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Rediff.com  » Business » Schwarzenegger's state passes anti-BPO bill

Schwarzenegger's state passes anti-BPO bill

Last updated on: August 25, 2004 13:54 IST

Despite stiff opposition from local businesses, the California senate has passed a controversial Bill banning state agencies from contracting services to companies that use overseas labour.

The Bill, sponsored by Assembly member Carol Liu, will now go back to the Assembly for a vote on several senate amendments. With the Assembly expected to concur, governor Arnold Schwarzenegger faces a choice between vetoing the measure to please business lobbyists or signing it to appeal to a populist demand for job protection, San Jose Mercury reported on Tuesday.

The governor's office said he had not taken a position on the Bill, which was cleared by the senate 21-14.

"If this state wants to retain business and jobs in California, then we need to set an example by utilising domestic business, rather than sending work overseas," Liu said.

"Jobs pump money back into the economy via income and sales tax revenue and reduce the number of people who need public assistance to survive. Offshoring may save money in the short term, but it will cost us more in the long run as more and more Californians find themselves jobless," she added.

Earlier, a coalition of business associations, led by the California chamber of commerce, had opposed the legislation, saying the regulations aimed at protecting California jobs and privacy rights could raise the cost of state services to taxpayers and invite retaliation by trading partners.

"Jobs pump money back into the economy via income and sales tax revenue and reduce the number of people who need public assistance to survive. Offshoring may save money in the short term, but it will cost us more in the long run as more and more Californians find themselves jobless," she added.

Earlier, a coalition of business associations, led by the California chamber of commerce, had opposed the legislation, saying the regulations aimed at protecting California jobs and privacy rights could raise the cost of state services to taxpayers and invite retaliation by trading partners.

California is one of the 34 states where legislation has been introduced, to restrict work on state agency contracts from being performed overseas, or impose regulations on offshoring practices to safeguard the security of medical and financial data.

Legislation in two other states was passed but was vetoed. Offshoring has become a hot issue during the 2004 Presidential campaign, as critics complained of slow job growth because of the Bush administration's economic recovery plan.

Jobs have been 'offshored' in the manufacturing sector for decades, as other countries became competitive with lower wages. But, a political crisis emerged once well-paying jobs in the service sector -- software and computer engineering jobs -- were outsourced to India and other countries.

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