Public Policy: The Latest in Offshoring Legislation

Offshoring legislation has already started, and many politicians, pressured by voters, are taking a stand. U.S. state legislatures in New Jersey, Michigan, North Carolina, and Indiana are all considering legislation that would ban the outsourcing of government contracts to foreign countries.

The pressure to legislate is coming from unions such as the AFL-CIO. Many groups such as the Communications Workers of America and WashTech are also lobbying to keep white-collar jobs in the United States. The unions are alarmed at the recent trend of outsourcing white-collar and IT jobs. This trend, which is clearly accelerating, is affecting workers all over the country at every income and education level.

The organized labor argument is that companies are laying off white-collar workers from high-paying desirable jobs while they add thousands of jobs overseas. Some local and state governments have even begun to outsource administrative jobs. As offshoring becomes more popular, more legislation is slated for introduction under the pretext of protecting U.S. and European white-collar jobs.

The introduction of various bills doesn't mean that they will be passed or enacted into law. Connecticut, Florida, Indiana, Maryland, Michigan, New Jersey, New York, and North Carolina all saw anti-outsourcing bills introduced in 2003, but none passed, according to the National Conference of State Legislatures.

New Jersey
When some New Jersey welfare recipients phoned their Human Services Department and reached a call center in India, legislators in New Jersey introduced a bill (State Assembly Bill No. 3529) that would regulate certain call center communications. The bill would require employees of inbound call centers to identify their name, their employer, and their location in phone calls or e-mail communications. The call center returned to New Jersey at an additional $1.2 million cost. The bill died in the House.

Michigan
Michigan lawmaker Steve Bieda has introduced a bill aimed at curbing the stream of white-collar jobs leaving the state and heading overseas. If passed, the law would ban the state government from awarding contracts to companies and businesses that use workers in foreign countries.

North Carolina
State Senator Eric Reeves, a Democrat in Raleigh, introduced legislation in April 2003 to ban foreign call centers on state contracts. The proposal passed the Senate and awaits House consideration. The governor's legal counsel is reviewing the state's purchasing rules. The state is seeking ways to encourage agencies to give preference to North Carolina companies with in-state workers. Government agencies face a difficult choice: use an offshore firm with a lower bid or using more taxpayer funds to keep a job in the country.

Indiana
Under pressure, Indiana's state government canceled a $15 million contract with Tata Consultancy Services in November 2003. Tata's bid was about $8 million lower than bids from two U.S. firms.

Federal Government
On January 23, 2004, President Bush signed the Omnibus Appropriations Bill into law. Many opponents of offshore outsourcing were happy because as part of this bill was the Thomas-Voinovich amendment which forbids certain government segments from offshoring outsourcing government work to foreign companies.

The battle is far from over. Since 2004 is an election year, you can expect to see much more scrambling and posturing from both sides of the campaign divide to be discussing the offshore outsourcing controversy.