US state bans IT offshoring

The US state of Ohio has banned the practice of outsourcing government IT projects to offshore providers over fears that it destroys local jobs and stunts economic growth.

Ohio governor Ted Strickland said in an executive order that "the expenditure of public funds for services provided offshore" would be prohibited by the state.

"Ohioans have been among the hardest hit by more than a decade of unfair trade agreements and the trickle-down economic policies that promoted offshoring jobs at the expense of Ohioans who work for a living," Strickland said. "We must do everything within our power to prevent outsourcing jobs because it undermines our economic development objectives, slows our recovery and deprives Ohioans and other Americans of employment opportunities."

While the decision was motivated primarily to protect local employment, Strickland added that there had been "pervasive service delivery problems" with the work provided by such companies.

India’s Tata Consultancy Services is the only offshore IT service provider that currently operates in the state, where it employs 300 people. A TCS spokesperson was not immediately available to comment on what contracts the company has with Ohio’s public sector, or what will now happen to these.

The tide appears to be turning against offshore outsourcing in the US, where the practice was first pioneered. A recent decision to double the cost of H-1B migrant worker visas was criticised by Indian software trade body Nasscom as discrminatory.

In the UK, meanwhile, a proposed cap on non-EU immigration has also raised concerns among Indian offshore providers.

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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