USA Today

August 31, 2004

States try to keep jobs in the USA


By Julie Schmit


State politicians, eager to keep jobs at home, are finding more ways to stem the flow of government work overseas.


In the past year, at least five governors took executive action to curtail the offshoring of state work. Legislators introduced more than 100 anti-offshoring bills in almost 40 states. More than half sought to forbid the states from contracting with companies that would do any of the work overseas.


While most of the bills died, California lawmakers last week passed one that would bar state and local government agencies from using state funds to contract for services unless the contractor certified the work would be done in the USA. Some exceptions are permitted.


Proponents expect a veto from Gov. Arnold Schwarzenegger. Massachusetts Gov. Mitt Romney vetoed a similar measure this year, saying it could increase costs.


Almost 40 states outsource some work, including call centers, overseas where labor is cheaper, says the National Conference of State Legislatures.


Those who oppose government offshoring say U.S. workers should get the tax-funded work.


Those who oppose restrictions say costs will go up, an efficient economy will be undercut and bans may be unconstitutional because states cannot make trade or foreign policy, says the National Foundation for American Policy, a think tank.


States also have moved against offshoring by:


  • Fiat. Missouri Gov. Bob Holden in March told state agencies not to award contracts to vendors who plan to perform the work outside the USA, with exceptions.

Arizona in April, through a rules change, banned future state contracts from contractors who offshore jobs. An audit of contracts found only two offshoring work, one of which was Arizona-based eFunds.


EFunds, as of March, used a call center in India to handle work for 19 states, including calls for food-stamp and welfare clients. New Jersey, North Carolina and Missouri crafted deals for eFunds to return the work to the USA. Twelve to 15 call-center jobs doing work for Oregon are slated to move from India to Wisconsin, then to Oregon. EFunds says fewer than 10% of state calls go to overseas agents; 90% are automated.


Last year, Indiana Gov. Joseph Kernan canceled a $15.2 million contract to software company Tata Consultancy Services in India after no Indiana firms bid for the job. The work will be broken into smaller pieces so smaller Indiana tech firms have a chance.


  • Giving preferences. Tennessee in May said it would give preference to data-entry and call-center companies that don't offshore. Michigan pledged consideration to state-based companies.
  • Tracking calls. Eight states proposed that call-center workers tell callers their location.

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