A report by the Corporate Research Project of Good Jobs First spotlights the growing degree to which state governments are contracting with foreign outsourcing firms for public contracts and are funneling millions of state taxpayer dollars offshore.
The report, entitled “Your Tax Dollars at Work…Offshore,” found that nearly every state has engaged foreign vendors to perform state work offshore. The Washington D.C.-based research group conducted the study for the Washington Alliance of Technology Workers, a local union of the Communications Workers of America that supports workers in the IT sector.
The research group found that 18 offshore outsourcing firms are aggressively seeking state government contract work – primarily in information technology -- in at least 30 states. The 18 firms have captured about $75 million in state contracts so far and are seeking more, in part by hiring former government officials and by making state electoral campaign contributions, the study said.
As the public controversy over the offshoring of private sector U.S. jobs to locations overseas continues to grow, many contractors and offshore vendors are focusing their attention on states and state contracts, as well as private sector business opportunities.
Often, state governments are not even aware that they are sending work offshore, the study found. In many cases, state governments awarded contracts to U.S. firms, believing that the work would be performed domestically, only to find that the work was subsequently subcontracted to an offshore vendor.
In other cases, states assume they are dealing with a domestic company because a U.S. mailing address is used. Offshore vendors typically use such addresses for sales and marketing purposes, while the contract work is performed offshore.
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.
The study also looks at the large number of states that operate food stamp call centers offshore.
The Corporate Research Project of Good Jobs First conducts research on business and public policy issues for a variety of non-profit organizations. It is a part of Good Jobs First, a clearinghouse on state and local economic development practices.
Read the full report here [Acrobat 151K].
