A contractor that is "offshoring" part of its work for the Utah Department of Workforce Services to a call center in India is willing to renegotiate but moving the work back to the United States will come with a price, state legislators were told Thursday.
The comments came during a Utah Technology Commission discussion of the Workforce Services contract with eFunds, a U.S. company that is having its India center handle calls about the department's electronic Horizons welfare benefits cards.
The call center work is a small part of eFunds' $8 million contract. About 195,000 calls per month from cardholders flow into an automated response system, with about 6,500 of those advancing to call center agents in India.
EFunds is in the second year of a five-year contract for the work. But John Nixon, the department's director of finance, said eFunds "is getting beat up at the national level as well" regarding offshoring jobs and is willing to reopen the call center part of the Utah contract.
However, moving the call center work back to the United States would cost Utah $63,000 more per year, he said.
Another option is having the state handle the work, but implementing a 24/7 operation could cost up to $1 million, he said. The work now is handled by the equivalent of four full-time workers, but it would take more than that for the state to operate a similar around-the-clock setup, he said.
The offshoring of jobs from state contracts is an issue not just in Utah. Dozens of states have been considering legislation to prohibit or limit it. Utah has no statute regulating or prohibiting which parts of state contracts are outsourced internationally.
Raylene Ireland, executive director of the department, said an India call center component was part of both bids on the contract. The state believed, and hoped, that a Sandy company would bid, but it did not, she said.
The outsourcing of the contract made sense because the state lacks expertise on electronic benefits transfers, and the full-service package offered by eFunds is saving the state $420,000 annually, compared to the previous contract, Nixon said.
But technology commission members still have short- and long-term concerns.
"The perception is these are low-end jobs, that we can't find people to do them here, therefore we go offshore," said Rep. Brent Goodfellow, D-West Valley. "I think that the concern I would have is that this is just a start, and if we don't do something we will have high-end jobs going offshore as well."
Sen. David Thomas, R-South Weber, said he worries about identity theft overseas.
The commission's co-chairman, Rep. David Clark, R-Santa Clara, said he wondered if information is secure "when we're dealing with a land with a different set of laws."
Thomas wondered if Utah's rural Smart Sites could handle the work, but Nixon said Smart Site companies typically want to have jobs paying more than the $7 per hour typical of call center wages.
Two commissioners Val Oveson, the state's chief information officer, and David Harmer, executive director of the state Department of Community and Economic Development cautioned against moves that would violate procurement laws or foreign trade agreements or have long-term impacts on the economy.
Thomas said it is "entirely possible" to write legislation requiring the work be done in the United States on the basis of homeland security and identity theft issues. "I think that shrinks the concerns," he said.
"Outsourcing benefits both parties, or it doesn't happen," said Harmer, who noted that the United States is a net importer of jobs.Anxiety always results when there is an economic shift to more-efficient producers, he said. Harmer called it "a big mistake" for government to restrict the use of the most-efficient producer. He also said protectionist barriers delay the economic impact of such job shifting, but the impact is usually more severe than simply adjusting to the job losses.