States Offshore Government Contracts

July 15, 2004 ( - State governments are looking beyond their borders and the borders of the United States for firms to fulfill state contracts.

Eighteen offshore outsourcing firms have captured about $75 million in state contracts – primarily in information technology – in at least 30 states. Further these groups are hiring former government officials and making state electoral campaign contributions to grease the skids in their favor, according to Corporate Research Project of Good Jobs First’s report “Your Tax Dollars at Work…Offshore.”

The report lists the 18 know offshore outsourcing firms asAuriga Inc.; HCL Technologies (Mass.) Inc., HTC Global Services Inc., ICICI Infotech, I-flex Solutions, Infosys Technologies Ltd., Intelligroup Inc., Larsen & Toubro Infotech, Luxoft; Mascon Information Technologies, Patni Computer Systems Ltd., R Systems Inc., Satyam Computer Services Ltd., SSI Ltd., Surya Technologies, Syntel Inc., Tata Group and Wipro Ltd.The worst state offenders, according to the report, were California and Connecticut, each with 11 contracts going to the offshore outsourcing companies. These states were followed by:

  • Minnesota (10)
  • Georgia (9)
  • Missouri (9)
  • North Carolina (9)
  • Oregon (8)
  • South Carolina (8)
  • Massachusetts (7)
  • Virginia (7)

The research report – commissioned by the Washington Alliance of Technology Workers (WashTech), a local union of the Communications Workers of America that supports workers in the information technology sector – found states are often not aware that funds may be going to contracting jobs overseas. For example,states may think they are dealing with a US firm because it has a domestic mailing address, but sometimes that address is just a marketing office for a company that is based offshore; other firms are technically headquartered in the US but do all or most of their work in offshore facilities.

Thus, taxpayers and state policy makers are ill-equipped to respond, the study found, since most states have little or no power to regulate work performed offshore or the offshore vendors they find themselves dealing with. To combat this, the report suggests a number of reform measures:

  • Each state should require all contract bidders to certify where the work on the project will be performed.
  • Each state should require all contract bidders to disclose the name and headquarters location of their parent company.
  • Each state should require existing contract holders to provide the previous two pieces of information.
  • Each state should create a comprehensive centralized database of contract awards by all state agencies.

“As state legislatures continue to take up this issue, they need the hard facts of how offshore contractors are positioning themselves to target the work of state governments,” said Marcus Courtney, president of WashTech.

The full report is available at .