governor Kathleen Sebelius for signature."

Tennessee Introduces Outsourcing Incentives

From the State:

"Gov. Phil Bredesen has signed a law that may have made Tennessee the first state to give businesses an incentive for not outsourcing data-entry and call-center work to cheaper offshore locales.

"The new law asks state procurement officials to give preference in bids for such services to contractors employing workers only in the United States.

"The bill was filed in response to the growing controversy over outsourcing of white-collar jobs to India and other countries with large populations of educated English speakers willing to work for significantly less money." Read More

'Lieberman Wants Commission To Study Outsourcing'

Techweb reports:

"Sen. Joe Lieberman (D-Conn.) on Tuesday called the outsourcing rage 'just the tip of the economic iceberg' and suggested the government create a bi-partisan commission to look into ways for the U.S. to better compete in the global economy.

"At a speech before the non-partisan New America Foundation, Lieberman, the Democrat's vice-presidential candidate in the 2000 election and briefly a candidate for the 2004 nomination, said that there's plenty of blame to go around for the outsourcing problem.

"'We have to stop blaming others and face some hard facts,' he said in the speech."

'GE ex-CEO Welch blasts opponents of offshoring'

From Forbes:

"Jack Welch, retired chief executive of General Electric Co., Monday ridiculed suggestions that the weak jobs market in the United States is a result of the movement of jobs abroad.

"'It is the dumbest argument ever put out,' the 68-year-old Welch told a meeting of the World Business Forum in New York. 'It is election time,' he said, blaming politics as the motivation for the recent backlash against offshoring."