Gangs of New Jersey - Part 10
Gangs of New Jersey - Part 10
Date: Tuesday, April 22, 2003 4:01 PM
H-1B and JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
There has been a very strange turn of events on the New Jersey
outsourcing issue. eFunds has announced that they will hire American
citizens instead of outsourcing the the New Jersey food stamp
processing to India.
NASSCOM and their stooges must be feeling tremendous pressure such a
concession to occur. That doesn't mean that they have given up on their
quest to squelch Turner's anti-outsourcing bill. In the game of Chess
this gambit might be little more than a pawn sacrifice. They could be
hoping that once the debate dies down, the NJ bill will be allowed to
die a silent death.
State Assemblyman Upendra Chivukula suggested that rather than
restricting use of foreign labor, policy makers should "find a way to
reinvest the savings achieved through lower cost global labor to create
higher paying jobs in the U.S." What savings is he talking about?
State Senator Shirley Turner has won a battle to save jobs in New
Jersey, but unless her bill is passed by the legislature, her victory
could be short and shallow.
http://cbsnewyork.com/njnews/NJ--WelfareCallCenter-jn/resources_news_html
Calls for help to NJ welfare program won't be routed to India
Monday April 21, 2003
TRENTON, N.J. (AP) Residents who call a customer service center seeking
help with their electronic welfare and food stamp cards will no longer
be routed to a call center in India.
The state Department of Human Services and eFunds Corp. of Scottsdale,
Ariz., the company that processes the card system for 200,000 New
Jersey residents, have agreed to a deal that calls for a new center to
open in Camden within the next few days.
The monthly cost for running the center whose 12 staffers will serve
English-speaking customers will be $410,000, or about $74,000 more than
the current arrangement, Human Services spokesman Andy Williams said
Monday. New Jersey's Spanish speaking clients will continue to be
directed to the company's Wisconsin center, The Star-Ledger of Newark
reported in Monday's editions.
The deal came about after several New Jersey lawmakers and officials
complained about eFunds decision to move the center from Green Bay,
Wis., to Bombay, India, in a bid to save money. Workers at the
Wisconsin center were paid $10 to $12 an hour, while their counterparts
in Bombay were paid the U.S. equivalent of $2 to $3 an hour.
``It's great news that these jobs are returning to the U.S., and that
they are coming to New Jersey is even better,'' said state Sen. Shirley
Turner, D-Mercer.
Turner has sponsored legislation that limits future outsourcing of
state-contracted work to overseas labor and requires workers on state
contracts to be U.S. citizens or legal aliens, unless they have a
specialty for which American workers cannot be found.
Industry officials have lobbied strongly against the measure, which has
spurred similar bills in seven other states. Citing an increasingly
global economy, they say it could foster anti-international trade
sentiments that could expand to other areas of government activities.
http://www.itworld.com/Man/2701/030415newjersey/page_1.html
New Jersey is microcosm of protectionism debate
IDG News Service 4/15/03
Marc Ferranti, IDG News Service, New York Bureau
In New Jersey, proposed legislation that would restrict offshore
outsourcing for state contracts has ignited controversy about how to
deal with low-cost foreign competition, especially in the area of
business process outsourcing (BPO).
The bill has yet to be signed into law, but issues related to the
proposal have already affected at least one BPO deal. Moved by the
desire to keep jobs in state, officials have asked outsourcing company
eFunds Corp., of Scottsdale, Arizona, to staff a New Jersey call
center. As a result, eFunds is charging the state more money than its
original contract called for.
The debate in New Jersey illustrates, in microcosm, the issues and
potential consequences related to protectionist sanctions that are
being considered elsewhere in the U.S. and abroad.
The New Jersey outsourcing bill was passed by the state senate
unanimously in December. If approved by the assembly and signed into
law by the governor, it would require that workers on state contracts
be U.S. citizens or legal aliens or have some specialty for which U.S.
workers cannot be found.
State Senator Shirley Turner, a Democrat, says she wrote the bill after
reading newspaper articles about eFunds. The company was awarded a
seven-year, US$326,000-per-month contract to process Electronic
Benefits Transfer and food stamp cards for about 200,000 New Jersey
residents. After getting the contract, it moved related work from a
facility in Green Bay, Wisconsin, to Mumbai, India.
