Hoosier Unemployment System "upgraded" by TATA
Hoosier Unemployment System "upgraded" by TATA
Date: Monday, September 29, 2003 6:13 PM
JOB DESTRUCTION NEWSLETTER
www.ZaZona.com
Indiana's Department of Workforce Development has so many unemployment
claims to process they need $15.2 million worth of computer upgrades.
Instead of hiring unemployed IT workers Indiana joined a growing list
of states that have decided to outsource the work to Indian bodyshops.
Most of the workers will come from India on H-1B and L-1 visas because
TATA rarely hires US citizens. TATA prefers Indian nationals and
typically won't hire US citizens even if they are of Indian heritage.
Indiana acknowledges that in 2002 they paid $872.7 million in benefits
to 272,554 jobless Hoosiers. The state claims that using TATA will save
them $8.1 million to $23.3 million. How much would they have to spend
on unemployment and computer upgrades if they simply used some of those
millions to hire unemployed computer programmers and support staff?
If states like Indiana insist on replacing American IT workers with
cheap foreign labor, they should do an honest accounting of how much
money is actually saved. They are just not telling the truth when they
calculate the money saved while ignoring the cash paid for unemployment
checks, lost taxes and revenue because the jobless don't pay as much,
lost tax revenue from the L-1s who often don't pay taxes, and the
expense of having to upgrade unemployment equipment because they are
refuse to hire state residents.
http://www.indystar.com/print/articles/0/078950-2810-009.html
State job agency hires India firm
No Indiana company sought the contract to upgrade computers for
Workforce office
Where the money goes
Here's how the state is planning to allocate the $39.3 million in
federal money:
Computer reprogramming: $15.2 million
New computers, software: $11.2 million
Maintenance, licensing fees: $7.4 million
Project support: $3.1 million
Worker training: $711,400
Remodeling work: $270,000
Unallocated money: $1.4 million
Source: Department of Workforce Development
Here's what agency's upgrade will accomplish
The Department of Workforce Development, which processes more than
270,000 jobless claims a year, is moving from an outdated Cobol-based
mainframe installed in 1989 to a Java-based, server system that should
last a dozen years.
It will be the first system in the country that allows employers and
jobless people to do business with the agency via the Internet 24 hours
a day, state officials say. For instance, workers could file initial
claims online and track their payments.
A state study indicates this could save employers $36.4 million a year
in postage and other costs and speed delivery of unemployment checks.
The new system also could help detect fraud and prevent overpayments.
By Kevin Corcoran
kevin.corcoran@indystar.com
September 29, 2003
The Department of Workforce Development is supposed to help out-of-work
Hoosiers find jobs.
But when the agency needed $15.2 million worth of computer upgrades to
speed handling of unemployment claims, it hired a company based in
India.
State officials acknowledge that hiring an overseas firm that competes
with U.S. companies has raised concerns, especially given their legal
responsibility to put Indiana workers first.
But they say the contract will save taxpayers millions of dollars --
and insist those savings won't come at the expense of jobs in Indiana.
"We wanted someone that would give us good value for the price," said
Alan Degner, the state's work force development commissioner. "They are
committed to paying U.S. market wages."
Computer programmers with Tata America International Corp., the New
York subsidiary of a Bombay firm, are scheduled to begin work Oct. 28
on the four-year project.
Top aides to the late Gov. Frank O'Bannon gave their go-ahead to the
politically sensitive deal before his death Sept. 13. The project will
be paid for entirely with federal money tied to Energize Indiana, a
10-year economic development plan the General Assembly passed portions
of this year.
In 2002, Indiana paid $872.7 million in benefits to 272,554 jobless
Hoosiers. This computer overhaul should speed claims processing, as
well as save postage and reduce hassles for businesses that pay
unemployment taxes, state officials say.
In the United States, Tata operates as TCS America. The firm won the
state contract over two U.S.-based companies -- Accenture LLP and
Deloitte Consulting LP -- with a proposal that came in $8.1 million to
$23.3 million lower.
Tata's proposal also was better, according to state officials'
subjective ratings of the various proposals.
No Indiana-based companies submitted proposals.
During the project, as many as 65 contract employees will work
alongside 18 state workers.
Such contracting has been common for years among major firms, including
Columbus-based Cummins Co., Indianapolis-based Eli Lilly and Co. and
Fishers-based Sallie Mae, which do business with Tata.
But concerns among U.S. software programmers are growing as more
cash-strapped state and local governments sign contracts with off-shore
companies, according to Information Week, which tracks software
industry trends.
Overseas firms offer high-quality work at much lower costs than
U.S.-based companies, often by paying workers 75 percent less, the
publication says.
Under the state contract, all work will be done at the Indiana
Government Center, but Tata is free to bring in workers from India and
elsewhere and pay them as it sees fit.
Company officials say they will do local recruiting, but the vast
majority of workers will come from India on L-1 visas -- which do not
require paying comparable U.S. wages.
Some also will be here on H-1B visas for workers in specialty
occupations; these visas do require paying comparable U.S. wages and
certifying the workers' presence won't eliminate U.S. jobs.
Although it's not required, Tata will pay the U.S. Department of
Labor's "prevailing wage" for each type of worker on the project, said
Jayanta Banerjee, the company's Indianapolis project manager. For
instance, a programmer analyst would be paid at least $36,733 a year.
Tata also has hired two minority-owned firms -- Bucher & Christian
Consulting of Indianapolis and Troy, Mich.-based Nexor Technologies
Inc. -- to do at least 5 percent of the work.
As word of the contract seeped out after it was signed in August,
Degner's phone "rang off the hook for a while." But he said most
critics were satisfied after he explained the state's reasoning.
New Mexico officials caught flak for hiring Tata in May 2001 to
overhaul its unemployment claims system, but the company does superior
work at low cost, said Alex Georgieff, a deputy director with the New
Mexico Department of Labor.
"They have an enormous amount of technical breadth and depth,"
Georgieff said. "We've been very satisfied," he said.
The $6 million software overhaul, involving 25 Tata employees working
in Albuquerque and 80 in India, will be done within six weeks.
Unlike what company officials say will happen in Indiana, Tata paid
workers who went to New Mexico on visas the same lower wages as its
workers in India, plus a living allowance.
Tata also does business with Pennsylvania and Montana.
Overall, says the leader of TechPoint, a nonprofit Indiana technology
trade group, taxpayers should be pleased with the deal state officials
cut.
"This is just a growing trend in globalization," said Cameron Carter,
TechPoint's interim president and chief executive. "The lines on the
map don't count for a lot when it comes to getting the best deal."
Star reporter Michele McNeil Solida contributed to this story.
Call Star reporter Kevin Corcoran at 1-317-444-2770.
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