San Jose Mercury News,
February 16, 2004 Monday
Secrecy the word on
Tracking where jobs are going is very difficult
By KARL SCHOENBERGER, Mercury News
Food stamp recipients in California having trouble with their accounts no
longer speak to customer service representatives within the state -- but
they are not supposed to know that. Operators at call centers in India and
Mexico, who work for a company that handles transactions in the state's food
stamp program, are trained not to reveal their location.
This fog of private-sector confidentiality is at the center of an
intensifying national debate over the exodus of white collar jobs to
low-wage labor markets abroad. California lawmakers are trying to get a
handle on how many state government services have been sent offshore by
contractors. But the task is proving to be practically impossible.
Two bills that would ban offshore outsourcing of state services have been
introduced in the state Assembly this year, and more are pending. Yet it is
far from clear how such restrictions could be enforced, state officials and
legislative sources say, because state agencies do not keep track of where
the multitude of private contractors do their work.
California is only now building a computer database that could track the $6
billion in contracts it awards every year to the private sector for goods
and services, said Rob Deignan, a spokesman for the General Services
Department. But it won't have the capacity to monitor subcontracting
services that might go overseas.
''The planet is shrinking very quickly,'' Deignan said. ''This is a global
issue that probably should be looked at on the federal level.''
In addition to California, a dozen other states are considering
anti-outsourcing legislation; bills at the state and federal levels would
require call centers to disclose their locations. To shed light on the
extent of California's involvement in outsourcing, state Sen. Liz Figueroa,
D-Fremont, has scheduled a hearing March 9 before the Senate Select
Committee on International Trade Policy titled: ''Outsourcing in California
-- Our Jobs and Privacy at Risk.''
Figueroa said she hopes to hear testimony from state agencies that send work
abroad, including the Health and Human Services Agency, and explore the
issues of privacy and security.
''A lot of California residents are concerned because they are paying taxes
at the same time we are sending those jobs offshore,'' she said. ''I think
if these people knew that their medical and welfare records were going
overseas they'd be even more concerned.''
Figueroa is the author of 1999 Confidentiality of Medical Privacy Act, which
protects the privacy of medical records in California. She said she was
motivated to hold the hearing on outsourcing after reading about a worker in
Pakistan who threatened to disclose confidential patient information from
the University of California Medical Center in an employment dispute.
The state's use of offshore outsourcing came into focus after the
introduction of Electronic Benefit Transfer (EBT) cards for food stamps and
some welfare programs on a county-by-county basis over the past two years.
Some welfare recipients realized their questions were being answered from
overseas call centers, not California state and county agencies.
The new electronic cards, called the Golden State Advantage Card, allow
welfare recipients to avoid the inconvenience -- and stigma -- of paper food
stamps at grocery store cash registers, where they can use them just like
ATM debit cards. If they have trouble with their accounts, they go to a
client services hotline operated by a state government contractor that
offers automated information. If they need to talk to a live person for
help, their calls go to overseas subcontractors.
A Mercury News reporter phoned the state's EBT Customer Service line
(877-328-9677) last week and got through to a young man who identified
himself as ''Richard'' but would not reply when asked if he was in India.
''We deal with the Golden State Advantage Card, but I can't tell you if I'm
or not,'' Richard said in a lilting South Asian accent. Jazz music played as
the call was put on hold, until his supervisor, ''Rachel,'' came on the
line. She said she worked for ''Citicorp'' but was not authorized to say
The welfare reform law passed by Congress in 1996 has radically changed the
way states and counties across the country process welfare benefits. The
U.S. Department of Agriculture has been out front with mandates to convert
the old paper food stamps into electronic payments, and other welfare
programs have followed suit.
In August 2001, California awarded a $441 million, 7-year contract with
Chicago-based Citicorp Electronic Financial Services (acquired by JP Morgan
in November for $380 million) to provide electronic transaction services for
its food stamp and welfare programs. The state's share of the EBT contract
is $109 million, while the federal government pays the remaining $332
JP Morgan Electronic Financial Services and its subcontractors hold similar
contracts in more than 30 other states, using a technology center in Tampa,
Fla., to process some 50 million transactions a month, said company
spokesman Brian Kibble-Smith. Nearly all customer service calls are handled
by its automated voice mail system, he said, but callers requesting live
help are transferred overseas -- to India for English speakers and to Mexico
for Spanish speakers.
Unions representing U.S. telephone operators and call-center workers have
been lobbying for state and federal ''consumers' right to know'' legislation
that would require customer service and tech-help call centers to disclose
their locations, ostensibly to discourage U.S. companies from moving such
jobs overseas. Sen. John Kerry of Massachusetts, the front-runner for the
Democratic presidential nomination, introduced a bill in Congress in
November along those lines.
No easy answers
There are no easy answers to the question of how many state and county-level
jobs will have been lost or moved offshore once the EBT program is in
operation across the state in July. ''I don't believe anyone in the counties
has lost a job yet because of the automation of the EBT services,'' said
Rapone Anderson, a spokesman for the Health and Human Services Agency.
But in the current political atmosphere, where job security is one of the
biggest concerns for Californians, the idea that state services jobs are
being subcontracted to foreign countries -- and can't easily be tracked --
is highly controversial.
''It may be good business for JP Morgan, but it's hard to figure out how
this is good for the people of
California,'' said Steve Trossman, an
official with the California State Employees Association in Sacramento.
''What about the people getting these services? Many of them are getting
food stamps or welfare payments because they can't find jobs. Does it make
sense to send this work overseas?''