Like many states, New Jersey contracts with an outside vendor to handle the back-office side of its welfare and food stamps programs. Part of that operation, run by an Arizona-based company called eFunds, is a small call center that handles telephone inquires from beneficiaries. State officials caught flak last year when the vendor moved the outfit from Green Bay, Wisconsin, to Bombay, where salaries for answering calls are in the range of $2 to $4 an hour. In the welfare-to-work age, critics say, it's unfair--and hugely ironic--to ship entry-level jobs such as these overseas.
So New Jersey negotiated with eFunds to bring the jobs back. In May, a new call center opened in economically depressed Camden, with several new employees hired from the welfare rolls. The move saved face, but it also came at a high price. New Jersey agreed to pay eFunds an additional $888,000 a year as compensation for the higher cost of doing business in Camden.
With the U.S. economy struggling and unemployment on the rise, the call center case struck a nerve all around the country. Lawmakers in New Jersey and in eight other states introduced bills that would prohibit the contractors they work with from moving jobs overseas. "These are taxpayer dollars, not private-sector dollars that can go wherever to save a buck," says New Jersey state Senator Shirley Turner, whose bill passed the Senate unanimously but is bottled up in the Assembly. "We have to be concerned about a greater good and not just getting the cheapest labor costs."
Yet it seems that Turner and other critics of overseas outsourcing are swimming against the tide. More and more U.S. corporations are moving call centers, data processing and other back-office work to nations such as India, Ireland, Israel and the Philippines. By one estimate, the U.S. may lose 3 million such jobs by 2015.
With their budgets in shambles, state and local governments may be inclined to turn to cheap overseas labor. Most have been hesitant to join the rush, however, because of the political ramifications. A few are less cautious. New Mexico, for instance, hired a company in India to build an automated system for unemployment insurance. The job required 25 staff on the ground in New Mexico, but the majority of the programming work was done by 80 workers in India.
Meanwhile, the budding U.S. backlash is being watched closely abroad, especially in India, where the fast-growing back-office industry has gained some political clout. An Indian business association, known as NASSCOM, flew members from New Delhi to Trenton to lobby state lawmakers on Turner's bill. India argues that state laws prohibiting outsourcing abroad would violate international trade rules, and India's commerce minister has said that if the bills pass in New Jersey or any other state, the country would bring the issue before the World Trade Organization.
