Outsourcing Debate

By eweek  |  Posted 2003-03-24

Outsourcing Debate

Shirley Turner
When New Jersey State Sen. Shirley Turner was first inspired to propose legislation banning the outsourcing of IT and other state contracts to overseas companies, she had no clue that bill No. 1349 would incite both heated lobbying by technology groups against it and a wildfire of support from laid-off technology workers. Since its introduction in March 2002, the bill has generated more response than any other piece of legislation introduced by the Democrat from Ewing in her nine-year political career.

But by March 6, 2003, the day the bill was scheduled to be heard by the New Jersey Legislatures State Government Committee, technology lobbying groups such as the National Association of Software and Services Companies, an association of Indian technology companies, were ready to water it down. They proposed an amendment stating that outsourcing could occur if the work cost less to do offshore or promised improved quality offshore.

The lobbyists succeeded in getting the bill tabled. But they didnt succeed in persuading Turner to give up. Encouraged by an outpouring of support from IT workers, Turner said she will continue to lobby for the bill. The senator recently met with eWeek Senior Writer Lisa Vaas to talk about her rationale.

eWEEK: Why did you propose this bill?

Turner: The work in question was a Department of Human Services contract for $326,000 a month for seven years ... dealing with [offshore] call center agents calling recipients regarding their welfare checks.

You can only be on welfare a given period of time before you have to get a job. If were telling people they have to get a job, its incumbent on us as legislators to make sure there are jobs out there for them. Weve had around a 6 percent unemployment rate in New Jersey. We have people looking for work who cant find it. I have no problem if we outsource jobs because we cant find people to do the work, but [were talking about work] that anybody can do.

eWEEK: How do you answer those who say offshore outsourcing makes sense because of its low costs?

Turner: Some of the people who are supportive of the special-interest groups are saying were saving taxpayer money. Were not. ... At the time [a given offshore company] got the bid, they were paying wages to people here in this country, at around $8 to $10 an hour. They get the contract, and then they move the operations to where theyre paying $1 to $2 an hour, but we didnt get any rebate on what were paying them.

Its unfair. Another company could have gotten that contract themselves. So [the offshore company] probably underbid, knowing what they were going to do. If you bid the contract here, you win it here, you should perform it here.

eWEEK: Your interest is in protecting jobs for U.S. IT workers. Does it then make sense to disqualify companies that employ H-1B and L1 visa holders from receiving state contracts?

Turner: If the federal government is allowing this to occur, as a state legislator, I have no control over these workers who are coming in on these visas. I could not say theyre not qualified to work because the federal government is saying that they are.

Page Two

: Outsourcing Debate">

eWEEK: How much of a security risk is posed by the act of sending sensitive consumer or business information overseas?

Turner: When [overseas companies are] dealing with welfare clients, those clients whole life history and financial information is available to the people who are making those phone calls [from overseas call centers]. From what Ive been told by people whove contacted me, there are situations where theyve had phone calls made by credit card companies that were being made offshore. They were concerned about [those companies] having financial information available to them. They thought it was something this government should be concerned about, what with all the acts of terrorism.

eWEEK: Whos writing to you?

Turner: People whove been laid off because of people coming in on these special visas. Those people in the computer area whove been laid off because their jobs were outsourced to foreign countries—China, Russia, India, the Philippines.

Its unbelievable. Ive never gotten so much e-mail on any one issue. I had no idea what I was doing when I introduced that bill. It was so narrow in terms of what I was trying to do. Now some people want it to be a panacea for other issues associated with this. Others are more realistic—they see it as a step in the right direction.

eWEEK: Isnt this protectionism?

Turner: Youre right—it is protectionism. Im protecting jobs in this country. Our economy is in a recession. We have a deficit, just like any other state. The reason is, we dont have people working and paying taxes. And those people are the ones who need the jobs. They have families to support.

Lowdown on the New Jersey bill …

  • What it is Bill No. 1349, introduced to the N.J. Senate and General Assembly on March 21, 2002, is intended to ensure that state funds are used to employ people residing in the United States and to prevent the loss of jobs to foreign countries.
  • Status The bill was scheduled to be heard in the State Government Committee March 6, 2003. However, industry lobbyists prevailed upon Chairman Al Steele, who deferred the bills hearing until after its sponsor, Turner, heard arguments put forward by the bills opponents.
  • What opponents proposed An amendment stating that exceptions to the original bill be justified by cost savings to the state of New Jersey or improved quality of services.
  • Whats next Turner said she will continue lobbying to get the bill heard.
  • Ripple effect Legislation to study methods of increasing efficiency in the procurement process, including outsourcing, has been introduced in Maryland. Connecticut is considering legislation to ensure that outsourced work doesnt go overseas. Missouri and Wisconsin are considering similar legislation.
  • Rocket Fuel