Ohio will not budge on outsourcing ban

IDG News Service - Ohio Gov. Ted Strickland defended his order to ban offshoring of state government work, describing it as "common sense".

In a letter to U.S. Trade Representative Ron Kirk, Strickland said that "no one in India, or anywhere else, is going to tell the citizens of Ohio where we can create jobs or how we can spend our resources."

Tuesday's letter to Kirk comes as top Indian government officials visit the U.S. for trade talks, in which the ban on offshoring by Ohio, and a federal law raising the costs of visas, are likely to figure in the discussions.

In the letter, Strickland said he wanted to clearly state the nature and purpose of Ohio's policy.

An executive order last month from Strickland, a Democrat, sparked protests from the Indian government and the outsourcing industry, as it banned the expenditure of public funds for offshore purposes.

India's National Association of Software and Service Companies (Nasscom) described Ohio's ban on offshore outsourcing as discrimination against Indian outsourcers.

State officials must at all times remain focused on initiatives that create and retain jobs in the U.S. in general, and in Ohio in particular, specially during Ohio's continuing efforts to recover from the recent global recession, the governor's order said.

The move by Ohio has alarmed Indian outsourcers as it comes a few weeks after the U.S. passed legislation that increased visa fees to pay for border security.

The Indian side is worried that rhetoric and actions against offshore outsourcing may pick up in the run-up to mid-term elections in the U.S. The high unemployment rate in the U.S. is expected to be a key election issue.

Strickland said in his letter to Kirk that while Indian officials have objected to his actions, they have admitted they do not have a case in the World Trade Organization (WTO) because his executive order does not violate any trade agreement with India,

There is no need to go across the globe to buy services that can be readily provided in Ohio or in the U.S., Strickland said.

The Indian delegation to the U.S. criticized Ohio's position as "ill-advised." India's commerce and industry minister, Anand Sharma, said in Washington on Tuesday that India was also helping to create jobs by for example buying aircraft from Boeing, according to the Press Trust of India, an Indian news agency.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com