by Beth Bacheldor

Could Offshoring Be Coming to a State or Local Government Near You?

Nov 02, 2009
Enterprise Applications

If government agencies could save money by offshoring IT, and in turn be able to cut constituents taxes, is it worth it?

Okay, I’ll admit it. While I support the “Buy American” mantra, I’ve always been a tad uncomfortable with the rallying cries of those (my dad, my brother, for example) who vow to “Only Buy American.” And in even fuller disclosure, I drive a Honda. It’s a Honda Fit actually, and it was cheap, gets great gas mileage, and well, it fits me and my small family. Ah, but the rough recession and collapse of two of our biggest automakers has given me pause. As does a recent story, You Can Outsource City Hall But Not Offshore Yet on It’s about public sector outsourcing and how—although state and local governments aren’t doing it and those that tried in recent times were soundly smacked—offshore outsourcing may be a necessary (and evil, some might argue) antidote to the current recession and subsequent revenue shortfalls many are facing. As an old boss of mine used to say, if someone elsewhere in the world can do IT cheaper, faster, and better… a company would be crazy not to offshore it.

In the article, there are those that raise my former boss’ very point. Jim Harvey, partner and co-chair of the global technology, outsourcing and privacy group at law firm Hunton & Williams, says there are many services that can be provided from offshore for less money. “There are just so many cost and performance advantages offered by offshore solutions that the public sector will inevitably consider that structure,” he says. “It’s a tense and charged issue, but if a government can do more with less and deliver cost-efficient services to its constituents, it will be on the table.” Food for thought, I suppose.

While some think a less-costly government that in turn costs less to taxpayers is the way to go, the idea of state and local governments offshoring work to save money is unpalatable to others. As one wise editor asks:  Which is more patriotic, not offshoring the work in an effort to preserve jobs in America, or offshoring the work in an effort to reduce the tax burden on American citizens? The answer is perhaps a little muddy. Just consider whether buying the American car that was built offshore by some other country’s labor is really buying American. That used to be my argument, but I’m less emphatic about it these days. We need to think future; we need to think about the strength of our businesses, our workers, and our brand. Buying American is investing in companies that underscore the health of our economy.  I think the same holds true for offshoring. Hiring outsourcing service providers with their roots here in the United States will have far-reaching benefits that will ultimately strengthen U.S. companies, and in turn, our economy. Not only that, we really do need every U.S. job we can get. Admittedly it may take some sacrifice, such as forgoing any short-term financial benefits companies might gain in an offshoring deal. I realize the argument for long-term benefits may not be enough for the company—or state government—that’s on the brink of bankruptcy. But perhaps it should be (and perhaps it should be enough for me too. I guess I really should consider American next time I’m in the market for some wheels). Not only that, the government of the people, for the people, and by the people needs to lead by example.

So, what do you think? Should prudence drive governments’ outsourcing decisions? Or should they Only Buy American?