"I was incensed to hear about that," Turner said. "Our system tells
people that they have to get off welfare after a limited time. You
can't tell them that on one hand, then on the other hand tell them that
jobs are being shipped out of the country. We have 6 percent
unemployment and it can be higher in urban areas. People without jobs
resort to crime, they resort to drugs."
Turner says the bill has stirred up more interest than any other
proposal she's backed in her nine-year government career. "It's a
feeding frenzy, people from not only New Jersey but from around the
country and as far away as Japan have called."
The controversy kicked up by the eFunds contract already has had an
effect.
The Department of Human Service's Division of Family Development, the
state agency that oversees state welfare and food stamp programs and
which contracted with eFunds for back-end processing and support, has
asked eFunds to staff a call center in New Jersey.
The center will provide nine entry-level, full-time equivalent
call-center jobs, and as a result to changes in the eFunds contract,
the state will pay for increased costs. The increase amounts to 36.9
cents per case per month, or about 20 percent over current charges,
according to Human Services spokesman Andy Williams. At the current
case load, this works out to about $886,000 per year, and could grow if
the economy gets worse, forcing more people into welfare.
The request for the contract change was not a direct result of the
Turner bill, which is not yet law and in any case would not affect
prior contracts, Williams said, but stemmed from concerns voiced by
county directors of the welfare and food stamp programs.
"The concern was larger than the economics," Williams said. "We operate
a welfare system that requires people to work and at the same time we
can't tell them that we're taking entry level jobs out of this
economy."
So far, New Jersey is the only state that has requested that eFunds use
American workers to fulfill state contract related work, according to
company spokeswoman Whitney Stewart.
"There is a cost advantage using offshore facilities and we can use
these facilities to provide customers with a low cost model," Stewart
said.
EFunds provides information and payment technology services to
customers worldwide. In addition to U.S. operations, it has facilities
in Sydney, in three Indian locations and in two locations in the U.K.
"If customers request that we use onshore workers we can provide that,
but there is a cost differential which we would have to pass on,"
Stewart said.
Citing costs, those opposed to Turner's bill say that it could
backfire.
"The bill would definitely increase costs to the taxpayer because it
can potentially prevent N.J. from awarding contracts to lowest bidders
in the global labor context," said State Assemblyman Upendra Chivukula,
a Democrat, in an e-mail exchange with IDG News Service.
Given the increasingly interconnected economies around the world, the
bill could have a variety of unintended consequences, Chivukula points
out.
"Most of the largest financial companies, such as Merrill Lynch,
Goldman Sachs, etc., have overseas operations and perform financial
data modeling overseas," Chivukula said. "If New Jersey wants to do
bond financing, it needs to use one of those companies. But it can't
under the requirements of this bill."
Rather than restricting use of foreign labor, policy makers should
"find a way to reinvest the savings achieved through lower cost global
labor to create higher paying jobs in the U.S.," Chivukula said.
In addition, Chivukula and some business executives point out that
state restrictions on procurement contracts involving foreign workers
could contradict U.S. law and international treaties, and may thus be
illegal.
The U.S. Supreme Court struck down a 1996 Massachusetts procurement law
providing sanctions aimed at alleged human rights abuses in Myanmar,
after a lawsuit against the state was brought by the Washington-based
National Foreign Trade Council (NFTC). NFTC is the umbrella
organization that includes USAEngage, a coalition of businesses that
examines state sanctions to ensure they do not damage American
competitiveness.
"Because sanctions of the type being proposed in New Jersey have
repercussions on our trade relations internationally that are likely to
be negative, we do not support them," said Haynes Roberts, a USAEngage
spokesman.
Despite the fact the Myanmar-Massachusetts case went all the way to the
Supreme Court, many sanctions bills end up stalling in state
legislative committees, never getting sent out for a vote, after
legislators make noise about trying to save local jobs, Roberts said.
A Maryland bill aimed at restricting offshore outsourcing never made it
out of committee review before the state legislative session ended last
week, according to Pauline Menes, the Democratic delegate who wrote the
bill.
Meanwhile, New Jersey's legislative session ends in June. "If we can
get this (bill) out of committee, I think we have a good chance of
getting it passed," Turner said.
Marc Ferranti is executive news editor for the IDG News Service.
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