The Hindu Business Line : `Most US States offshoring work'

The numerous proposals to restrict offshoring in US Government agency projects notwithstanding, a latest report of the US Government Accountability Office (GAO) reveals that offshoring occurred in human services programs in a majority of US States for functions such as software development and call centre.

It also found that India was the most prevalent offshore location. "Offshoring occurred in one or more programs in 43 of 50 States and the District of Columbia, most frequently in the Food Stamp and Temporary Assistance for Needy Families (TANF) programs. However, expenditures for services performed offshore in the four State-administered programs appear to be relatively small... India was the most prevalent offshore location, followed by Mexico," the recent report by GAO said.

Customer service

The services that States most frequently performed offshore in the Food Stamp and TANF programs were functions related to customer service, such as call centres. For Unemployment Insurance and Child Support Enforcement programs, offshore functions pertained to software development.

In all, the report examined four federally-funded state-administered programs — Child Support Enforcement, Food Stamp, TANF and Unemployment Insurance — and two federally-administered programs that provide student financial aid — Pell Grant and Federal Family Education Loan (FFEL).

While work was performed offshore in the majority of States for the four State-administered programs, the report noted that no work was taken offshore for the two federally administered student-aid programs.

"Fifteen State program directors reported having performed cost comparisons for their current contracts, based on differences in the location of services, and all reported that they would achieve cost savings if some of the work were performed offshore. On average, these comparisons showed that with some services performed offshore, contract costs would be between 0.3 and 24 per cent less than if all the services in the contracts were to be performed in the US," it said.

Quality issues

The few State officials that reported issues with the quality of services provided by offshore contractors said that these involved difficulties in understanding the English of software programmers or customer service representatives.

While numerous actions have been proposed at the State and federal levels to limit offshoring by government agencies, few restrictions exist with respect to the six programs that GAO reviewed. New Jersey and Arizona have prohibited offshoring in State contracts, it added.

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