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In this election year, there are 50 bills pending in state legislatures that are geared, one way or another, to cutting down on offshore outsourcing. There are also 15 federal bills aimed, in whole or in part, at curbing what is being called the exportation of American jobs.
If you doubt these totals, check out the list posted on the National Foundation for American Policys Web site.
Job loss is fraught with economic and emotional pain. State and federal governments lose income tax revenue; states begin paying unemployment benefits. Time and money are spent on job searches; sometimes people must retrain or change careers.
The bills under consideration are meant to alleviate these ills. Most, however, are unlikely ever to be voted on, much less passed, said Meta Group analyst Tom Rubel. But politicians feel they have to do something. When you read some of the bills, its clear even some of the sponsors dont hope they pass. That way, they can say theyre opposed to job loss and tried to do something about it without having to take responsibility for causing the prices of goods and services to increase and making U.S. companies uncompetitive globally.
There must be a middle ground; we just need to find it. Even those who decry offshoring generally accept that we cant build an economic wall around the country. At the same time, its unlikely that even the staunchest free-trader would think national security would be enhanced were we as dependent on imported lines of code as we have become on imported oil.
Whats needed is a federal policy that takes the issue seriously—and negotiates seriously with other countries about it. It was encouraging to see that Secretary of State Colin Powell, while in India recently, raised the issue of reciprocal free trade with that country. He noted American concern with IT job loss to India and suggested that India ease barriers to goods and services from the United States. Sadly, Indian officials rebuffed the overture.
Given pressing concerns in Iraq and elsewhere, its doubtful that Indian offshoring will get much more of Powells attention any time soon. However, the State and Commerce departments must do more.
What can the federal government do? An example might be the “voluntary” automobile export quotas agreed to by Japanese automakers a generation ago. While unsatisfactory in many ways, they allowed the U.S. auto industry to survive and recover. U.S. automakers still have plenty of room for improvement, but without an auto industry, would we have the expertise to build Humvees and tanks? Technology expertise is at least as strategic.
Out and About
Out and About
Procter & Gamble will hand its transactional accounts payable operations to its big outsourcing partner Hewlett-Packard. The two companies signed a 10-year, $3 billion deal nearly a year ago. The accounts payable contract will be for several hundred million dollars, according to Joe Hogan, vice president of managed services marketing at HP. In November, IBM won a big deal to outsource P&Gs human resources systems.
Computer Sciences Corp. is hammering out a major IT infrastructure support contract with Sears, Roebuck. In a deal that is expected to be signed by the end of June, CSC would provide Sears with desktops, servers and systems support for Sears Web sites. Also included would be voice and data networks, help desk, risk management, asset management and decision support. Value: $200 million for up to 10 years. About 260 Sears employees will go to work for CSC.
Atos Origin will be handling IT integration tasks for the Olympic Games in Athens this year; in Turin, Italy, in 2006; and in Beijing in 2008. Atos, based in Paris, took on the responsibilities when it completed its acquisition of SchlumbergerSema earlier this year.
Electronic Data Systems sold its UGS PLM (product lifecycle management) solutions subsidiary to a private equity group consisting of Bain Capital, Silver Lake Partners and Warburg Pincus for $2.05 billion in cash. EDS spun off the unit to focus on its core IT and business process outsourcing business, officials said.
Stan Gibson can be reached at stan_gibson@ziffdavis.com.