Feeds

Government IT: wasting money to win votes

Indiana v. India

  • alert
  • submit to reddit

Secure remote control for conventional and virtual desktops

The Governor of the US state of Indiana has succumbed to massive pressure from local media and workers' unions, and pulled the plug on a $15.4 million IT services contract with Indian company Tata Consultancy Services (TCS).

Indiana's anti-offshore stance is not unique. In the state of New Jersey, Senator Shirley Turner is attempting to create legislation to ban state contracts from being outsourced to overseas companies. Her gripe stems from the New Jersey Department of Human Services awarding Arizona-based company eFunds a contract to service paperwork for the state's welfare recipients. eFunds ran part of the project from a call center in Mumbai, India, but one year later, the work was relocated back to a call center in Camden, New Jersey.

Indiana's decision to scrap the TCS contract will appease voters, media and unions in the short term, but it will probably force the state to spend more taxpayers' dollars on revamping the benefit claims system than it had planned. New Jersey now spends $340,000 per month on supporting its welfare benefits applications from a call center in Camden, which represents a 28% premium over the $266,200 monthly charge it was paying for the service when it was delivered from Mumbai.

The reality is that most large private enterprises in the US already source low-cost back-office processing and IT skills from offshore centers such as India or China, either through wholly owned captive operations, or from third-party services partners.

The government sector has so far proved a bigger challenge for India's software services companies, which currently derive only a small amount of their revenue from government organizations. This is unlikely to change in the short term, with the offshore issue likely to play a major role in next year's presidential elections.

But while Indiana's deal with TCS had a high level of visibility, it is worth noting that many dollars worth of government IT and processing work may be sourced by stealth from offshore locations through US-based services companies such as IBM Global Services and EDS, which are committing huge resources to building up offshore operations.

Source: Computerwire/Datamonitor

Related Research
Indian Contact Center Outsourcing: Surviving the Shakeout

Secure remote control for conventional and virtual desktops

More from The Register

next story
Linux? Bah! Red Hat has its eye on the CLOUD – and it wants to own it
CEO says it will be 'undisputed leader' in enterprise cloud tech
Oracle SHELLSHOCKER - data titan lists unpatchables
Database kingpin lists 32 products that can't be patched (yet) as GNU fixes second vuln
Ello? ello? ello?: Facebook challenger in DDoS KNOCKOUT
Gets back up again after half an hour though
Hey, what's a STORAGE company doing working on Internet-of-Cars?
Boo - it's not a terabyte car, it's just predictive maintenance and that
Troll hunter Rackspace turns Rotatable's bizarro patent to stone
News of the Weird: Screen-rotating technology declared unpatentable
prev story

Whitepapers

A strategic approach to identity relationship management
ForgeRock commissioned Forrester to evaluate companies’ IAM practices and requirements when it comes to customer-facing scenarios versus employee-facing ones.
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.