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Home > Business > PTI > Report

Most US states offshore govt's IT work

Meenakshi Ganjoo in Silicon Valley | April 17, 2006 11:29 IST

Most US states offshore a chunk of the IT work needed to operate some of the federally-funded social services programmes, with India garnering the largest share of the business.

A 'Government Accountability Office' report found'some work is performed offshore in majority of the states' to run the four state-administered federal aid programmes it reviewed -- child support enforcement, food stamps, temporary assistance for needy families and unemployment insurance programmes.

India was the most prevalent offshore locations, followed by Mexico. Other countries where services were offshored included Canada, France, Ireland and Poland, the report said.

Offshoring IT work for federal programmes has been politically controversial in Congress, due to the perception that it contributes to job losses and to privacy concerns.

Although actions have been proposed to restrict offshoring in government programmes, there are no current federal restriction on offshoring.

However, two states -- New Jersey and Arizona -- have prohibited offshoring in state contracts.

Some states have also taken other actions, such as requiring state agencies to disclose when state-contracted work is performed offshore or to report on the implications of offshoring.

The report found that offshoring occurred in one or more programmes in 43 of 50 states.

State officials most frequently used offshore services for call centers, customer services and software development.

However, expenditures for services performed offshore in the programs appear to be relatively small.

Generally states did not directly contract with foreign companies and offshoring occurred when US companies subcontracted with companies that performed work offshore, the report said.

State officials said they selected contracts with offshoring to reduce their costs, with some states showing a savings as high as 24 percent.

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