Date: Fri, 1 Oct 2004 12:43:00 -0700 From: Norm Matloff To: Norm Matloff Subject: government offshoring backfiring To: H-1B/L-1/offshoring e-newsletter Note: TWO articles on enclosed below, the original and a followup. Norm http://www.omaha.com/index.php?u_pg=1638&u_sid=1206549 September 18, 2004 Omaha World Herald Firm in India hired by Nebraska may face lawsuit LINCOLN (AP) - The overseas firm recently picked by the state over two U.S. companies to do computer work is being accused of not finishing a similar job in New Mexico. The Nebraska Labor Department signed a $7.9 million contract in July with TCS America, a branch of the information technology firm Tata Consultancy Services of India. The two-year contract calls for TCS to upgrade the department's computer system to better handle unemployment benefits. But the New Mexico Labor Department is considering a lawsuit against the company, saying delays and other problems on a similar project there have swelled the cost from the original $3.6 million to $13 million. The New Mexico system was originally scheduled to be delivered by the end of 2001. The system arrived in December 2002 but is still not operational. The computer system's warranty expired last year, and the agency's contract with TCS lapsed in May. "It was supposed to be a six-month project," said New Mexico Labor Department spokesman Carlos Casteneda. "TCS has left. An incompleted system is what we have." The company said it has fulfilled all contract obligations and has offered to finish the project but wants hundreds of thousands of additional dollars, according to New Mexico Labor Secretary Conroy Chino. Chino has put two of his highest-ranking employees on paid leave pending further investigation into their roles in how the department handled the contract, signed under the previous administration. One has since resigned. Nebraska Sen. Matt Connealy of Decatur, a Democrat running for Congress, has criticized the awarding of the Nebraska contract to TCS over two U.S. firms. Nebraska labor officials have stressed that the contract requires TCS to hire 25 percent of the workers for the project locally and for all the work to be done in the state. Any workers from overseas hired for the project have to do the work in Nebraska. After learning of New Mexico's problems, Connealy renewed his call Friday for Nebraska to cancel the deal. Nebraska Labor Department spokesman Chris Triebsch said the agency was aware of the New Mexico problems when it signed the contract and is convinced that TCS will do quality work. http://207.218.133.50/hserver/SITE=omaha/AREA=region.story/AAMSZ=230X7 September 25, 2004 Tech firm defends Nebraska contract BY LESLIE REED WORLD-HERALD BUREAU LINCOLN - Representatives of a global information technology firm Friday came to Lincoln to defend its unemployment benefits computer contract with the State Department of Labor. The contract with Tata Consultancy Services, or TCS, has been criticized by Democratic congressional candidate Matt Connealy for outsourcing Nebraska jobs overseas. TCS is a subsidiary of the India-based Tata Group. It has 30,000 employees worldwide. Although Nebraska is requiring all contract work to be performed in the state and that 25 percent of TCS' 29-member project staff be hired locally, about 10 people will come from India to work on the project. State Sen. Ernie Chambers of Omaha, after learning of problems surrounding a similar contract between TCS and the New Mexico Department of Labor, questioned whether Nebraska officials thoroughly investigated TCS before awarding the contract. Chambers, however, said Friday that his most serious concerns have been answered by Labor Commissioner Butch Lecuona, although he will continue to monitor the contract. TCS spokesman Victor Chayet of Denver defended his company's record in New Mexico and described Nebraska's requirements as some of the most rigorous his company has faced. Chayet said it is a mischaracterization to describe the TCS contract as "outsourcing." "No jobs are being eliminated as a result of this contract and, in fact, there will be new hires conducted by the Nebraska Department of Labor as a result of this contract," Chayet said. Although New Mexico officials complain that TCS departed their state without leaving them a working system, Chayet said the problem is that the New Mexico Department of Labor does not have qualified staff to manage the system - and is unable or unwilling to hire the appropriate people. The quality of the TCS technology has not been questioned, he added. Asked if New Mexico knew it was buying a computer system that its staff could not operate, Chayet said officials knew specialized staff, with a knowledge of both unemployment insurance and information technology, would be required. Carlos Castaneda, a spokesman for the New Mexico Department of Labor, disputed that New Mexico lacked qualified people to handle the system. "We maintained a staff that worked alongside TCS to design and construct the system for the lengthy time they were in New Mexico," he said. "They're still here. The training did not occur because the system just never got off the ground." He said the TCS contract ended up taking years longer than the six months originally projected - and the cost mushroomed from a projected $3.6 million to $13 million. Earlier Friday, Gov. Mike Johanns' office released a five-page letter, plus attachments, from Lecuona detailing Nebraska's efforts to investigate the New Mexico situation, how it selected TCS, and its contract safeguards. Lecuona said Nebraska interviewed four New Mexico officials, who expressed satisfaction with the company, before awarding the $7.9 million contract to TCS. Two of those four officials now are on paid administrative leave while New Mexico investigates the contract, Castaneda said. He added that Nebraska talked to New Mexico officials before the problems emerged. Nebraska negotiated a pay-as-you-go contract, which includes a provision that 15 percent of the total contract amount - or about $1.2 million - be held in escrow until the contract is completed.