Should State CIOs Go Offshore?

At the backdrop of that debate was the release in late March of a study by the Information Technology Association of America (ITAA) with data that finds offshore outsourcing will create more jobs than it replaces and actually will provide higher-paying jobs for U.S. workers.

"Global competition creates more jobs in the United States, not less, and it creates better-paying jobs," said ITAA president Harris Miller, who moderated a panel of state CIOs and government contractors at last month's spring National Association of State Chief Information Officers (NASCIO) conference in Chicago.

But it wasn't the merits of offshore outsourcing that CIOs contested, though some 30 states have sought legislative actions attempting to bar offshore IT outsourcing. Rather, the political nature of the issue is what had CIOs talking.

Underscoring that point, offshoring was not even mentioned in RFPs by states as recently as a year-and-a-half ago. Now, up to 50 percent of RFPs state the work cannot be done offshore and should preferably be done in-state, said Bryce Haws, senior vice president of the public sector at Covansys, an outsourcing firm that has a strong presence in India.

"Right now, we're in a bubble, and the bubble is a political bubble, and it's difficult to defend against the Lou Dobbs 6 o'clock scorecard," added Larry Herman, managing director at BearingPoint for state and local government and education.

Some state CIOs make no apology for that. "In an election year, we have to consider our positions [on offshore outsourcing] as state CIOs," said Teresa Takai, Michigan's CIO. "The fact is, what we deal with in terms of benefiting the citizens of the state is not always the same as what the private sector looks at in terms of shareholder value. I think it's going to be a while before I would stand up and say offshoring would be a major benefit for us."

Gerry Wethington, Missouri's CIO and president of NASCIO, takes a similar stance. "We specifically state that offshore services are not an allowable activity," he said. "We like to pay attention to Missouri-based businesses and U.S.-based businesses."

Meanwhile, Peter Quinn, CIO of Massachusetts, is among those who think barring offshore outsourcing could do more economic harm than good. "It's really going to handicap [our] ability to do business in ways you haven't even begun to think about," he said.

But for all the debate, little offshore outsourcing is actually taking place. James Krouse, an analyst at Input, says less than 5 percent of all public-sector IT work has an offshore component to it and, most often, it's basic call-center support and other low-risk functions.

"I think it's dangerous for politics to regulate economics," he says.

Either way, finding the best delivery models for IT services and solutions is in the best interest of running a more efficient state government and getting the most out of taxpayers' dollars, added Maine CIO Richard Thompson. "The end result is products that work," he said. "We want to make sure we are able to play in the global market."