Measure seeks to ban state outsourcing

A budget provision that landed on Governor Mitt Romney's desk this week will test the depth of the governor's feelings on a sensitive political issue: outsourcing jobs.

The budget the Legislature sent to Romney includes a little-noticed amendment that would prohibit Massachusetts from contracting with companies that ''outsource" the state's work to other countries. Outsourcing is part of a growing national debate, with 38 states considering similar provisions this year in response to the loss of jobs to cheaper foreign labor markets.

Backers of the amendment say Massachusetts already has state contracts with firms that are using workers in Bangladesh to enter Medicaid data and in India to answer customer queries about food stamps.

Romney has said he's against outsourcing in the private sector, having proposed incentives for companies that hire Massachusetts workers. But his position on the state's own outsourcing practices is unknown. A spokesman said yesterday the governor is not prepared to discuss his position on the issue and has 10 days to approve or veto particular provisions.

Democratic state Senator Jack Hart of Boston, Senate chairman of the Joint Committee on Commerce and Labor, introduced the measure as a late budget amendment. A key state employees' union, the National Association of Government Employees, supports it.

''To save a little bit of money, we're actually putting people out of work here and sending this work to India and employing those people with taxpayer dollars," Hart said. ''The majority of citizens in Massachusetts would side with me on this one, that I would rather employ people in the Commonwealth than save a little money by shipping these jobs offshore."

The Department of Transitional Assistance has a $160,000-a-month contract with Citigroup to operate a system of electronic food stamp cards that includes a customer phone service center in India, said Hart. He said he asked Romney's administration for an estimate on savings of the foreign phone service but has not received an answer.

Other states are wrestling with similar issues, trying to balance political and economic realities. Kansas state senators, for example, added language to a budget requiring that similar food-stamp telephone service be performed in the United States, but they removed it after learning it would boost the state's costs by $640,000. New Jersey built a $1 million call center rather than contract overseas for the work.

Business and taxpayer groups and some economists oppose the proposed Massachusetts law. An independent economist, Nariman Behravesh, of Waltham-based Global Insight Inc., said jobs sent overseas tend to be low-skilled and low-paying, and tapping the global economy to provide that service can save as much as two thirds in wages. He said politicians should be pressed to explain why taxpayers should pay more.

''From an economic perspective it makes no sense," he said. ''It's great politics in an election year but lousy economics."

At the Massachusetts Taxpayer Foundation, president Michael Widmer also called the proposal misguided. ''You're trying to prohibit something that is clearly part of the global marketplace. You can do it, but it's going to come at a significant cost to taxpayers."

The proposed amendment was added to a set of union-backed state laws approved in 1993 that were intended to make it difficult for the state to privatize government services. The Massachusetts business community has long opposed these laws.

The new initiative ''will make it even more cumbersome and unappealing to outside vendors," said Brian Gilmore, spokesman at the Associated Industries of Massachusetts, a lobbying and information group for employers.

On the other side of the issue is the Organizing and Leadership Training Center, a Boston-based group focused on fighting unemployment. It issued a press release yesterday that called on Romney to approve the outsourcing ban for state contracts. There are many jobless people in the Boston region, the group said.

The center's director, Lew Finfer, recalled a recent organizing meeting in Sudbury in which five of the 20 people in attendance were out of work.

''Outsourcing particularly makes no sense for a state government, which should be trying to bolster its own economy," he said. ''They should be able to find contractors that would hire American workers."

Christopher Rowland can be reached at crowland@globe.com.