Now the Governor’s Angry Too
April 2, 2004

Ted Kulongoski

Oregonians may be startled to have their questions about welfare and food-stamp benefits fielded by someone at a call center in India. Nancy English was.

The Eugene resident was straightening out business involving a deceased family member who had an Oregon Trail card–a debit card used to administer food stamp and welfare benefits. The retired educator and social worker said she was frustrated to be talking with someone who couldn’t answer her questions and alarmed to think that so many Oregonians were out of work, yet state tax dollars were going to pay people overseas.

She isn’t the only one upset to discover that the Arizona-based eFunds Corp, contracted to handle the Oregon Trail card program, has shifted the call center for card-holders to India. "The governor was really mad about it. If there’s not a state regulation against doing this, there should be," said Mary Ellen Glynn, spokeswoman for governor Ted Kulongoski. Glynn said the governor told state administrators to look into the situation because he "didn’t like the practice and he wanted it to stop."

Oregon is one of several states that have contracted eFunds to handle the processing of benefits payments. The Oregon Trail card is used by about 212,000 households to access and spend welfare and food stamp benefits. Following a global trend, eFunds has been moving many of its call centers to India. The company last year shifted its call center operations for Oregon Trail card holders from Wisconsin to India.

"India is a key growth market for us, with over 75% of our employees based here," Kathleen Flanagan, senior vice-president of eFunds Global Outsourcing Solutions, said in a statement. Two eFunds officials contacted refused to answer a reporter’s questions.

The Register-Guard, USA

Privacy Peril: Something Else to Worry About?
April 1, 2004

Legislators from California to Massachusetts are launching salvo after salvo against outsourcing IT work overseas—to India in particular—saying it’s a grave threat to the privacy of Americans’ data. But is it, really? My privacy counterparts in other companies don’t think so. We see Indian companies quickly learning that advanced data security is a competitive requirement and an Indian government that’s considering a European-style data protection law. So what should multinational companies do? Wait out the election-year excesses, but make sure you have a strong way to verify the security of all third parties, whether they’re in Bombay or Peoria.

US politicians are increasingly viewing overseas outsourcing as the wedge issue of the 2004 elections. Some say that outsourcing our call centers to India exposes the average American’s medical and financial information to unregulated gangs—even al-Qaeda! Others say that sending our tax returns to the subcontinent for processing puts our Social Security numbers in great danger. Several are proposing bills that would make it prohibitively difficult for US companies to take advantage of the high-quality, low-cost Indian IT worker. Politicians who oppose these bills risk being seen as out of touch with the mounting number of white-collar workers who lost their jobs when their IT departments were sent to New Delhi. So has protectionism won the day? Will these bills pass?

We’d all better hope not. Europeans have been making the case for years that the US is an "inadequate" place for European data. They say the US is the Wild West of data protection. The European Union argues this is the case because we don’t have a comprehensive privacy law. If we take the same approach toward India—saying that its privacy protections are inadequate—we weaken our defense against this European argument.

Computerworld, USA

Despite Ire, AOL’s in Town
April 2, 2004

HOW INDIA WAS WON: AOL is advertising in Indian newspapers, seeking software developers with varying experience. The company’s statement did not make a link between its troubles in the US and its decision to move work to India

Despite the controversy against outsourcing, Internet giant America Online, which has cut jobs in the US, is moving to save money by hiring employees and setting up a software development center in India. Virginia-based AOL, part of Time Warner, has set up a development center in the southern Indian city of Bangalore, hiring a dozen people for now, the company disclosed. Many other positions have been advertised in local newspapers.

"Our development center will work in close coordination with our global offices in the US and other locations on a variety of different product initiatives," the company said. The company, which lost 2 million dial-up subscribers in the last few years, laid off 450 software developers in California in December and closed two offices there.

AOL cited "the high pool of professional talent in India" as its attraction to the country, but refused to divulge investment figures or hiring plans. A shift to India can help American corporations save up to 80% in wages and operating costs. Having employees in India also helps U.S. firms work on a 24-hour cycle, due to the nearly half-day time difference.

New York Daily News, USA

Outsourcing tech jobs aids US
March 31, 2004

Outsourcing white-collar jobs to low-wage countries such as India and China has thrown some Americans out of work, but a new report predicts that the trend will ultimately lower inflation, create jobs and boost productivity in the US. The Information Technology Association of America, in an yet unreleased survey, acknowledges that the migration of tech jobs to low-paid foreigners has eliminated 104,000 American jobs so far, nearly 3% of the positions in the US tech industry. Software engineers have been particularly hard hit. Researchers at Global Insight, which prepared the report for the ITAA, predicted that demand for US software engineers would shrink through 2008.

But ITAA leaders emphasized that outsourcing has damaged the job market far less than the dot-com meltdown of early 2000, when Internet startups, telecom companies and other companies eliminated as many as 268,000 positions. Democratic presidential candidate John Kerry’s economic proposals said they would reduce the sting for outsourced workers. More than two dozen states are considering bans on outsourcing government contracts. Such legislation would be "protectionist" and "unwise", according to the ITAA, whose 500 members include Microsoft, H-P and Amazon.com.

But Cynthia Kroll, senior regional economist at the University of California, Berkeley, said policy makers can’t afford to ignore outsourcing. "If R&D is coming out of India, will the next wave of growth bypass us entirely?" Kroll asked.

"We need to pay attention to what India and China and these other countries are doing to get these new rounds of investment."

Boston Herald, USA

Citibank to buy Indian firm
April 13, 2004

Citigroup wants to buy e-Serve In ternational, one of India’s leading outsourcing firms, of which it already owns 44%, for $126 million. The New York-based bank said e-Serve International provides outsourcing services to Citigroup companies in more than 25 countries, reported the Calcutta Telegraph.

Citigroup has said it would pay a 27% premium on the share’s last close, an analyst said. "Shareholders of e-Serve may tender their shares to Citibank Overseas Investment Corporation at a price at or above the floor price determined by the Sebi guideline," the bank said in a statement. The Mumbai, India-based, company employs 4,500 people that provide call center, transaction-processing and data-management services.

The Washington Times, USA

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