Ohio takes the lead in offshoring fight

A backlash against sending jobs overseas has implications for IT policy

WASHINGTON -- There are anti-outsourcing efforts in almost every state, but few are as loud and aggressive about it as Ohio. This is a state that has suffered major job losses in manufacturing, and the anger about those losses has put offshore outsourcing in the cross-hairs of state politics.

The actions by state political leaders, including a recent state ban on offshore work, might be minor news in the U.S., but not overseas. India's news outlets, in particular, have written more stories about Ohio's anti-offshore moves than their U.S. counterparts, and the ban has drawn the attention of cabinet-level ministers and the leaders of India's big IT firms. They see the Ohio stance as a troubling sign of U.S. protectionism.

Ohio fights offshoring
Ohio has taken steps to fight job offshoring.

U.S. officials have tried to downplay the situation as something similar to an unruly kid in the sandbox. But don't be surprised if the topic comes up when officials from India and the U.S. meet here this week for a high-level government trade policy forum.

Ohio's anger is something even President Barack Obama has tapped into. The president spoke in Parma, Ohio, earlier this month about the economy, saying in part: "And, Ohio, I think if we're going to give tax breaks to companies, they should go to companies that create jobs in America -- not that create jobs overseas. That's one difference between the Republican vision and the Democratic vision. That's what this election is all about."

There are other reasons Ohio gets attention.

Last week, U.S. Rep. Marcy Kaptur's "Made in America" bill passed the U.S. House by a lopsided margin: 371-36. Its goal is to ensure that products purchased by the legislative branch are made in America. Kaptur, a Democrat from Ohio, was blunt: "Outsourced production translates into lost jobs."

The anti-outsourcing efforts picked up steam last month when Ohio Gov. Ted Strickland issued an executive order barring state agencies from sending any work offshore. "Outsourcing jobs does not reflect Ohio values," said Strickland, who is up for re-election this year. He didn't stop there; Strickland blasted offshore firms, saying their use has "unacceptable business consequences," including data security and privacy risks.

Strickland took that position despite having given about $19 million in tax breaks in 2007 to Indian giant Tata Consultancy Services to build a development center in the state. Tata has already established 400 jobs at the center and is supposed to have 1,000 there by the end of 2011.

And there is no forgetting the state's godfather of H-1B opposition, U.S. Rep. Dennis Kucinich, a Democrat and one-time mayor of Cleveland, who wants the H-1B visa program ended.

The sum impact of Ohio's legislative actions on offshoring may be minor, but the political noise and worry they are creating is something else.

The government of India saw a $2,000 H-1B fee increase recently approved by Congress and signed by the president as a direct attack on its domestic IT industry. That move, coupled with the possibility that comprehensive immigration reform might hinder access to visas, has clearly raised alarm bells overseas.

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