Ohio is attempting to curb public funding for offshore outsourcing services. Combined with the recent H-1B visa fee increase, pro-business trade groups from Asia are upset.
In an executive
order put forth by Gov. Tim Strickland of Ohio in August, his state is no longer
allowed to outsource work offshore, despite some federal stimulus monies being
paid to a Texas company Parago in March for services on a federally funded
appliance rebate program.
"Ohio's policy has been-and must continue to
be-that public funds should not be spent on services provided offshore,"
said Strickland in a statement. "Ohioans have been among the hardest hit
by more than a decade of unfair trade agreements and the trickle-down economic
policies that promoted offshoring jobs at the expense of Ohioans who work for a
living. We must do everything within our power to prevent outsourcing jobs
because it undermines our economic development objectives, slows our recovery
and deprives Ohioans and other Americans of employment opportunities."
India's National
Association of Software and Service Companies (Nasscom), which represents all
of the major outsourcing companies, including Wipro, Satyam, Infosys and Tata
Consultancy, plans to fight this measure in trade talks with the United States
at the end of September. This latest move by Ohio follows recently passed U.S. legislation that ups the cost of H-1B visa applications for companies that employ more than 50
percent of its workforce with H-1B visa holders. That move was called
protectionist and discriminatory by Nasscom as it "unfairly" targets
Asian outsourcers that are major global competitors with American-based
outsourcing companies including IBM, Accenture and others.
"Ohio's ban
on outsourcing can only be viewed as counterproductive to the U.S. government
thrust on reducing public deficit and possibly lead to an increased tax burden
on its citizens," wrote Nasscom in an official statement against Ohio's
ban of offshore outsourcing services. Nasscom counts over 1,200 member
companies from India and other multinationals.
Nasscom cites
the midterm and the Ohio governor's forthcoming elections in November as causing
these politically charged moves. Ohio has been one of the hardest hit states
by the recession, with a very slow recovery on jobs.
"Throughout
my administration, procurement procedures have been in place that restrict the
purchase of offshore services," said Gov. Strickland. "Despite these
requirements, federal stimulus funds were recently used to purchase services
from a domestic company which ultimately provided some of those services
offshore. This incident was unacceptable and has caused me to redouble my
commitment to ensure that public funds are not expended for offshore
services."
"While the
public sector represents a small fraction in the overall demand for offshored
services, it does represent a future focus area," wrote Nasscom in the
same statement. "Globally governments are beginning to see the benefits
that can be reaped out of employing Information Technology in public services. India too is opening up not only in IT, but
other areas, representing a growth market for global and domestic companies."
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