State agencies send U.S. work overseas

Study finds $75 million in offshore contracts from more than 40 states

July 15, 2004|By Warren Vieth | Warren Vieth,LOS ANGELES TIMES

WASHINGTON - More than 40 state governments have contracted with companies in India and other low-wage countries to help administer new food-stamp and other taxpayer-funded programs, according to a study released yesterday by a technology workers union.

The practice by state agencies of sending work overseas has proliferated despite efforts in many legislatures to impose restrictions on it, the study said, and foreign companies are becoming more aggressive in their efforts to win government contracts.

"Taxpayers clearly aren't informed," said Marcus Courtney, president of the Washington Alliance of Technology Workers, or WashTech, in Seattle. "Citizens don't necessarily know that their tax dollars are being spent overseas. This is being done quietly and secretly. Oftentimes, the state governments don't even know that this is going on."

The WashTech study identified $75 million in offshore contracts across the country, but the report's authors said they were able to document only a portion of state government work performed overseas and could not provide a reliable estimate of the total dollar volume of such contracting.

Some states refused to disclose contract data, some lacked centralized vendor information, and some were not certain whether work was being done in the United States or overseas.

Nevertheless, they said the study represents one of the first efforts to quantify a practice that might have contributed to the loss of U.S. jobs, and it could increase pressure on politicians to impose restrictions. Legislation has been introduced in 36 states to limit the transfer of jobs overseas, show preference to domestic firms or increase disclosure of foreign contracting.

"A lot of people feel there is something wrong about using taxpayer dollars to create jobs offshore when there are people in this country [who] are without jobs," said Philip Mattera, the report's principal author. "That's a policy issue."

Advocates of outsourcing said state government contracting accounts for only a small sliver of the total offshore market. Even so, they said efforts to restrict states from contracting with companies that send jobs abroad would saddle the taxpayers with higher costs and alienate key U.S. trading partners.

"This is a big issue," said University of Maryland trade economist Peter Morici. "It's really one of the frontiers of trade policy right now. It's one of the key ways that unions are trying to maintain their lock on a marketplace when that lock is being eroded by technology."

Cliff Justice, who is a specialist in overseas outsourcing at EquaTerra, a Houston-based advisory firm, said legislation under consideration in California and other states would invite retaliation by India and other countries that are providing services to the United States.

"This is a global economy," Justice said. "We are a large consumer, but we also sell a lot into these countries. When we start putting up barriers to imports, then they start putting up barriers to our exports. It causes job loss ultimately."

The Los Angeles Times is a Tribune Publishing newspaper.

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