Outsourcing California - March 9, 2004

Read the bills SB1451, SB1452, SB1453, SB1492 at http://www.leginfo.ca.gov/

California Senator Sen. Liz Figueroa, D-Fremont, (www.sen.ca.gov/figueroa) held a hearing on offshoring today. Senators Dunn, Machado, and Kuehl participated, all asking good questions.
The hearing began by airing the 60 Minutes video "Out of India" - video is online here:

Programmer's Guild president Kim Berry presented roughly the following during the public comment period:

Angie Wei of California Labor Federation was on a panel. Here is her testimony:


I also provided the panel with declarations from several U.S. programmers who are unemployed due to offshoring.
I cornered Jeff Lande, Senior VP, IT Services Division, ITAA in the hall and, reminding him of the wager I had made, asked why ITAA would not back its own studies. Jeff said either U.S. companies outsource to remain competitive on the global market, or they go out of business. I said Globalism is being touted as a "win-win" -- but that is "lose-lose". During the hearing he warned that the cost of software could soar by several times if we tried to limit offshoring. But currently SW is written mostly in the U.S. He's a weenie.
I also spoke with David Wyle, CEO, SurePrep (www.sureprep.com) who has hired 300 Indians to process 25,000 U.S. income tax returns. He only has 12 U.S. employees. He would not tell me what % of revenue remains in India - furthering the U.S. trade deficit. He claimed that "Turbo-tax" threw far more accountants out of work than offshoring ever will. He claimed his offshoring benefits America because he buys the Cisco routers and they eat at McDonalds. (I told him that a McDonalds in India results in very few American jobs.)
ITAA Western Region VP Carol Henton approached Natasha and said, regarding her termination after training Indians, "Isn't that the same sob story you presented to the U.S. Congress?" She apologized a few minutes later:




(The opening sentence is incorrect. The claim was that these jobs had the potential to be outsourced): "SACRAMENTO -- California will lose more jobs than most states to overseas competition, including about one of every six jobs in Silicon Valley, experts warned Tuesday."

INFORMATION WEEK - Read ITAA's drivel at the end


Chris Larson, CEO of Dublin-based E-Loan Inc., said the company started giving customers a choice of having their loan processed outside the United States. If the loan is processed overseas, the wait is cut from 12 days to 10. Eventually, E-Loan might also offer price breaks if customers go this route, Larson said. So far, the majority of customers who have been given the choice have chosen to have the loan processed overseas.


Statewide, 11.5 percent of jobs could eventually be sent overseas, Cynthia Kroll, economist with the University of California Berkeley's Haas School of Business, told a state Senate committee hearing. Areas with high concentrations of high-tech jobs could be at greater risk, Haas added. She estimated that Silicon Valley, which is still reeling from the bursting of the dot-com bubble, could lose 15.7 percent of its jobs.

Local economists say San Diego is at less risk for massive job losses because local businesses concentrate more on research and development than manufacturing. "But then the question becomes what kind of R&D will happen here," said Donald Cohen, president of San Diego's Center on Policy Initiatives. "When will the R&D jobs start following the manufacturing jobs?"


Senator Dunn said his main concern [with transcribing medical records overseas] was the lack of legal recourse in a foreign country if privacy is breached. "When you place confidential information outside the reach of the U.S. court system, there is nothing that can be done," Dunn said. "Other than saying, 'Trust us,' there are no quality controls in place."


``Protectionism is not the answer. It will only lead to a trade war,'' warned Jeff Lande, senior vice president of the Information Technology Association of America. ``Ultimately, it will result in fewer jobs.''



How bad is it?


"We can debate all we want as to what the best approach is to generate job growth," Shapiro says, "but until the jobs come back, we should agree to provide assistance to those being left behind in the labor market. We have been collecting numbers on this since 1971, and we have never had so many people exhaust their benefits and have to go without further aid. It's unprecedented." That word, again.

No food was served, so Larry Ellison couldn't make it:


AB 1829 (Liu) would require all state contractors and subcontractors for service contracts to sign, under penalty of perjury, that the contract would be performed solely by workers located with the United States.  This bill would prohibit the use of state taxpayer funds from contracting with companies that send the work to other countries.  Public agencies around the country have been contracting for jobs offshore.  New Jersey, Nevada, Maryland, and the Carolinas have all discovered that taxpayer dollars are funding jobs in India and other developing countries. 


State taxpayer dollars should be used to create good jobs and state revenue for California.  More jobs means more people earn, consume, and pay taxes, stimulating our local economies.  AB 1829 will also help small and medium-sized business compete for state contracts against big corporations who outsource jobs and bid for contracts with cheaper labor costs.  At least 25 other states have introduced similar legislation. 


SB 1492 (Dunn) would guarantee that no work that is privacy related can be done outside the United States.  Work on X-rays, medical records, court documents, tax forms, homeland security, financial analyses – is all being done in other countries.  A San Francisco Chronicle story reported that a worker in Pakistan threatened to release patient records from UC San Francisco across the Internet if she was not paid her due wages. 


California residents have no privacy protections or legal standing to enforce our state’s laws in other countries.  Our court systems and shareholder rights cannot alter behavior or activity that occurs in other countries.  Because we cannot protect our privacy related matters, this work must be done in the U.S. where our rights can be exercised. 


AB 3012 (Assembly Labor Committee) would require employers to report to the Employment Development Department (EDD) annually the number of jobs maintained in California, in other states, and outside of the United States.  Neither the Bureau of Labor Statistics nationally, nor the EDD, currently collect any data on the outsourcing of jobs.  This data is critical to track employment trends and enact needed policy interventions.