Labor group says states unknowingly offshore work. A study by the Washington Alliance of Technology Workers indicates that numerous states have signed public contracts with foreign outsourcing firms and are funneling millions of taxpayer dollars offshore. [Computerworld News]

Summary:

JULY 15, 2004 (IDG NEWS SERVICE) - U.S. state governments are granting public contracts to foreign outsourcing firms and funneling millions of state taxpayer dollars offshore, in many cases without being aware of it, according to a study released yesterday by the Washington Alliance of Technology Workers (WashTech) in Seattle.

However, at least one of the Indian contractors named in the study questioned its accuracy.

The study found that state governments are often unaware that they're sending work abroad, and in some cases, states assume that they're dealing with a domestic company because a U.S. mailing address is used.

For example, the Georgia Department of Revenue awarded a $638,000 contract to an Indian company last year but didn't know where the work was being executed, according to the report.

"It is important for states to know where the work they have contracted is being performed, and many states have no idea that this work is sent offshore," said Philip Mattera, director of the Corporate Research Project of Good Jobs First.

The research group found that 18 offshore outsourcing companies, including some in India and Russia, are aggressively seeking government contract work -- primarily in IT -- in at least 30 states.

The 18 companies have captured about $75 million in state contracts and are seeking more, in part by hiring former government officials and by making state electoral campaign contributions, the report said.

That figure doesn't completely tally every offshore outsourcing company working on state contracts, according to Marcus Courtney, president of WashTech.

"That is the amount we could say with certainty that is going offshore, but we know it is much higher," said Courtney.

"For example, IBM and EDS have large offshore facilities in locations such as India that do state work.

The report's release is timed to influence offshoring discussions at the National Governors Association meeting that begins tomorrow in Seattle.

However, Wipro Ltd., which was named in the report, hasn't executed any U.S. federal or state government work, either directly or as a subcontractor, according to Sudip Banerjee, president for enterprise solutions at the Wipro Technologies division of Bangalore, India-based Wipro.

"We have stayed out of the U.S. government market because it can be time-consuming to get business from that market," Banerjee said.

Several other leading Indian outsourcing companies were mentioned in the study, including Infosys Technologies Ltd. in Bangalore and Tata Consultancy Services in Mumbai.

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