Ask Marcus Courtney, president of a Seattle-area union for technology workers, whether state governments should outsource work only to firms that hire U.S.-based employees, and the answer is a predictable yes.
"The fact is that these are taxpayer dollars, and there is clearly a benefit for taxpayer dollars to go to support the economy in this country," said Courtney, who leads WashTech, a local affiliate of the Communications Workers of America. In today's stagnant labor market, the union has argued, lawmakers must take steps to keep jobs from heading overseas.
Only recently, however, is such logic gaining ground with legislators. As the prospect of paying drastically reduced wages for qualified workers prompts a growing number of U.S. companies to shift technology and services jobs overseas, state and federal lawmakers are beginning to consider setting limits on outsourcing. So far, efforts have focused largely on contracts for government work.
This fall, opponents of overseas outsourcing are hoping to get a boost from the New Jersey state assembly, which is slated to consider a bill requiring that only citizens or legal residents of the United States be employed to perform certain state contracts. The state senate approved the same measure in December.
Backers of the New Jersey bill say it was drafted in response to complaints about a contract for a state welfare and food stamp program. The contract, granted to an Arizona company, eFunds, came under fire after program participants learned that the firm was fulfilling call center work for the program through a call center in India.
Sponsors say the bill "is intended to ensure that State funds are used to employ people residing in the United States and to prevent the loss of jobs to foreign countries." The state legislature is also considering a bill (PDF) that would place restrictions on overseas call centers.
Legislators in several other states are considering similar proposals, including a bill introduced in Maryland that would bar government contract work from going to overseas workers.
At the federal level, Congressman Adam Smith (D-Washington) announced last week that he is requesting a study from the General Accounting Office, Congress' research arm, on the economic impact of offshore outsourcing on the technology job market. Smith said he sought the information out of concern that government-funded training programs may be educating U.S. workers for jobs that are being sent overseas.
Renewed interest from legislators comes as industry researchers project sharp growth in overseas outsourcing, particularly to India. Earlier this month, research firm Gartner forecast that spending on so-called "business process outsourcing," in which traditional office jobs are shifted overseas, will reach $1.8 billion in 2003, a 38 percent increase from 2002.
By 2007, Gartner projects that India alone will receive approximately $13.8 billion from business outsourcing.
Debashish Sinha, principal analyst for Gartner's IT services group, attributes much of the projected growth in outsourcing to the obvious cause: wages in India and other developing nations are much lower than those of developed nations. Outsourcing, he says, also allows companies to expand more quickly and to hire from a larger pool of qualified workers.
But while he's confident that outsourcing will continue to grow briskly, Sinha is less convinced that overseas hiring thus far has been responsible for the diminishing job prospects of U.S. IT workers.
"It seems the overseas outsourcing market is being used more as a scapegoat for the troubles the U.S. IT industry is going through," he said, noting that the vast majority of job losses stem from slowing demand for services as the economy struggles to recover.
Josh Bivens, an economist at the Economic Policy Institute, a liberal think tank, says data he's examined draws a similar conclusion. While companies are indeed outsourcing work overseas at a growing rate, it is still only a miniscule portion of the overall labor market, based on the most recent data from the U.S. Commerce Department's Bureau of Economic Analysis.
What the data appears to indicate, Bivens said, is that the IT job market has followed the downward trends of the general economy. And while he believes it's likely that more lower-level service jobs, such as call center operations, will head overseas, companies will still see value in hiring their top positions close to home.
"There's got to be a benefit to being in physical proximity. Otherwise, you wouldn't have places like Silicon Valley or Seattle that are the hub of these activities," he said.
